S ANKIREPORT
2021

Engineering for the Future

CONTENTS

Sanki Engineering

Sanki Engineering

Growth Strategies

Business Activities

Introduction
Management Philosophy
Long-Term Vision
History of Sanki Engineering
Business Overview by Segment
Financial and Non-Financial Highlights

Business Report

P. 05

P. 34

Facilities Construction Business

P. 06

P. 38

Plants & Machinery Systems Business

P. 08

Real Estate Business

P. 14

ESG Initiatives

P. 42

P. 10

P. 44

Sustainability Management

Message from the President

P. 16

Environment Feature:
Supporting Japan’s Antarctic Research with
Sanki Technology

Sanki Engineering Value Creation
Our Value Creation Process

P. 20

Sanki Engineering Value Chain

P. 22

Status of Business Progress
Medium-Term Management Plan“Century 2025” Phase 2 (FY2019–2021)

P. 24

Feature 1: C ontributing to a Decarbonized Society
through Our Business

P. 26

Feature 2: Promoting the Smile ProjectFeature 3: Preventing the Spread of COVID-19
Feature 4: E nhancing the Quality of Our Technology
and Human Resources

P. 46

Environment

P. 52
P. 54

Social

P. 75

Governance

Financial Report and Corporate Information
P. 94

P. 28

Financial Report

P. 30

Share Information

P. 104

Third-Party Opinion

P. 105

Corporate Information, Business Locations,and Group Companies

P. 29

Feature 5: Promoting Research and Development

P. 31

Feature 6: D isclosing Financial and Capital Policies
and Reinforcing Information Transmission

P. 32

P. 102

Editorial Policy● Boosting Understanding of the Sanki Engineering GroupWe have positioned the SANKI REPORT, the annual report of Sanki Engineering, as a key, integrated communication
tool for reaching all our stakeholders. We hope it will boost understanding of the Sanki Engineering Group’sbusiness activities and future direction, and we welcome feedback for enhancing our operations and information
disclosure. Listed below are new approaches we adopted in compiling the 2021 report.
· We created a six-part section featuring the Sanki Engineering Group’s concrete initiatives for value creation(pages 26 to 32).
· We published a “Sustainability Management” page which summarizes the sustainability management promotion
system at the Sanki Engineering Group with the message from the general manager of the CSR Promotion
Division (pages 44 to 45).
· We published “Message from the Chairman of the Board of Directors” to provide an external director’s
perspective on the Sanki Engineering Group’s efforts to reinforce its corporate governance (page 81).
Major information that was added to our disclosure includes: Turnover due to personal reasons (non-consolidated,consolidated) (page 71).

● Reference Guidelines· “International IR Framework” of the International Integrated
Reporting Council·M inistry of Economy, Trade and Industry’s “Guidance for Integrated
Corporate Disclosure and Company-Investor Dialogues for
Collaborative Value Creation”· GRI Sustainability Reporting Standards 2016, 2018, 2019, and 2020
· Ministry of the Environment’s “Environmental Reporting Guidelines 2018”· ISO 26000● Organizations Covered by the Report
The Sanki Engineering Group, which consists of Sanki Engineering
Co., Ltd. and its 8 subsidiaries.
· Non-financial information is based on non-consolidated figures
for Sanki Engineering Co., Ltd. When the information concerns theGroup, organizations covered by the data are specified in the text,
list, or graph.

Precaution on Performance Outlooks
In addition to past and present information
concerning the Sanki Engineering Group, thisreport includes the targets, plans, outlooks,
strategies, forecasts of future performance,and other information drawn from our longterm vision “Century 2025,” Medium-termManagement Plan “Century 2025” Phase 2(FY2019–2021) as well as other sources. Please
be aware that these forecasts are the best
estimates by Sanki Engineering management
and based on information available at thetime and that actual performance may differ
significantly from these forecasts, owing tochanges such as in economic conditions,market trends, and exchange rates.

● Reporting Period
April 2020–March 2021 (Some information from outside this period
has also been included.)●P ublication Date
September 2021 (previous issue: September 2020; scheduled releaseof next issue: September 2022)

02

SANKI REPORT 2021

SANKI REPORT 2021

03

Sanki Engineering Group Philosophy
The Sanki Engineering Group Management Philosophy, the Sanki
Standard, is a comprehensive statement of the Sanki EngineeringGroup’s purpose in society and presents three values. The SankiEngineering Group is pursuing sustained growth by ensuring all
Group executive officers and employees uphold these shared values
and is contributing to the creation of a sustainable society. Under the
Sanki Engineering Group Compliance Declaration, which summarizes
issues related to corporate ethics and legal compliance, all Group
executive officers and employees will strive to create value forstakeholders and society at large by performing their daily job duties
in accordance with the Sanki Engineering Group Code of Conduct,
which lays out the basic principles of appropriate conduct, and themore specific Sanki Engineering Group Action Guidelines.

Sanki Engineering Group Management Philosophy
Sanki Standard

Engineering for the Future

We create comfortable environments through engineering andwidely contribute to social development.
We will refine our skills and wisdom with the aim of increasingclient satisfaction.
We will place significance on communication and mutual respect.
We will remain aware that we are a member of society and will
act accordingly.

Local
Communities
Government
andAdministrative
Authorities
Customers

Value Creation
throughBusiness Activities

Shareholders
and Investors

Employees

Partners
Business
Partners

Sanki Engineering Group Compliance Declaration
Sanki Engineering Group Code of Conduct
and Action Guidelines

Sanki Engineering GroupManagement Philosophy
Sanki Standard

04

SANKI REPORT 2021

05

Long-Term Vision“Century 2025”
The Sanki Engineering Group regards all people involved in the Groupas stakeholders, including customers, shareholders, investors, suppliers,
business partners, employees, local communities, and government andadministrative agencies. Over the next ten years, we will strive to become
the company of choice for all of them.

Phase
FY2022–2025

当社
100周年

3

4-year period to become
the company of choice

Phase
FY2019–2021

2

The Company of
ChoiceIncreased reliability will encourage more
stakeholders to choose our company

3-year period to enhance reliability
Superior quality generates stakeholder satisfaction, and stakeholder
satisfaction and confidence lead to reliability.

Medium-Term Management Plan“Century 2025” Phase 2

Phase
FY2016–2018

READ MORE

1

P.2 4

3-year period to enhance quality
Sanki
Engineering’s
100th
Anniversary

We will enhance quality by refining our skills and wisdomand developing our human resources as a foundation forresponding to change.

FY201606

SANKI REPORT 2021

FY2019FY2022

FY202507

100┃ Introduction┃

History of Sanki Engineering2025 Toward the 100th Anniversary

Sanki Engineering has developed its business in step with the modernization of Japanese industry over the past nine decades.
Under the Sanki Engineering Group Management Philosophy, “We create comfortable environments through engineering
and widely contribute to social development,” the Company will continue to forge ahead in Japan’s new Reiwa era withthe power of technology toward its 100th anniversary in 2025.

Origin of Our
Corporate
Name
Sanki Engineering has
its origins in the former
Machinery Divisionof Mitsui & Co. andwas named by taking
one Chinese characterfrom “Mitsui” and“Machinery.”◦ Starts manufacturing conveyors◦ Concludes sales contracts for machinery used in mining-related
chemistry with U.S.-based Dorr Inc. and Oliver, Inc.
◦ Completes work on the main building of the Dai-ichi Life Insurance
Company, Japan’s first building with the special high-voltage power
reception of 22 kV

Laying the Base for TechnologicalCompetence by Meeting the Needs ofthe Era◦ Provides heating, plumbing, steel frame construction,and building materials for two major construction
projects: the Shiga manufacturing plant of Toyo Rayon(currently Toray Industries, Inc.) and the refrigerated
warehouse of Aomori Seihyo Co., Ltd.
◦ Installs Japan’s first centralized air conditioning system
for an entire structure at Mitsui’s main building“Sanki—From Past
to Future”

Diversified and Expanded
Businesses Lead to Greater
Technological Competence

A Proactive Approachto TechnologicalInnovation

1986 Japan’s Equal Employment
Opportunity Law

1964 Tokyo Olympics
1958 Opening of Tokyo Tower◦ Develops and installs a proprietary incinerator for
facilities in the Sanshin Building◦ Establishes Toyo Carrier Industries together with
U.S.-based Carrier Engineering and launches the
air conditioning business◦ Completes work on the Tokyo Office of Nippon
Life Insurance Company (currently
Takashimaya Nihonbashi department store)◦ Launches the information andcommunications business◦ Launches the facility systems
business to deal with officeintegration and moving

1950s1970 Japan World Exposition,
Osaka
1972 Reversion of Okinawa

1960s
1945 End of World War II

A Manufacturer that
Responds to the Needsof the Times

2008
Lehman Brothers
bankruptcy

1997 Adoption of the Kyoto Protocol
1991 Collapse of Japan’s bubble economy

1990s

1970s
Wide Range of TechnologicalInnovations◦ Completes work on Japan’s first largescaleclean room at NEC’s Sagamihara plant◦ Develops the world’s first completely
unmanned automatic sorting system andairport baggage handling system◦ Provides HVAC equipment for satellite
communication ground stations in the
Middle East and other regions and builds
automotive testing equipment in Russia

Driving Progress in Environmental
and Information Technologies◦ Develops environment-related technology,
including an ice thermal storage system,
sewage advanced treatment systems, andgasification and melting furnaces◦ Completes work on HVAC, plumbingand electrical systems for Japan’s firstskyscraper, the Kasumigaseki Building◦ Develops the standardized “6S sash”
and gains the top market share among
steel sash manufacturers◦ Completes work on HVAC and plumbing
for the Yoyogi National Stadium1923 G reat Tokyo Earthquake

April 22, 1925

1931

1950

Sanki Engineering isestablished

Moves the head office to Hibiya

Capital of 500,000 yen
and 12 employees

Celebrates the tenth anniversaryof its founding, with five branches,
six field offices, three affiliates, andaround 300 employees

The Japanese economy takes aCompletes the Sagami
favorable turn, and the expansion plant (currently thein demand for building construction Sanki Yamato Site),and equipment results in a dramatic which tailors production
improvement in the Company’sequipment for conveyor
business performance, lists shares mass production
on the Tokyo Stock Exchange

1935

1958

1963

Global COVID-19
pandemic
2020◦ Advances network systems, including LAN, building
monitoring and automated control◦ Provides HVAC, plumbing and an open BA system(automated control, BEMS) for the Roppongi Hills building and otherconstruction work
◦ Establishes the Energy Solution Center to promote and develop theenergy-saving business and provide sales support◦ Develops and begins sale of clean conveyor facilities in
response to growing demand for liquid crystal
displays and organic EL panels

1995 Great Hanshin Earthquake◦ Completes work on
Japan’s first all-fluorescentlighting system in the Taisho Marine and Fire Insurance
Building◦ Becomes involved in night-soil treatment plant disposal
facilities in response to urban hygiene needs◦ Delivers a roller conveyor to the Japanese Antarctic
Research Expedition II

1930s

Sanki Engineering’s PR
video (Japanese only)

Meeting the Needs of a Rapidly
Advancing Information Society

Rising to the Challengeof New Businesses

Sanki’s Advanced Technology Bolsters aConstruction Boom

1920s

2000s

1980s

1940s

th

2019 Start of the Reiwa era
in Japan2015 A doption of the Sustainable
Development Goals

2011
Great East Japan Earthquake

2010s
Contributing to a Sustainable
Society by Bolstering the LCE
Business◦ Promotes the LCE Business, which is intended
to sustain the life cycle of buildings and facilities,
from planning, design and construction work tomaintenance, operation/management, renovation,and reconstruction
 ins order for the DBO project,◦Wa bulk contract encompassing
design, construction,
management, and maintenance◦Completes hygiene facility for the
Tokyo Midtown Hibiya building◦Completes the HVAC, central
monitoring and automatedcontrol systems for the
Toranomon Hills Business Tower◦Completes HVAC, plumbing andelectrical systems for Yoyogi
National Stadium 1st Gymnasium(Photo credit: Japan Sports Council)

1971

1982

2000

2011

2018

Sets up theEnvironmental
Administration office

Builds theTechnical ResearchLaboratory

Opens the Shonan
Training Center

Moves the head office
to Tsukiji

2005

2015

Begins operations at all
facilities of the Sanki Techno
CenterMoves the head office to
Nihonbashi

90th Anniversary

2019

2016

Begins operations at the
Yamato Product Center

1973
Spins off the sash
business

Launches the long-term
vision “Century 2025”

Capital exceeds 1 billion yen

08

SANKI REPORT 2021

SANKI REPORT 2021

09┃ Introduction┃

Business Overview by Segment(Year ended March 2021)

HVAC and Plumbing for Building,Industrial HVAC, and Electrical Systems

Facilities
Construction
Business

Net Sales
Composition
Ratio

76

Organization (as of April 1, 2021)%

Our Facilities Construction Business is conducted in ways that are friendly to both people andthe environment and through systems that are convenient, comfortable and efficient, and also
save energy. We are engaged in wide-ranging fields, including HVAC and plumbing systems forbuildings, industrial HVAC systems, and electrical systems.

● HVAC and Plumbing for Buildings● Electrical Systems· HVAC systems· Freezing and·B attery manufacturing · Electrical systems
refrigeration
facilities· Telecommunication systems· Industrial HVAC
systems· District heating and · P lumbing system· Electrical civil engineeringcooling plants
for water supply and· Clean rooms
drainage· Environmental control · Nuclear powerrelated facilities·F ood service
systems
equipment·S emiconductor· Pharmaceutical andmanufacturing·D isaster prevention
food manufacturing
facilities
systems
facilities
Net Sales
Composition
Ratio

Facility Systems Business

Net Sales
Composition
Ratio

6

%

Facilities Construction BusinessPresident● Sanki Techno Support Co., Ltd.

Board of Company Auditors

Management Meeting● THAI SANKI ENGINEERING & CONSTRUCTION CO., LTD.

Secretarial Office● Tomakomai Netsu Service Co., Ltd.

HVAC and Plumbing for
Buildings Business

Management Planning Office

Industrial HVAC
Business

Electrical Systems
Business

Supercomputer Fugaku

Fukuoka High Court, District Court, Family Court, and Summary
Court Building

Technical Administration Division

CSR Promotion Division

Procurement Division

General Affairs andHuman Resources Division

Facility Systems
Business

Sales Administration Division

Labor Safety, Health,Quality Management &Environment Promotion OfficeInformation Systems Office

Smart Building
Solutions Business

Mechanical &Electrical Contracting
Headquarters

Sanki Techno Center%

Main Sales Items

82

Board of Directors

Chief Cost Inspector Office

We serve the needs of offices and other workplaces by providing design and project management
for construction and relocation as well as strategic and operational consulting services.

155.5 billion yen*

Major Projects● Sanki Construction Engineering (Shanghai) Co., Ltd.

Main Sales Items

Net SalesGroup Companies

Legal Affairs Office

Engineering Integration OfficeInternational Business
Administration DivisionTokyo Branch● Facility Systems● Smart Building Solutions

Accounting Division

Yokohama Branch Office· Project management and designingof fit-out and relocation of offices
and workplaces· Consulting involving overall workstyle

· Central monitoring and automated control systems· ITC solutions· Crisis management (BCP) solutions· IP phone solutions· Security-related solutions

Technical Research &Development Center

Kanto Branch Office
Chiba Branch Office

Abeno Harukas

Tokyo Midtown Hibiya

Toyoda Gosei Memorial Gymnasium (ENTRIO)

Ibaraki Branch OfficeKansai Branch

Plants &Machinery
Systems Business

Net Sales
Composition
Ratio

Machinery Systems BusinessWe provide material handling systems and conveyance systems that meetcustomer needs and challenges in supply chain management.

SANKI REPORT 2021

Shikoku Branch Office● Sanki Sangyo Setsubi● Material Handling Systems· Lightweight conveyors· Distribution-related conveyors· Sorting devices·A utomated warehouse· FA systems· Airport baggage and cargo· Clean conveyance systems handling systems· Material handling systems · M
 edical handling systems
 andling information control·Hsystems

12

Net Sales
Composition
Ratio

%

Kobe Branch Office

Major Projects

Co., Ltd.

Chubu Branch

Environmental Systems BusinessShizuoka Branch Office● Sanki Kako Kensetsu Co., Ltd.
● Sanki Kankyo Service Co., Ltd.

Toyota Branch Office● AQUACONSULT Anlagenbau GmbH

Mikawa Branch Office● A EROSTRIP Corporation● Sendai Kankyo Hozen Co., Ltd

Kyushu Branch Office● P FI Okubo Techno Resource Co., Ltd.

Hokkaido Branch Office
Shimojishima Airport

Machinery Systems Business

Minami-Gamo Purification Center

Environmental Systems Business

Hokuriku Branch Office

Facility Systems Division● Water Treatment

17%· Water and sewage
treatment facilities· General and industrial waste
disposal and recycling
facilities· Sludge recycling facilities

Chugoku Branch Office
Tohoku Branch Office

Main Sales Items

32.5 billion yen*

10Group Companies
Machinery Systems
Business● Conveyance Systems

We develop unique facilities and systems for water and sewage
treatment and waste treatment to enhance living environments whileconserving energy and reducing CO2 emissions.

Net Sales
Composition
Ratio

%

Main Sales Items

Environmental Systems Business

Net Sales

5

Kyoto Branch Office● Waste Treatment· Industrial wastewater
and waste gas treatment
facilities·P lant facilities for the foodand chemical industries· Waste incineration facilities· Landfill wastewater
treatment facilities· Sludge incineration facilities

Plants & Machinery
Systems Headquarters
Machinery Systems
Administration Division
U.S. Forces Yokota Air Base Cargo Handling System

SANKI REPORT 2021

Clean Hill Tenzan

11

Environmental Systems
Administration Division

SANKI REPORT 2021

12┃ Introduction┃

Financial and Non-Financial Highlights
Page 34

Facilities Construction Business

Financial Data (Consolidated)

Non-Financial Data

Orders Received and Net Sales

Gross Profit Margin■ Orders Received

HVAC and
Plumbing
for Buildings
Business

195.5

Industrial
HVAC Business

29%

34%

Net Sales for Fiscal 2020

185.8

190.0

190.0

Up 0.8%year-on-year

billion yen

191.1

168.5

● Gross Profit Margin■ Net Sales

217.0 212.3
170.1

15.1

Down 8.5%
year-on-year

billion yen

207.6

194.0

195.5 190.0

13.4

Number of Employees

Rate of Annual Paid Leave Taken

Consolidated

Consolidated

2,548

Down 0.4 points
year-on-year

%

14.7

15.5

14.9

15.1

14 35886
2,190

Female

2016

2017

2018

2019

(FY)

2020

2016

2017

2018

2019

2020

(FY)

55.3

Male

%

billion yen*

Total

%

Male

%

Female53.4
67.1

As of March 31, 2021

Machinery
Systems Business

Environmental
Systems Business

5%

12%

13%

■ Ordinary Income■ Profit Attributable to Owners of Parent● Equity Ratio

8.1

5.9

53.4

Down 27.0%
year-on-year

Down 22.1%
year-on-year

3.経常利益／親会社株主に帰属する当期純利益
billion yen
billion yen

Facility Systems
Business

Page 38

Real Estate Business 1%
Page 42

Real EstateBusiness

9.0
4.6

2017

● ROA

● Building Maintenance and Management· Land leasing· Building leasing· Facility maintenance and upgrades

2018

2019

Down 1.3 points
year-on-year

%

(FY)

2020

%

48.6

2016

2017

■ Special Dividend■ Ordinary Dividend

6.6

80

Down 2.0 points
year-on-year%

Net Sales
Composition
Ratio

1

%

SANKI REPORT 2021

13

14

4.1

4.3

2016

2017

SANKI REPORT 2021

2019

yen

73.9

55.5

6.6
4.5

2018

77.6

Down 15 yen
year-on-year

8.6

Net Sales

2.3 billion yen*

53.4

6.0

2018

6.0

2019

40.0

40.6

20

4.7

2020

Up
2.8 points
year-on-year%
FY2020

2020

(FY)

10
20
(FY)

2016

15
20
2017

25
70

2019

fewer
cases

Down 30%
year-on-year

FY2020Up 3.7 points
year-on-year%

Number of Registered Patents
77.6

462

10
70

40

2018

Year-on-Year Comparison of
Problems and Complaints
during Construction

20● Payout Ratio

10.3

5.5

48.2

45.8

Annual Dividend per Share and Payout Ratio
● ROE

4.7

100

Up 5.2 points
year-on-year%

FY2020Members of Subcontractor Groups

960

Average Monthly Overtime
Work per Person
Consolidated

companies

29.0

Down
5.3 hours
year-on-yearhours

As of March 31, 2021

FY2020Contribution to CO2 Reductions at
Customers through Sanki Products andTechnologies (for Ordered Projects)

Recycling Ratio of Industrial Waste
at Sites where Sanki Engineering is
the Prime Contractor

Consolidated

Non-consolidated

5.9

ROA and ROE

Main Sales Items

Consolidated

3.9

2016

Our Real Estate Business includes operations in the areas of real estate leasing andbuilding management. We are striving to expand into higher value-added real estate
while taking advantage of our current technology.

51.5

8.1

7.5

7.4

6.8

*Includes items not listed in
the graph such as 0.8 billion
yen in other net sales and1.15 billion yen in eliminationof inter-segment transactions.

● Real Estate Leasing

11.2

11.2

6%

Plants & Machinery Systems BusinessRate of Reinstatement afterChildcare Leave

Equity Ratio

Ordinary Income and Profit Attributable to Owners of Parent

Electrical Systems
Business

%

2020

(FY)

cases

As of March 31, 2021

28,430Up 2.9%year-on-year

t-CO2
FY202096.6

Down 0.6
pointsyear-on-year%

Test and R&D Expenditures

ICT Investment

Consolidated

Non-consolidated

1.47

Up 2.8%year-on-year

billion yen

FY20201.25

FY2020Up 9.6%
year-on-year

billion yen

FY2020SANKI REPORT 2021

15

┃ Message from the President┃

Message from the President
Business Environment and Results for FY2020

We will promote sustainability
management to become acompany of choice that offers
both quality and reliability.
Hirokazu Ishida
President

Profitability Maintained at High Levels Despite Declines in Revenues andIncome due to the COVID-19 Pandemic
ore than a year has passed since I was appointed president in April 2020.
Soon after that, a national state of emergency was declared, and I set sail in
my new role amid a flurry of activity, concurrently taking responsibility forleading the COVID-19 Task Force* that was promptly set up in response. Incidents
of individual infections did not result in related clusters. I believe this was theresult of policies and actions taken by the task force, including thorough safety
management and the introduction of teleworking. In the course of steering theCompany through unprecedented difficulties, I had my own concerns as I sought
to strike a balance between preventing the spread of infections and ensuringbusiness continuity. Thanks to the efforts of employees, we were able to maintain
uninterrupted business operations throughout the year, and I feel a profoundsense of gratitude.
In fiscal 2020, although the Japanese construction market experienced aslump in investments due to deteriorating corporate profit under the COVID-19
pandemic, the situation recovered in the latter half of the year. As for the businessenvironment surrounding Sanki Engineering, the direct impact of the pandemic
was limited compared to other industries, as our business was to some extent
supported by ample ongoing construction work from the previous year. Even so,
there was a significant decrease in small-scale maintenance work in our mainstay
Facilities Construction Business during the first half, which affected our businessperformance. The impact was also felt in our Machinery Systems Business, whichhandles conveyance systems, in the wake of declining orders and sales.
Under these circumstances, we enjoyed brisk orders for construction facilities
on the back of favorable demand related to semiconductors and 5G, and forenvironmental systems in large construction projects, which led to higher orders
received compared to the previous fiscal year. This gave us the confidence—basedon the experience we had gained during the pandemic—to continue our businessbeyond fiscal 2021. Although net sales decreased due in part to an off-season
decline in sales from large-scale construction projects, we expect a recovery fromfiscal 2021 onward. We were also able to maintain our gross profit ratio at thehigh level of 15.1%, which we believe is the fruition of our ongoing efforts to boost
productivity.

M▎Business Performance (Billions of Yen)
185.8

191.1

168.5

170.1

217.0
212.3
11.2

11.2
9.0

7.4

6.8
4.6

2016

16

SANKI REPORT 2021

207.6
194.0

7.5

195.5
190.0
8.1
5.9

3.9

2017

2018

2019

*The COVID-19 Task
Force was established in
April 2020 and has been
entrusted with designating
the response and actions
for preventing infections
after considering therequests and guidanceissued by central and local
governments.

2020● Orders received● Net sales■ Ordinary income■ Profit attributable toowners of parent（FY）

SANKI REPORT 2021

17

┃ Message from the President┃

Reference
Lon-Term Vision “Century 2025”
Pages 06–07
A long-term vision covering theten-year period from fiscal 2016
to fiscal 2025, which in turn isdivided into three periods.

Reference
Medium-Term Management Plan“Century 2025” Phase 2(fiscal 2019 to 2021)
Pages 24–25
Second stage of the long-term
vision “Century 2025”*1 We have designated theFive Key Initiatives, which
are strengthening corebusinesses, promoting
growth strategies, enhancing
the Sanki brand, reinforcing
dissemination of information,and disclosing financial andcapital policies and ESG
policies.
*2 The Smile Project wasestablished in 2015 under
the president’s leadership topromote work style reform
unique to Sanki. Four Smile
Plans have been launched as
initiatives of the project thatwill be implemented by eachbusiness unit.
*3 B uilding Information
Modeling is a concept thatinvolves the constructionof a database comprising a
3D model and attribute dataof a building on a computer
and the application of that
information across the entire
process, from design andexecution to progress andmanagement.
*4 Life Cycle Engineering isa business concept of the
Sanki Engineering Group.
Throughout the life cycle of abuilding, we provide services
from new construction,
repair, and maintenance torenewal and reconstruction.
*5 D esign Build Operate is aprocess through which thedesign, building, operation,and maintenance of a projectis awarded to a private
enterprise as a bulk order.

Reference
Feature 6:
Disclosing Financial andCapital Policies andReinforcing the Disseminationof Information

Progress and Future Outlook for the Medium-Term Management Plan “Century 2025” Phase 2

Providing Solutions to Social Issues through Sanki Engineering’s Business

Promoting Five Key Initiatives with an Eye on the Next MediumTerm Management Plan

Promoting Sustainable Management by Responding Flexibly to
the Changing Business Environment

iscal 2021 marks the final year of the Medium-Term Management Plan“Century 2025” Phase 2 (FY2019–2021), which is the second stage of our“Century 2025” long-term vision. While we were shaken up by COVID-19 in
fiscal 2020, we maintained our unwavering commitment to pursuing the Five Key
Initiatives*1 upheld in the plan and have steadily shown results.
First, from the perspective of strengthening our core business, we focused on thepressing issue of work style reform in the context of Japan’s revised Labor Standards
Act, which will be applied to the construction industry in April 2024. In September
2020, we boosted our Group-wide effort on the Smile Project*2, which represents
our unique work style reforms, by launching Smile Plans for the four groups of facility
construction, plants and machinery systems, facilities and overseas operations, andmanagement support in order to accelerate our drive to raise productivity throughmeasures that specifically reflect the operational characteristics and challenges ofeach group. We also recognize the importance of DX promotion to utilize ICT andBIM*3 to raise operational efficiency in all our processes, and we established the
DX Promotion Section in April 2021. Strengthening our core business will depend
upon forging closer collaborations with subcontractors that are directly responsible
for onsite construction work. For this reason, we have been offering assistance forstabilizing their business operations since March 2020 through measures such as
reviewing payment terms. We believe it is important to secure an environment inwhich Sanki engineering can continue to evolve alongside its subcontractors.
With regard to promoting growth strategies, we focused on the themes of
pursuing technological development led by the R&D Center and bolstering theLCE*4 business. Concrete achievements of fiscal 2020 included the developmentof an automated robotic air flow meter for facilities construction work. We intend tocontinue exploring various technologies for saving labor and raising efficiency at theconstruction site to improve productivity and profit ratios of our construction work.
To bolster the LCE business, we will seek to maintain steady operations of a waste
treatment facility that has come online under our management for the next 20 years
using the DBO*5 method. We are taking on the challenge of winning the next largescale order by demonstrating our total engineering competency through Group-wide
collaboration.

nder its ESG policies, Sanki Engineering has consistently sought to promotesustainability activities that are synonymous with its management. Companies
have recently been facing stronger demand for strategic and effective
initiatives on sustainability and ESG for developing a sustainable society. In response,
Sanki Engineering set up the Sustainability Promotion Department in April 2021 forsystematically promoting activities across the entire Group. We will proceed withconsiderations for placing sustainability at the center of our business strategy in thenext Medium-Term Management Plan Phase 3 (FY2022–2025), which will be the final
stage of our vision of becoming the Company of choice by our 100th anniversary.
Among the many ESG issues that must be addressed by Sanki Engineering,
initiatives for achieving a decarbonized society, underpinned by the Japanese
government’s declaration of attaining carbon neutrality by 2050, are particularly
significant with direct relevance to our main business of total engineering based on
our strengths in energy conservation and energy creation. We must more boldly
express our intentions and accelerate concrete actions. Specifically, in addition
to reducing CO2 emissions from our business activities, we will pursue R&D andproposal-based sales for energy conservation and energy creation technologies toreduce CO2 emissions from customers’ business activities with a focus on the SANKI
YOU Eco Contribution Point system.
As I have mentioned, advancing work style reforms from the social perspective
and in anticipation of declining labor market while seeking to acquire competenthuman resources is vital for achieving corporate sustainability. I hope to hear theopinions and concerns of onsite employees including new staff through directcommunication, such as during the President CCU*, and reflect those ideas in our
initiatives insofar as possible.
In the area of governance, discussions and considerations are underway inaccordance with the latest revision of our Corporate Governance Code. Furthermore,
we have yet to address the information disclosure in accordance with the TCFD
recommendations and are committed to constructing a robust system of governancethat meets the expectations of diverse stakeholders by incorporating the views of ourexternal directors.

F

Advertising the Sanki Brand by Actively Disseminating Information
The key to enhancing the Sanki brand is to achieve higher quality by providing
technology training primarily at the Sanki Techno Center as well as by reinforcing
the dissemination of information. In fiscal 2020, we produced new commercials andaggressively sought TV and web exposure. Sanki Engineering is founded on its B-to-B
business, and these advertisements will not directly lead to new orders. Developing
broad recognition of our company, however, is the key to acquiring competent humanresources and a valuable means of increasing motivation among those working for
the Sanki Engineering Group, including subcontractors.
With regard to the disclosure of financial and capital policies and ESG policies,
we have sought to practice PDCA cycles by publishing a basic policy covering eachtype of information. Sanki Engineering saw a significant increase in the number ofindividual shareholders from around 3,000 to 14,000 from fiscal 2019 to fiscal 2020.
We believe this is evidence that we have been recognized by the market as a stablecompany in times of uncertainty that actively provides returns to shareholders.

U

Reference
SANKI YOU Eco Contribution
Point System
Pages 27, 48–49*President CCU, during which
employees exchange views
with the president, is part of
the Century Communication
Up (CCU) discussion events
held in accordance with theCentury 2025 long-term vision.

Achieving Sustainable Growth as Society’s Backseat Player
Sanki Engineering’s strength lies in its total engineering competence, and wepursue diverse businesses that go beyond facilities construction such as HVAC,
plumbing, and drainage systems; electrical systems; and ICT systems to also include
machinery, environmental, and facility systems. Also,
Sanki Engineering provides services that encompass theentire life cycle of a facility, from planning and design toconstruction, maintenance, and management. Through thefacilities we provide as a total engineering company, we
serve as a backseat player that contributes to broad areasof society, and our relationship with customers and society
differ with each business. As companies are expected tomake an even greater contribution to the achievement of
the shared international goal of sustainability, our mission isto reconsider how each of our businesses can contribute to
the world and to give shape to ideas. We hope to become
the company of choice by 2025 and achieve sustainablegrowth in the years beyond by building on these efforts.

Page 32

18

SANKI REPORT 2021

SANKI REPORT 2021

19

┃ Sanki Engineering’s Value Creation┃

Our Value Creation Process
Guided by the Sanki Standard management philosophy, the Sanki Engineering Group strives to fulfill
its mission of realizing all types of comfortable environments and contributing to the development of asustainable society by creating value at each step of the business process and in every business area.

Social Issues
Climate change

Aging infrastructure

Automation, labor-saving,and higher productivity

Creation of comfortable environments

Infrastructure maintenanceand upgrades

Safe working environments

A better, sustainable society

Disaster prevention, mitigation,and resilience

Adaptation to the “new normal”
caused by COVID-19

Decarbonization

Declining population, falling birthrates, and aging population
Work style reform

Continuous Enhancement of Corporate Value

Stakeholder Needs

Spread of COVID-19

Input

Business Activities

Output● Capital Assets● Major Products and Services(FY2020)(FY2020)

Plan nFinancial Capitalin g a n d D e

91.6 billion yen· Net assets

si g

Major Products and Servicesn

Manufactured Capital· Domestic bases

18 locations· Comprehensive training and researchfacility (Sanki Techno Center)· Yamato Product Center

1.47 billion yen

Human Capital· Number of
employees

2,548

Sanki EngineeringGroup Management
Philosophy

Environmental
Systems
Business

Facility
Systems
Business· Net sales

190.0 billion yen· Annual dividends per share· Equity ratio

17 projects(as of March 31, 2021)

 nergy consumption·E(crude oil equivalent)

2,279 kl

Okubo Water Purification Plant*1

Phase 1Long-term Vision

Century 2025

462 cases· Project management technician(civil works, construction, electricalconstruction, pipe-laying works)

1,132 persons· Average monthly overtime work perperson29.0 hours· Rate of paid leave taken per person

55.3 %*4· Exchange views with business partners

Environmental Impact·C O2 emissions

G GovernanceMedium-Term Management Plan Phase 2
Enhance Reliability*3Social Capital

S Social

Consideration for the environment· Input of energy and water resources

0.44· Closer cooperation with subcontractors throughsubcontractor groups

E Environment

Natural Capitalfrom FY2019

Human CapitalCenter for Treatment and Care,
Chiba University Hospital

ESG Initiatives that Support Business Activities· Collaboration with business partners

30 % reduction

Intellectual Capital· Number of registered patents

C o n s t ru c t i o n

960 companies

Manufactured Capital· Industrial accidents frequency rate

· Credit-worthiness fostered over theyears and a solid customer base·M embers of
subcontractor groups

6.6 %80 yen53.4 %*2· Reduction rate for number of problems
and complaints during construction

Major Projects· Average educational
training cost per
61,000 yen/year
capitaSocial and Relationship Capital

Financial Capital
·R
 OE

t

· Test and R&D
expenditures ofFacilities
Construction
Business(FY2020)

195.5 billion yen·L arge-scaleconstruction projects

Machinery
Systems
Business● Value Created·O rders received

ProcuremenIntellectual Capital·P roven track record and advanced
technical skills across a broad range ofbusinesses

,
Op
ent
e
m
r
M a a t i o n a n d M a n a ge c t i o ne
i n tenance, and Insp

(branches and branch offices) in

Outcome· I ndustrial
wasterPhase 3

6,046 t-CO

2

18,029 t

Natural Capital·C O2 reduction based on our proposals(for ordered projects)· Reduced environmental impact throughpromotion of energy creation· Volume of water treated using SankiEngineering products

28,430 t-CO

2

5,785 t-CO

2

220 million m

3· Provision of facilities equipped with highly efficient energy
saving facilities based on ZEB*1 Total of head office, other offices, and construction sites *2 Construction projects of over 1 billion yen each
*3 Sanki Engineering construction sites (Sanki Engineering Co., Ltd. and business partners) *4 Non-consolidated

20

SANKI REPORT 2021

SANKI REPORT 2021

21

┃ Sanki Engineering’s Value Creation ┃Sanki Engineering Value Chain
The Sanki Engineering Group is engaged in the life cycle engineering (LCE) business, where we handle the entire process

Relevant
Stakeholders

from facility planning and design to procurement, construction, operational management, maintenance and management,
and renovations and renewal. We seek to generate diverse benefits that meet stakeholder expectations by addressing

Customers

Business
partners

Partners

Employees

Local
Governments andcommunities administrative bodies

opportunities and risks in the context of sustainability management across the value chain of our business activities.
● Related to society ● Related to the environment

Social Issues
Climate change● Shift to a decarbonized society ● Limited resources● Resource circulation ● Waste issues

Declining population, fallingbirthrates, and aging population● Labor shortage● Human rights risks

Aging infrastructure

Work style reform

Spread of COVID-19● Fair procurement ● Supply chain risks ● Safety first ● Quality assurance ● Ensuring information security

Renovation
andRenewalPlanning
andDesignProcurement

As a total engineering company with high-level expertise andreliable technical skills, we participate in the planning anddesign stages of wide-ranging projects involving building andindustrial HVAC systems, water supply and drainage systems,
electrical systems, material handling and conveyance systems,
and water treatment and waste treatment facilities in order toprovide proposals offering the ideal combination of comfort
and reduced environmental impact. In addition, we proactively
develop and introduce new technologies for meeting customer
needs, including Open Lab initiatives that encourage active joint
research inside and outside the Group.

Relevant
Stakeholders

Relevant SDGs

We ensure the stable procurement of highly specializedmaterials, equipment, and services required in construction
through a sound and secure supply chain based on longstanding relationships of trust. We have constructed a
Procurement Web to strengthen our relationships with business
partners by sharing information, seeking to raise operational
efficiency, and shorten lead times for both Sanki Engineeringand its partners while also reducing costs through lower
purchasing costs and promoting digitization.

Relevant
Stakeholders

Relevant SDGs

We have developed a nationwide construction management
system drawing upon the ample experience and advanced
technical skills we have gained over the years and applied
to implement safe, high-quality construction operations withthe cooperation of 960 members of subcontractor groups.
In addition to strengthening internal controls and systems
for supporting site operations, we aggressively adopt newtechnologies and improve construction methods to advance
automation and save labor in the construction process to meet
diverse customer needs through customized construction
options that effectively balance quality and cost.

Relevant
Stakeholders

Relevant SDGs

Operation/Management
and Maintenance/
Inspection
By taking over the operation, management, maintenance,
and inspection of facilities designed and constructed by SankiEngineering, such as office buildings, factories, schools,
hospitals, waste treatment plants, and water treatment plants,
we facilitate the stable operation of customer facilities andrealize efficient preventive maintenance, extend the operational
life of facilities, and reduce running costs. This also leads topromoting our LCE business by providing us with a source ofstable, long-term profit and enabling us to offer renovation andrenewal proposals at optimal times.

Relevant
Stakeholders

Relevant SDGs

Maximize Opportunities

Maximize Opportunities

Maximize Opportunities

Maximize Opportunities● Proposal for disaster prevention and mitigation
facilities●P roposal and design for meeting the demand for
HVAC and clean rooms that prevent infections●R esponse to increased demand for data centers andopen offices due to promotion of teleworking●P romotion of the SANKI YOU Eco Contribution
Point system●P roposals and design for reducing environmental
impact●P roposal and design for energy creation facilities● Raise efficiency by constructing a purchasingsystem and exercising centralized management●F oster stable relationships of trust with business
partners●P romotion of green procurement● Improved productivity based on systematic division of labor● Foster stable relationships of trust with subcontractors● Active proposals for improving work sites●D evelopment of education system that incorporates
the Sanki Techno Center and on-the-job training● Prevention of nosocomial transmission andresponse to the need for contact-free means ofhuman interaction●R ealize optimal operational management that saves
energy●R educed environmental impact based on generatingenergy and the recycling and reuse of resources

Minimize Risks

Minimize Risks

Minimize Risks● Fair, equal, and transparent business relationships●S upport for stabilizing the business of
subcontractors●● Initiatives for CSR procurement● Development and introduction of construction-related
automation and labor-saving technologies●P revention of problems and complaints●P romotion of health and safety activities●R esponse to human rights issues●S upport for stabilizing the business of subcontractors●P roper disposal and reduction of waste●C ompliance with environmental regulations● Appropriate management of customer information,
protection of personal information

Key Initiatives across the Entire Value Chain

22

Construction

SANKI REPORT 2021

● Execution of stringent measures for preventing COVID-19
infections, strengthening of BCP system

Minimize Risks● Prevention of problems and complaints●P romotion of health and safety activities●R esponse to human rights issues●C ompliance with environmental regulations●● P romotion of DX including BIM to achieve higher efficiency and advances● Work style reform based on the Smile Project

SANKI REPORT 2021

23

┃ Sanki Engineering’s Value Creation ┃Status of Business Progress Medium-Term
Management Plan “Century 2025” Phase 2

Results of Key Initiatives and Policies for Fiscal 2021

(FY2019–2021)

FY2020 Results

FY2021 Policy◦Facilities Construction Business

The Medium-Term Management Plan “Century 2025” Phase 2 (FY2019–2021), launched in fiscal 2019, entered its final year in April 2021.
Building on the achievements of Phase 1, which was the three-year
period of enhancing quality, we are now focusing our resources onfurther pursuing quality to strengthen reliability in Phase 2. We report on
the current status of Sanki Engineering’s initiatives toward our goal of
becoming the company of choice in the next phase.

Long-Term Vision◦Facility Systems Business“Century 2025”

Strengthen Core
Businesses

Becoming the company ofchoice for our stakeholders

Phase 2Phase 3

(FY2016–2018)(FY2019–2021)(FY2022–2025)

Enhance Quality

Enhance Reliability

Company of Choice

Key Initiatives

Further Pursue Quality⃝S trengthen Core Businesses

Improve component technologies
and achieve stable growth⃝P romote Growth Strategies

Pursue future growth in the areas oftechnology and business⃝ E nhance the Sanki Brand

Develop human resources thatpossess the Sanki spirit

Promote Growth
Strategies

Enhance the
Sanki Brand

Key Initiatives· Improve construction
productivity· Meet energy saving and labor
reduction needs· Promote technological R&D· Continue to receive orders forstock projects· Create better work conditions· Improve internal
communication

200.0 billion yen

190.0 billion yen

200.0 billion yen

Gross profit(margin)30.0 billion yen (15.0%)

32.1 billion yen (15.5%)

31.0 billion yen (15.5%)

28.7 billion yen (15.1%)

32.0 billion yen (16.0%)

Ordinary income(%)

9.0 billion yen (4.5%)

11.2 billion yen (5.4%)

9.5 billion yen (4.8%)

8.1 billion yen (4.3%)

10.0 billion yen (5.0%)

S

SocialDividend

Dividend per Share

5.0% or higher (final fiscal year)

4.3%

Annual dividend per share of 60 yen or higher

Annual dividend: 80 yen■ Extra dividend (yen)■ Ordinary dividend (yen)20
Acquisition oftreasury stock

About 5 million shares (in 3 years)

Total return ratio

70% or higher

ROE

24

SANKI REPORT 2021

8.0% or higher (final fiscal year)

1 million shares(cumulative total: 2,958,000 shares)
97.3%
6.6%

· Promote business activities and R&D focused on SDGs
and ESG· Promote activities to increase orders for DBO projects· Appeals to the wider public through advertisements andcommercials· Invigorated internal communication· Develop educational programs for fostering human resources
with the Sanki spirit along with advanced expertise andempirical knowledge·P romote work style reform through internal dialogue

10
20

15

2016

2017

25
70

40

2018

G

2019

· Contribute to building
sustainable infrastructure· Collaborate and engage
with the local community· Create work environmentsthat are safe and easy towork in· Promote diversity toenhance human resources

10
70

20

Phase 1

· Develop products andtechnologies that contributeto realizing a decarbonizedsociety· Reduce the environmental
impact of businessactivities

2020

Phase 2

FY2021 KGI

KPI(Indicators for Evaluating FY2021 Results)(Indicators for Evaluating Progress)◦Number of orders received basedon CO2 reduction proposals under
the SANKI YOU Eco Contribution
Point system◦Number of CO2 reduction
proposals under the SANKI
YOU Eco Contribution Point
system· 50% or more of total number of proposals◦Sanki Engineering’s CO2
emissions (result of businessactivities) (2020 and 2021)· Reduce by 1% year-on-year

207.6 billion yen

Ordinary
income ratio· Developed next-generation technologies at the R&D
Center and Yamato Product Center· Ongoing promotion of the stock-based business

FY2021 targets

200.0 billion yen

FY2020 results

Environmental Systems Business:· Further promote the LCE business· Expand new strategic products that meet energy-saving andenergy creation needs

PolicyNet sales

Phase 2 (FY2019–2021) Management Targets

Environmental Systems Business:· Increased orders for large-scale projects· Developed a new system that contributes to saving energy

Page 32
Feature 6:
Disclosing Financial and Capital Policies andReinforcing Dissemination of Information

FY2020 results· Enhance the productivity of the Yamato Product Center· E xpand products and services that meet labor-saving and automation needs

Page 44 Sustainability Management

Phase 2 Performance Targets and Results
FY2020 targets◦Plants & Machinery Systems Business
Machinery Systems Business:

Status of Progress on ESG Initiatives

E

FY2019 results· Establish a system for promoting consulting services◦Plants & Machinery Systems Business
Machinery Systems Business:⃝D isclosure of Financial andCapital Policies and the ESG
Policy⃝R einforce the Dissemination ofInformation

Environment

FY2019 targets· Promote DX to improve productivity and construction quality· Raise the efficiency of construction management operations
by using the BIM Promotion Center· Reduce problems and complaints after completion of construction◦Facility Systems Business· Began providing consulting services· Continued to receive orders for a next-generation central
monitoring system (Sler)·B olstered the production management system at the Yamato Product Center· Continued to receive orders for hybrid systems

Medium-Term Management Plan
Phase 1

◦Facilities Construction Business· Reduced the number of accidents, problems, and complaints
during construction by using the Sanki Techno Center· Introduced a new labor-saving technology at construction sites(FY)

Governance·R einforce the governancesystem· 300 cases or more per year

◦Continuous reductionin Sanki Engineering’s
CO2 emissions (result of
business activities)◦Reduction rate for numberof problems and complaints
during construction◦Number of technicaltraining sessions and· Reduce by 5% year-on-year throughseminars for preventing
divisional collaboration
problems, claims, and◦Reduction rate for number
accidents· 25 times per yearof accidents◦Designate targets for the◦Achieve the goals of the
Smile Project
Smile Project*· Average monthly overtime work perperson·R ate of paid leave taken per person◦Construct a better
governance system in linewith the changing times· Quantify work-life balance throughmonitoring

FY2020 Results◦Promotion of CO2 reduction
proposals under the SANKI
YOU Eco Contribution Point
system· 379 cases◦Initiatives for reducing
Sanki Engineering’s CO2
emissions· 6,046 t-CO2◦Number of technicaltraining sessions andseminars for preventing
problems, claims, andaccidents· 22 times◦Continuous monitoring of
the Smile Project· Average monthly overtime work
per person: 29.0 hours· Rate of paid leave taken perperson: 55.3%◦Consideration of measures
for strengthening governancebased on the revised Corporate· Implement measures in accordancewith the scores
Governance Code◦Annual inspection of thegovernance system*The Smile Project was established in 2015 under the president’s leadership to promote work style reform unique to Sanki.

SANKI REPORT 2021

25

┃ Sanki Engineering’s Value Creation ┃

CASE

1

NKC Nagai Green Power
Wood Biomass Gasification
Power Plant

Contributing to Achieving Carbon
Neutrality by Promoting Wood
Biomass Power Generation

Feature1

13,0005,785Power generated

The NKC Nagai Green Power wood biomass
gasification power plant began operations inJuly 2017 in Yamagata Prefecture, Japan, as aclimate change measure by effectively using
the region’s ample wood biomass resources.
The use of wood as an energy source isconsidered carbon neutral because it does
not affect the concentration of CO2 in theatmosphere. Emissions of CO2 can be limited
by using timber from forest thinning instead offossil fuel. Sanki Engineering was responsible
for plant facilities such as the gasification
facility and tar combustion system as well as

Reductions in CO2 emissions

HVAC, plumbing, and electricalsystems.
At the plant, timber is dried
naturally to reduce its moisture
content to 45% and then turned into
chips that are heated, gasified, andrefined before they are sent to thegas engine to generate electricity.
The gasification furnace achieved
its rated output of 1,990 kW about amonth after it was fired for the firsttime, and stable operation has been
maintained to date. In fiscal 2020,
power output reached 13,000 MWh,equivalent to a CO2 reduction of
5,785 t-CO2 (as of March 31, 2021).

t-CO2/year

The plant has been generating
an economic impact valued at
approximately 800 million yen, byrevitalizing the neighboring forestry
industry through the use of unused
lumber centered on thinned wood,
creating employment related to
the facility, and generating profit
from the sale of electricity to powercompanies.

Promote open
innovation

Contributing through Our Businessto a Decarbonized Society

Guided by our Management Philosophy, under which we seek to “create comfortable environments throughengineering and widely contribute to social development,” Sanki Engineering seeks to help bring about a decarbonizedsociety through its business activities in wide-ranging fields, from facilities construction and machinery systems toenvironmental systems. We will utilize our original technologies for saving and creating energy to reduce CO2 emissions
generated by customers’ business activities while also contributing to lowering the life cycle costs for society as awhole by expanding our LCE business.

MWh/year

ReduceCO2 emissions
generated by SankiEngineering’s
business
activities
Climatechange issue

Sanki Engineering

ReduceCO2 emissions
generated bycustomers’
business
activities

We create comfortableenvironments through engineering
and widely contribute to social
development.
ProvideProposeoptimalenergy-saving
solutionssolutionsbased on
LCE

Contributing
to adecarbonizedsociety

1,871
Reductions in CO2 emissions

CASE

2

ESCO Project at Mie University’s
Kamihama Campus

Contributing to Realizing a World-class
Environmentally Advanced University
Sanki Engineering is participating in the ESCO
Project* of Mie University, which intends
to become a World-class Environmentally
Advanced University and is contributing toachieving the goal set in the Third MediumTerm Goals of its medium-term plan to reduceenergy use (intensity) for the entire university,
including its affiliated hospital, by 6% fromlevels in fiscal 2015.
In the latest ESCO project, we sought to*In an Energy Service Company project, the costs of energy-saving
renovations are offset by resulting reductions in the costs of light,
heating, and water utilities.

26

SANKI REPORT 2021

t-CO2/year

achieve the energy reduction targetof 6.83% for Kamihama Campus asa whole in fiscal 2019 by installingan energy-saving facility at Mie
University Hospital, a particularly
energy-intensive building. We wereable to clear this ESCO projecttarget by reducing energy use by
7.4% (baseline comparison) in fiscal
2020 (effect of CO2 reduction was
1,871 t-CO2/year).
Furthermore, the EcoSearcher®
real-time heat source optimization
system was installed to ensure theoptimal operation of the heat source
system. This control system isintended to minimize overall energy
consumed by the heat source
system and consume the least
real-time energy based on optimal
control parameters determined by
a computer. Energy savings in theheat source system, including theeffect of EcoSearcher®, accountfor roughly 50% of total energy
savings.

Sanki Engineering’s CO2
Reduction Proposals
Open the Way to the Next
Step in Environmental
Conservation Activities

SANKI YOU
Eco Contribution
Point System
Our search for an environmental
conservation activity unique
to Sanki Engineering led to thelaunch of the SANKI YOU EcoContribution Point System ten
years ago. When a customer
adopts our proposal for energy
savings, the amount of CO2
emissions reduced by thesolution is converted to EcoContribution Points (100 yen
per tonne), which are used
to subsidize environmental
conservation activities. SankiEngineering’s original initiative
has yielded visible results,
with the cumulative volumeof reductions in customer CO2
emissions reaching 231,462
tonnes, equivalent to more than
20,000,000 yen in donations,by the end of fiscal 2020. The
pursuit of our business activities
is synonymous with resolvingsocial issues such as saving andcreating energy—a corporate
identity Sanki Engineering
should hold in high esteem far
into the future. We will continue
promoting CO2 reductions
through this system as ourcontribution to achieving Japan’s
carbon neutrality in 2050.

Cumulative total of the reduction in
CO2 emissions for ten years*

231,462t-CO2*October 2010 to March 2021

SANKI REPORT 2021

27

2

┃ Sanki Engineering’s Value Creation ┃FeaturePromoting the Smile Projectrk
Wo

Since fiscal 2015, Sanki Engineering has been striving to create
environments where all employees can work with joy by
pursuing the Smile Project led by the president, a Companywide work style reform project. In anticipation of the revised
Labor Standards Act of Japan, scheduled to be applied from
April 2024, we launched a dedicated Smile Plan for each of
the four groups of Facilities Construction, Plants & Machinery
Systems, Facility Systems and International Business, andManagement and Support. By collaborating with these groups,
Sanki Engineering is making a concerted effort to reducethe incidence of long working hours and create comfortableworkplace environments.

Smile
Site Plan

Smile
Plant Plan

Smile
Project
Smile
Facilities andInternational
Business
Plan

Establishing a Division of Labor System to Boost Productivity
at Construction Sites
Compared to steady work style reforms underway at our offices, long
working hours of managers at construction sites have remained thenorm, presenting an issue we must overcome. Sanki Engineering has
established a system of operational support to mitigate the workloadof these managers and achieve both higher productivity and enhanced
quality. Five years have passed since the start of the Smile Project, andinitiatives for supporting site operations have evolved from support todivision of labor. We intend to level out the amount of work by further
improving the quality of division of labor system to prepare for theupcoming 2024 application of the revised Labor Standards Act.

Style Reform

Smile
Management
and Support
Plan

Rai
se Productivity

History of the Initiative

Technical Center

Quality Control Center

Procurement Division

Construction
Sites

Alleviate workloads
and raiseproductivity

Site support organization
at each branch officeInformation
Systems Office

2016

Customers/
Society◦Promptly disclosed information in and outside the Company
concerning the growing number of infected people◦Donated to student support funds◦Please see TOPICs 1, 2, and 3

Business
Partners◦Reviewed the concentration and diversification of purchasingthat we have long been working on◦Concluded commitment line contracts to help stabilize thebusiness of subcontractors (change from bill payment to cash
payment) and to secure funds (May 2020 to May 2021)

Employees◦Quickly established a telework environment◦Kept employees informed about preventing infection andmanaging health◦Secured adequate stock of basic materials for preventing infection

2017
Start of the Smile Site Plan

· Launch of the Octopus site
documentation system· Established the TechnicalSupport Center (currently
the Technical Center)2020· Established the Quality
Control Center· Established the Smile Plansystem implemented byfour groups encompassing
all divisions

As part of the Smile Project, we aim to further promote DX in
all areas, including construction sites and offices. In April 2021,
we established the DX Promotion Section within the Information
Systems Office, which is dedicated to executing and promoting DX
throughout the Company. We will reinforce our efforts to raise theefficiency of construction management with digital tools as well as
by installing and fully applying systems that facilitate the sharing of
information with relevant staff both in and outside the Company.
We will also collaborate with the R&D Center and each division topromote in-house development and onsite installation of AI and IoTtechnologies for saving power and raising work site productivity so
as to realize sustainable work styles unique to Sanki Engineering.
SANKI REPORT 2021

System◦Set up the COVID-19 Task Force◦Considered and implemented measures in line with our policy basedon the guidelines of the Ministry of Land, Infrastructure, Transport
and Tourism and Keidanren (Japan Business Federation)

Establishment of the Design
Support Center (currently the
Design and Engineering Center)

Promoting DX to Create Comfortable
Working Environments

28

Main Measures for Preventing the Spread of COVID-19

2015
Start of the Smile Project

2018

Design andEngineering CenterTo address the spread of COVID-19, we set up an in-house
COVID-19 Task Force in April 2020, which is headed by
the president and determines policy by placing priority on
preventing infection among all stakeholders. In addition
to stringently practicing basic measures against infection
and actively implementing a telework and sliding work
schedule system, we will seek to contribute to society
by offering proprietary technologies. From July to August
2021, 1,500 applicants such as employees, their families,
and those from subcontractor groups were vaccinatedthrough our workplace vaccination program.

Feature3

TOPIC 1
Delivering Proprietary
Technologies forPreventive Measuresagainst COVID-19
Sanki Engineering joined
the Open COVID-19
Declaration, launched byinterested companies, universities,
and other organizations for the purpose ofbringing an end to the COVID-19 pandemic.
Accordingly, we have released nine patent rights
to our proprietary technologies. These all have
proven track records of installation at medical andresearch facilities and are considered effective
against infection. Looking ahead, we will continue
to work on preventing the spread of infection
and contributing to end the pandemic by applying
Sanki Engineering’s HVAC and other proprietary
technologies.

Released patents and outline

Preventing the Spread of COVID-19

TOPIC 2Work Style Reform with COVID-19
Our Facility Systems Business Division provides total
management from office development to work styles, and as
the pandemic’s spread gave rise to the need for work styles
that avoid the 3Cs (closed spaces, crowded spaces, and closecontact settings), the division upheld the slogan of “Work
Style Reform with COVID-19” to practice operating facilities
without a physical human presence in its offices.
Many tasks must be addressed, including avoiding the
3Cs, responding to changes in communication patterns that
accompany telework, managing schedules, and making themost of extra space inside Company buildings. We are steadily
progressing, however, by discerning the essence of the issue
to start with what’s possible and repeating thecycle of verification and execution. In future,
we plan to share the knowledge acquired
through these initiatives in and outside
the Company and build on them asclues for realizing optimal work
styles for each customer.

TOPIC 3
Participation in Research and Development of a
Sewage Monitoring System to Realize a Societythat Can More Readily Adapt to Infectious Diseases
An industry-academia-government researchand development project has been launchedto create a real-time sewage monitoring
system that analyzes epidemiologicalinformation found in urban sewage andestimates the number of infected individuals
in a particular urban area. Sanki Engineeringhas joined the project, which was adopted
as a sewage-related applied research project
by Japan’s Ministry of Land, Infrastructure,
Transport and Tourism in fiscal 2021. We are responsible foranalyzing various water quality data obtained from sewage. In doing
so, we apply the know-how accumulated at water treatment sites
over the years by the Environmental Systems Business Division andconduct applied research in collaboration with the R&D Center. We
hope to establish a technology for monitoring infectious diseasebiomarkers in sewage, and systems that can control sewage
treatment operations, as our contributions to realizing a society thatcan more readily adapt to infectious diseases.

SANKI REPORT 2021

29

┃ Sanki Engineering’s Value Creation ┃Feature4

Measures under Medium-Term Management

To becomethe company ofchoicePlan 1

Enhancing the Qualityof OurTechnology
and Human Resources

Feature5

Measures under Medium-Term Management Plan 2

Promoting Researchand Development

Enhance Technologies and Human Resources

Pursuing R&D to Become the Company of Choice

Technical
Training

The Technical Research and Development Center handles
two aspects of R&D. One is aimed at addressing current
challenges such as DX for the construction business, saving
labor in construction work, and improving productivity and isintended to fulfill our responsibilities to our customers andsociety as a whole. The other aspect is R&D for maintaining
our status as the company of choice into the future, which
we will pursue with a clear awareness of developing
technologies for saving and creating energy that cancontribute to achieving Japan’s carbon neutrality in 2050 andrealizing a digital society.
Today, as society undergoes major changes, the centeris placing even greater emphasis on R&D based on theOpen Lab method. Gaining new knowledge by collaborating

Safety Training

Technical
Administration
Division

Sanki Techno
CenterSanki Engineering is striving to become the company of choice by 2025 by consistently
enhancing the quality of its technologies and human resources, the theme underlying its
Medium-Term Management Plan Phase 1 (FY2016–2018). Our efforts are spearheaded by theTechnical Administration Division, which is responsible for Sanki Engineering’s strategies ontechnology, and the Sanki Techno Center, our comprehensive training division, and basedon strategies for technological and human resource development that are directly linked to
management. We will seek to raise the quality of our technologies and human resources throughpractical training programs and initiatives for improving construction work productivity.

Management
Training

Collaboration

Facilities
Construction
Business
Plants & Machinery
Systems Business
R&D Center

Sanki Engineering’s
Open Innovation

Enhancing the Quality of Our Technologies

Fostering Our Safety Culture

Passing on technical skills that constitute thefundamental value of Sanki Engineering to thenext generation is directly connected to businesssustainability. We are nurturing reliable engineers
by providing intensive levels of technological skills
training at the Sanki Techno Center using simulated
construction sites and actual machinery while also
conducting on-the-job training at each branch, including
branch offices. Online training was introduced in
response to the COVID-19 pandemic, and we havesought to creatively
deliver learning
experiences similar
to onsite training. We
are also constantly
improving our training
facilities and fostering
trainers.

Guided by our philosophy of giving top priority
to health and safety, Sanki Engineering fosters asafety culture throughout the entire Group, including
subcontractors. In the Safety Experience Area of the
Sanki Techno Center, employees can gain empiricalknowledge about safety by using immersive
experience facilities that simulate construction siterisks and by participating in training that effectively
incorporates virtual reality. A second Safety
Experience Area, incorporating the feedback ofseasoned engineers at subcontractors, is scheduled
to be completed in fiscal 2021.

Improving Construction Work Productivity
As part of our efforts to enhance the quality of ourtechnologies, we undertake initiatives aimed atexponentially boosting the productivity of construction
work through DX. Front-loading based on introducing
and applying BIM is key to addressing the future labor
shortage to increase construction site productivity,
efficiency, and economic viability. Accordingly, we areaccelerating our efforts, including internal training,in collaboration with the business divisions and
BIM Promotion Center. We also acknowledge theimportance of reducing the number of problems andcomplaints that directly impact construction work
efficiency and are working to address this issue by
sharing information and developing databases.
30

SANKI REPORT 2021

Analysis and
Evaluation

Society’s
Needs

Apart from technical training, we also provide training
across broad areas to enhance the quality of ourhuman resources. For new employees, we provide
training on essential social manners, basic businessskills, and corporate and engineering ethics. We
organize management training by rank, for younger
employees, mid-career employees, and executives.
In addition, we focus on delivering training for honing
personal qualities such as communication skills andonline training in the context of the pandemic.

with companies, universities, and research institutes canaccelerate the pace of development. I also believe that
promoting cross-divisional R&D will allow us to better
demonstrate our strengths and generate unprecedented
new value.
What makes us the company of choice, and what are
our missions beyond being chosen? With these questions
always in mind, we will take on the challenges of R&D tofulfill our role in building a sustainable society.

Experimentation
and TestingIntellectual
Property

Promoting Open Innovation
Big data

Cloud

Open Lab

Synergy andInnovation

5G, AI, IoT

Diverse Component Technologies that Sustain Infrastructure for Urban
Areas, Buildings, and Production

R&D
Case
Study

Major R&D Results in FY2020
Goal

Resulting Product

Labor-saving
construction
work

Autonomous airflow
measurement robots forfacilities construction

Comfort,higherproductivity

Oil mist solution formachining factories

Comfort,improved
hygieneSuppressed diffusion of
biological material (odor,
bacteria, etc.) by applying
MEDIFORT®, a highcomfort HVAC system for
hospital rooms, to multiplebed environments

Test and R&D Expenditures

Developing Human Resources across a Broad Range of Fields

Executive Officer,
General Manager of the TechnicalResearch and Development Center

Areas of R&D

Developing Our Human Resources

Passing on and Further Developing Technical Skills

Junichi Hamasaka

1.47

billionyen(FY2020)

Number of Registered Patents462(as of March 31, 2021)

Simultaneously Improving the Quality of HVAC Construction and Reducing the Workload

Trial Operations Begin for the Autonomous Airflow Measurement Robot

HVAC systems constitute a major component of the Facilities Construction Business, and airflow
measurements were manually conducted onsite when making operational adjustments. While thisrequires precision in terms of verifying facility performance, there has been a longstanding needto save power and labor, since a standard high-rise building has over 1,000 locations that must be
measured.
In this context, the Technical Research and Development Center took the lead in developing anautonomous airflow measurement robot. Deployed at construction sites since November 2020, it iscapable of autonomously moving from one measurement point to another by registering the route inadvance based on construction drawings.
It can also significantly reduce the%lavolume of data sorting by automaticallysavin bor
conv g overenrepeating accurate measurements andmet tionalhodsrecording data. The trials resulted in
reducing the number of processes by
75%, thus verifying an improvement in
the quality of HVAC construction workwith regard to the airflow measurement
process. We will introduce the robot
at Sanki Engineering’s construction
sites while also further enhancing its
performance, such as by broadening
its applications through integration withimage recognition technology and othermeasuring instruments and by sharing
information with a BIM database.

75

https://www.sanki.co.jp/news/release/article381.html (Japanese only)(Left) Airflow measurement by hand
(Right) Airflow measurement by autonomous robot

SANKI REPORT 2021

31

┃ Sanki Engineering’s Value Creation ┃Sanki Engineering Business Activities

Business ReportFeatureMeasures under Medium-Term Management

6

Plan

3

Disclosing Financial and Capital
Policies and Reinforcing theDissemination of Information

P. 34 Facilities Construction Business
P. 37 Facility Systems Business lants & Machinery Systems Business
P. 38 P
P. 39 Machinery Systems Business
P. 40 Environmental Systems Business eal Estate Business
P. 42 R

Under the three-year Medium-Term Management Plan “Century 2025” Phase 2, which began in fiscal 2019,
Sanki Engineering designated its basic financial and capital policies and disclosed chronological information. We are also
seeking broader recognition of the Company by reinforcing our dissemination of information to enhance corporate value
over the medium to long term.

Disclosure of
Financial andCapital Policies

Reinforce theDissemination ofInformation

Future investments

ROE 8.0%
or higher

Return of profits tostakeholders

Enhancing
corporate value
over the medium
to long term

Disclosure of Financial and Capital Policies
Dividend Payments per ShareFY202070

FY201970

FY201720

15FY2016

20

10

25

73.9

Reinforcing the Dissemination of Information
To increase recognition of the Sanki brand both in andoutside the Group, we reinforce the dissemination of
information from the dual perspective of enhancing IR
activities and expanding public relations efforts.

40.0
55.5
40.6

Ordinary dividend (yen)Special dividend (yen)Payout ratio (%)

FY2016FY2017FY2018FY2019FY2020

Dividend per share (yen)

30

35

60

95

80

Ordinary dividend (yen)

20

20

40

70

70

Special dividend (yen)

10

15

20

25

10

Payout ratio (%)

40.6

55.5

40.0

73.9

77.6

Total return ratio (%)

40.6

148.9

52.9

111.4

97.3

Acquisition of treasury
stock (thousand shares)

–

3,000

1,000

1,958

1,000

Retirement of treasury
stock (thousand shares)

–

3,000

1,000

2,000

1,000

5.5

4.5

10.3

8.6

6.6

ROE (%)

32

77.6

10

20

40

Enhance IR activities

Expand PR activities

Improved capital efficiency

FY2018Enhance the
Sanki Brand

SANKI REPORT 2021

We produced advertisements, under the themes of Kaiteki wo
Katachi ni (giving shape to comfort) and “Where to find SankiEngineering,” featuring unique characters that represent theimage of each business division. The ads are distributed
via diverse media, including TV commercials, YouTube
videos, newspapers, and magazines.

Sanki Engineering video(Japanese only)33┃ Business Report ┃Facilities Construction Business

Creating Comfortable Environments

Major Results for Fiscal 2020
The Facilities Construction Business provides a broad
range of comfortable environments by harnessing
Sanki Engineering’s component technologies, and thegrowing pace of transitioning to a decarbonized society
presents us with greater opportunities to contribute bydemonstrating our strengths in energy conservation andenergy creation. Furthermore, the COVID-19 pandemic
has led to a renewed awareness of the vast possibilities
inherent in our component technologies for providing
safe and secure environments.
Meanwhile, many issues must be tackled for us
to meet the requirements of Japan’s revised Labor
Standards Act, scheduled to be enacted in April 2024. Bycreating comfortable working environments for ourselvesby addressing issues such as long working hours and theneed for gender-inclusive workplaces, we will endeavor to
realize continuous growth for the Company and contributeto achieving sustainability for society as a whole.

Director, Senior Executive Officer and General Manager of the Mechanical& Electrical Contracting Headquarters

Net Sales
Composition
Ratio

Net Sales for
Fiscal 2020

82%

155.5
billion yen

Orders Received (Billions of Yen)
182.5
146.6

157.6

153.4

156.7 161.0

Opportunities and Risks in the Business Environment
・Ongoing demand for construction due to urban redevelopment projects andcapital investment by Japanese manufacturers seeking to restore production backto Japan
・Increased demand for environmentally sound facilities for realizing a decarbonizedsociety
・Active investments in the semiconductor and telecommunication sector due tostay-at-home demand and acceleration in DX
・Decline in demand for offices due to the expansion of teleworking and slow
recovery in the tourism sector
・Delayed economic recovery and cut-backs in investments due to the continuation
and resurgence of the COVID-19 pandemic

Key Initiatives of the Medium-Term Management Plan
Key Initiative 1

Actively leverage customer information and closer collaboration among
branches and branch offices
2016

2017

2018

2019

2020

2021
Forecast(FY)

Net Sales (Billions of Yen)
179.3

171.5

141.5 139.6

155.5 161.0

We will quickly identify customer needs through Company-wide informationsharing between the headquarters, branches, and branch offices and promotesales activities that effectively use customer information to win orders.
Key Initiative 2

Raise productivity by establishing a Company-wide construction system
We will establish a construction system that ensures Company-wide
collaboration to improve productivity, and we will reinforce the construction
system by linking it with work style reforms to secure profit.
Key Initiative 3

Promote the development of younger employees
2016

34

2017

2018

2019

SANKI REPORT 2021

2020

2021
(FY)
Forecast

We will implement Web-based training as well as OJT Sheets as an educational
tool to foster younger employees to strengthen sales capabilities along withconstruction techniques.

◦ While we saw declines in orders and net sales for smallscale construction work involving renovations and repairs
due to spread of the COVID-19 pandemic, we received
robust orders for large-scale projects involving building
and industrial HVAC systems. Net sales fell due to the offseason slump in demand but maintained high levelsof profit

Facilities Construction Business

Eiji Mitsuishi

Business Report

Contributing to Achieving Sustainability by◦ Promoted the Smile Site Plan work style reforms,
designed to reduce the workload of construction
managers and raise operational efficiency, ahead ofthe enactment of Japan’s revised Labor Standards Act,
scheduled to go into effect in April 2024
◦ Established the Quality Control Center within theTechnical Administration Division and began construction
quality audits by quality assurance administrators andtechnical experts

Chiba University (Hospital) Center for Treatment and Care building◦ Reduced problems and complaints as well as the numberof accidents during construction by implementing
measures such as the efficient allocation of humanresources after reinforcing operational processes andthrough a division of labor in the stage preceding orderacceptance and construction◦ Developed and rolled out an autonomous airflow
measurement robot that saves labor at construction sites
Major Projects◦Shiseido Osaka-ibaraki Factory/West Japan Distribution Center(HVAC and plumbing systems/new construction work)◦Chiba University (Hospital) Center for Treatment and Care Building(HVAC and plumbing systems/new construction work)◦Toyota Technical Center Shimoyama (HVAC, plumbing andelectrical systems/new construction work)◦Courthouse of Tokyo High Court, Tokyo District Court, and Tokyo
Summary Court (HVAC and plumbing systems/renovation)

Courthouse of Tokyo High Court, Tokyo District Court,
and Tokyo Summary Court

Status of Business Operations and Future Outlook toward Achieving Phase 2
Pursuing Business with Due Consideration for
Sustainability
We will pursue business activities with due
consideration for achieving sustainability for the SankiEngineering Group as we seek to take the next step
toward becoming the company of choice, which is
the goal of our next Medium-Term Management Plan“Century 2025 Phase 3.” In concrete terms, we will
promote businesses related to energy conservationand energy creation that reduce environmental impact
and make an even greater contribution to reducing
CO2 emissions generated by customer businessactivities. We will also designate specific targets toensure sustainable development for Sanki Engineering
while making continuous improvements to address
the pressing issue of creating comfortable workplaces
for the future.

Promoting Sales Activities Based on Company-Wide
Information-Sharing and Boosting Competitive Strength
We will continue our efforts from fiscal 2019 topromote nationwide sharing of sales information
based on collaboration between the headquarters,
branches, and branch offices and engage in
multilayered sales activities with branches and branch
offices made possible by expanding the headquarters’
functions as the contact point. We will also effectively
use Company-wide information-sharing to calculate
appropriate costs to boost competitive strength.
We recognize that enhancing construction quality
is essential for raising our competitiveness. We
will therefore continue to build on our significant
achievements over the years in reducing problems
and complaints during construction and focus on
post-construction problems and complaints to identify
fundamental causes and develop solutions.
SANKI REPORT 2021

35

┃ Business Report ┃Facilities Construction Business

Facilities Construction Business

Facility Systems Business

Forging Closer Ties with Subcontractors
To achieve our goal of zero accidents, we will bolster
the system for ensuring safety at construction
sites based on cooperation among the sites,
subcontractors, and Sanki Engineering. We will
forge closer ties with the Sanki Health and Safety
Cooperative Association comprising subcontractors
by prioritizing member companies with a particularlyhigh safety record in placing orders, as a means toeffectively enhance both our business transactions
and health and safety activities. Closely collaboratingwith subcontractors is also important from theperspective of BCP, and we are creating a system thatwill facilitate the dispatch of staff from subcontractors
in the event of a contingency at customer facilities.

・Change in the office market due to the introduction of
teleworking triggered by work style reform and spread of
the COVID-19 pandemic・Growing expectations for solutions and consulting services
that address emerging needs
・Expectations for systems that improve productivity byusing AI and IoT and a corresponding rise in demand fora robust communication infrastructure to support thesesystems
・Increased opportunities for reconstructing and reviewing
ICT infrastructure due to DX-driven change in businessmodelsFacility Systems

Smart Building Solutions

Key Initiatives of the Medium-Term Management Plan

Focus

• We will enhance our consulting service toward
expanding the market for PM and CM* businesses• We will develop our organization to expand ourbusiness and establish our system for serving
customer needs• We will strengthen our component technologies andenlarge our customer base through alliances andother strategies

Contributing to the Construction of a Hub of Medicine that Aims to Be Best in the World*Project management and construction management

New Center for Treatment and Care Building at Chiba University Hospital
Value deliveredby SankiEngineering◦Energy saving based on individualized HVAC
◦Indoor pressurization/depressurization functions thatprevent contamination and infections inside the hospital

Chiba University Hospital in Chiba City, Chiba Prefecture,opened a new Center for Treatment and Care buildingin January 2021 as part of its redevelopment plan
to become a world-leading hub of medicine. SankiEngineering was responsible for constructing the HVAC
and plumbing systems.
The redevelopment plan involves several
buildings, and the Center for Treatment and Care willaccommodate particularly key sections of the plan,requiring independent construction work for each floor.
With regard to the HVAC system, we saved energy byenabling individualized HVAC according to the purposeof each space. We paid due consideration to preventing
contamination and infections within the hospital bycreating independent indoor pressure environments
for sections handling radiation, clinics where infections
are identified, and operating rooms. We also adopted
electricity and gas to power the heat source equipment

36

Opportunities and Risks in the Business Environment

SANKI REPORT 2021

◦Multiple heat source equipment for diversifying
risks during times of disaster or power outages

to diversify risks during times of natural disaster or a
power outage. In addition, we installed highly reliable
plumbing and drainage facilities, which also contributed
to creating a safe and high-quality regional healthcare
hub.

Facilities Construction Business

BIM Promotion Center
The BIM Promotion Center established in April 2019 will
spearhead our initiatives in meeting customer needs
related to design, construction work, maintenance, andmanagement using the BIM.

While we are currently focused on using BIM during
the construction stage, we expect that introducing
it at the design stage will have a direct benefit on
improving construction quality and reducing theworkload of construction managers. We will therefore
reinforce the educational system for engineers
starting in fiscal 2021.

Business Report

Further Promoting the Smile Site Plan to Improve
Productivity and Construction Quality
To address the pressing need to improve productivity,
we will further promote the Smile Site Plan to reducethe construction manager workload, which requires
a speedy response. While consistently seeking
to reinforce the Company-wide division of laborsystem, we will simultaneously promote DX in onsite
operations to boost productivity as well as improve
construction quality. In addition, we will systematicallyaddress the complete operational process from before
orders are received to after construction work has
been completed to accelerate the pace of onsite work
style reforms by resolving issues at an early stage
in areas such as advance preparations for receiving
orders, personnel allocation, operational flow, and risk
avoidance.

• We will expand our solutions business throughproactively consulting on installation and upgrades ofcentral monitor systems and other facilities• We will provide system integration solutions from aneutral and fair standpoint as a means for resolving
customer issues• We will pursue collaborations and work style reform
while closely monitoring social circumstances during
and after the COVID-19 pandemic

Major 2020
Resultsfor Fiscal 2020年度の主な成果◦ Revisions in facility use strategies involving
large-scale relocation gained momentum amongcustomers. In addition to major customer projects,
we also seized on investment opportunities provided
by affiliated companies, which resulted in robust
growth in orders received, sales, and profit on sales.
◦ We released the “Work Style Reform with
COVID-19” as our proposal for ideal officeenvironments during the pandemic◦ In the area of building management solutions(instrumentation), we won orders for large-scale projects
and achieved steady progress, resulting in favorable
growth in orders received, sales, and profit on sales◦ In the area of network solutions (ICT), we deepened
our relationships with customers by responding totheir emerging needs, and we are focusing our sales
activities on areas showing a marked increase ininvestments, such as projects involving the constructionof data centers and large-scale logistics hubs

Status of Business
Operations
and Future Outlook toward Achieving Phase 2
Phase2達成に向けた事業の進捗と今後の見通し◦ While we expect the trend of large-scale relocations
to continue in our favor in fiscal 2021, we are enteringa period of change in the value of offices following
the spread of teleworking. The Consulting Promotion
Division established in April 2021 will seek to ascertain
the essential requirements of an ideal work stylethat reflects the customer’s future vision and expand
services by paying due consideration to the purposeand benefit of physical gatherings.

◦ By effectively applying the instrumentation technologies
we have cultivated over the years, we will provide
unique building management systems that excel interms of openness and versatility and provide systems
tailored to customer needs as a system integrator.
Given that robust investments in the ICT area are
expected to continue, we will advance businesses
involving the construction of ICT-related infrastructureand networks to further expand our business areas.

New Center for Treatment and Care building

SANKI REPORT 2021

37

┃ Business Report ┃Plants & Machinery Systems Business

Needs for Realizing a Sustainable Society

Director, Managing Executive Officer and General Manager,
Plants & Machinery Systems Headquarters

Net Sales
Composition
Ratio

Net Sales for
Fiscal 2020

17%

32.5
billion yen

Orders Received (Billions of Yen)
38.7

36.3

8.1

33.7

12.1

30.6

2016

24.2

2017

34.5

12.0

2018

10.3

24.2

21.7

2019

Machinery Systems Business

37.0

36.5
7.8

2020

25.0

Machinery
Systems
Business

Environmental
Systems
Business

26.4

18.2

19.9

2017

34.4

11.7

9.2

8.1

2016

32.2

20.4

2018

Key Initiative 2

Raise productivity at the Yamato Product Center.

Key Initiative 3

Create next-generation technologies throughcollaboration with the R&D Center.

Key Initiative 1

Further expand the LCE business, such as byupgrading, maintaining, and managing water
treatment and waste treatment plants.

27.0

Key Initiative 2

Expand the energy creation business by drawing on
Sanki Engineering’s strengths in total engineeringand effectively applying proprietary technologies.

2021
(FY)
Forecast

Key Initiative 3

Enhance new strategic products that provide
underlying support for the LCE business.

Machinery
Systems
Business

Machinery Systems Business

38

SANKI REPORT 2021

37.0

8.9

23.2

23.5

2020

10.0

Environmental Systems Business

Environmental
Systems
Business

Reverse Sorter that was introduced to the market

Major Projects◦Narita International Airport, extension of the T1S#53 make-up
conveyor and enhancement in BHS capacity(construction work for conveyance system, upgrade)◦Specimen sorting system for a medical institution(construction work for a conveyance system, new construction)

Status of Business Operations and Future Outlook toward Achieving Phase 2
Raise Productivity at the Yamato Product Center
We will continue to bolster the production
management system at the Yamato Product Centerby optimizing inventory control and stringently
managing across the product assembly process toboost productivity and reduce costs.

32.5

11.1

2019

・Expansion in decarbonization needs arising from Japan’s
declaration to achieve carbon neutrality by 2050
・Japanese government policy for promoting PPP and PFI・Intensified competition due to the adoption of fiscal austerityby local governments

Expand hybrid facilities that combine conveyors
and robots and provide related services.

Environmental Systems Business◦ Although manufacturing-related orders and net
sales remained stagnant due to the impact of the
COVID-19 pandemic, we saw a growing need for
robotic solutions for labor-saving and automation.
We enjoyed robust orders and net sales for hybrid
facilities that combine conveyors with robots.
◦ We added enhancements at the Yamato ProductCenter, our main production base for conveyors,
by bolstering its production management system,
which handles the entire process from assemblyof large-scale equipment to trial runs
◦ Collaborated with the R&D Center to develop ahigh-spec, space-saving Reverse Sorter to meetthe growing demand for logistic solutions

Key Initiatives of the Medium-Term Management Plan

Net Sales (Billions of Yen)

29.1

・Growing need for automation and labor-saving solutions arisingfrom the decline in Japan’s working population, and need forunattended processes to prevent the spread of COVID-19
・Expansion in capital investments for logistics facilities targetingthe EC market
・Decline in investments related to airports and manufacturing
due to the spread of COVID-19

Key Initiative 1

2021
(FY)
Forecast

Major Results for Fiscal 2020

Opportunities and Risks in the Business Environment

12.0

28.7

Machinery Systems Business

Plants & Machinery Systems Business

Kazuaki Iijima

The Plants & Machinery Systems Business, which comprises the
Machinery Systems Business and the Environmental Systems
Business, supports social infrastructures that are indispensable todaily life. I believe that maintaining a sustainable business witha potential for further development is highly significant, certainly
from the perspectives of helping achieve the SDGs and promoting
ESG management. In the coming years, we expect continually
growing needs for automation and labor-saving solutions due to thedeclining population as well as the needs for saving and creatingenergy toward achieving carbon neutrality. The developmentof technologies using AI and IoT will be absolutely required tomeet these needs as well as the accumulation of expertise formaintaining the stable, long-term operation of infrastructure
facilities. Meanwhile, Sanki Engineering is facing the urgency ofachieving its own sustainability by promoting work style reform
alongside the introduction of DX. Looking ahead, we will seek tobroadly contribute to society by continuously delivering original
solutions with the steadfast intention to create a sustainable future.

Business Report

Delivering Solutions to Meet Growing

Yamato Product Center

Increase Sales of Hybrid Systems
We will increase sales of hybrid facilities by fosteringcloser collaboration with distributors of our standard
conveyors to develop new customers and marketing
channels. We will also continue promoting sales
geared to local needs while at the same time
establishing new sales bases.
Develop New Products and Promote Services
We will develop products and provide services thatare compatible with next-generation technologies
including those related to promoting DX. And we will
do this by driving development in collaboration with
the R&D Center to improve our product development
capability and accelerate the pace of development.
In particular, we will focus on developing products
for logistics facilities that meet needs arising fromadvances in e-commerce and to enter the market
for secondary batteries that is attracting interest inconnection with the shift to EVs.

SANKI REPORT 2021

39

┃ Business Report ┃Plants & Machinery Systems Business

Machinery
Systems
Business

Major Results for Fiscal 2020

Value deliveredby SankiEngineering

Flocculation basin at the Okubo Water Purification Plant

Major Projects◦Okubo Water Purification Plant, upgrade work for the Seibusystem 1B flocculator◦Fukuoka City Western Regional Water Treatment Center, upgrade
work for sludge dewatering equipment◦Nomikawa River Water Purification Plant utilizing highly
oxygenated water, installation of water treatment equipment andother construction work
◦Tamagawa Joryu Water Reclamation Center, reconstruction workfor the reaction tanks

Expand the Business Scope of Energy Creation
In the wake of the Japanese government’s declarationof achieving carbon neutrality by 2050, we expect to see
broader application of decarbonization technologies in
the areas of water treatment, waste treatment, and otherfields that constitute the strengths of our Environmental
40

SANKI REPORT 2021

Facilitating Transfers from Domestic to International Flights◦Solution for handling peak loads due to the increase in the number of flights◦Enhanced capacity for processing baggage during the transfer fromdomestic flights to international flights

In January 2021, we completed work for a 500-meter
extension in the baggage handling line (approximately
6,000 meters) in the departure section of the South
Wing of Narita International Airport’s Terminal 1. This
was the second large-scale project for expanding the
airport’s capacity since we extended the conveyanceline by approximately 2,000 meters in 2014. The
latest project was mainly aimed at improving baggage
handling capacity during transfers from domestic tointernational flights and raising the level of satisfaction
for airline customers. To that end, we sought to meetpeak demand caused by an increased number of flights
and shorten the time taken for conveying baggage byimplementing renovation work such as adding a bypass
line and changing the conveyance route.
Specifically, we are setting up adjacent entry points◦Shortened lead times

for baggage arriving on domestic flights and baggage
departing on international flights for easier baggage
handling. We also increased the number of positions
where baggage tag readers are installed. As a result, we
cut in half thetime required
to convey
baggage fromthe entry
point to the
make-upconveyor.

Newly installed make-up conveyance system

Focus

Status of Business Operations and Future Outlook toward Achieving Phase 2
Promote and Expand the LCE Business
The 20-year operation period for the DBO project Clean
Hill Tenzan waste treatment facilities has begun, and wewill seek to maintain steady long-term management incollaboration with Sanki Kako Kensetsu Co., Ltd. At thesame time, we will collect data on waste quality and otherfactors toward achieving automated combustion control
to accumulate know-how for expanding the LCE businessin the future. We will also share our experience fromoperating the Okubo Water Purification Plant for 13 years
and seek to construct a business structure encompassing
maintenance and management operations for PFI and
DBO projects by creating a system for managing businesswhile simultaneously promoting DX to raise efficiency andproductivity.

Narita International Airport, Extending the Make-up Conveyor andEnhancing BHS Capacity in the South Wing of Terminal 1

Plants & Machinery Systems Business◦ Orders for large-scale properties grew significantly inresponse to increased needs related to the Japanese
government’s national resilience policy◦W e won an order for the Kitatama Water Reclamation CenterNo.1 Sludge Incineration Systems Construction Project, thefirst large-scale project using our binary cycle power generation
system based on a turbo-charged fluidized bed incinerator◦W e won an order for upgrading the underwater wire ropeoperated sludge collector at the Okubo Water Purification
Plant to a remodeled system with a simplified structure◦W e developed a system that uses AI to predict the moisture
content of dewatered sludge; the system began full-scale
operation at two drainage disposal plants in Japan◦ In collaboration with Sanki Kako Kensetsu Co., Ltd., we maintained
steady operations of the Clean Hill Tenzan energy recovery waste
treatment facilities, a DBO project including construction andmanagement operations we received as a bulk order◦ Sanki Engineering is participating in the development of areal-time sewage monitoring system to realize a society thatis better adapted to infectious diseases, which was selected
as a sewage-related applied research project by Japan’s
Ministry of Land, Infrastructure, Transport and Tourism

Focus

Business Report

Environmental Systems Business

Systems Business. We will seek to broaden our energy
creation business by drawing on our track record indiverse energy creation businesses based on power
generation methods such as woody biomass gasification,
waste incineration, and the use of sludge digestion gas
as fuel and by closely collaborating with the R&D Center,branches including branch offices, the Energy Solution
Center, and Group companies.
Contribute to a Decarbonized Society by Enhancing
Strategic Products
Energy saving strategic products such as the
AEROWING II ultra-fine bubble air diffuser, SANDEC
G3 decanter centrifuge, and turbo-charged fluidized
bed combustion system offer solutions that meet thedemand for upgrading infrastructure facilities required
to keep pace with societal change. They also provide
the long-term foundation for the LCE business. We will
strive to win orders for large-scale projects with a focus
on our strategic products while making continuous
improvements to deliver high value-added technologies
that contribute to realizing a decarbonized society.

Environmental
Systems
Business
Value deliveredby SankiEngineering

Contributing to Saving Energy at Two Drainage Disposal Plants in Japan

New System that Uses AI to Predict the Moisture Content of Dewatered Sludge◦Use of AI to predict moisture content of dewatered sludge◦Contribution to stable operation of sludge treatment facilities

An accurate understanding of moisture content indewatered sludge is essential for maintaining steady
operation of sewage sludge incinerators and sludgeto-fuel convertors at drainage disposal plants. SankiEngineering developed a system for predicting moisture
content using AI.
The AI-enhanced software on the system predicts
the moisture content of dewatered sludge by using
the data on the operational status of an energy saving
decanter centrifuge, including centrifuge performance,
sludge density and conveyor torque of the dehydrator.
The prediction is used for an optimal control of operating
conditions in the sludge incineration and fuel conversion
processes, allowing the stable operation of sewage
sludge incinerators and sludge-to-fuel convertors while
also realizing energy saving across the entire sludge◦Energy saving across the entire sludge
treatment facility

treatment facility. Energy saving decanter centrifuges
equipped with this system are already in operation at
two drainage disposal plants in Japan. We intend toactively develop a market for these centrifuges capableof predicting moisture content.

A decanter
centrifuge

SANKI REPORT 2021

41

┃ Business Report ┃Sanki Engineering Business Activities

Real Estate BusinessP. 44 S ustainability Management
P. 46 Environment
P. 52 Environment Feature

ESG Initiatives



P. 54 Social
P. 54 Quality Control
P. 59 Occupational Health and Safety
P. 62 Supply Chain
P. 66 Human Resources
P. 72 Local Communities

Adding Higher Value toReal Estate by Applying
Our Technologies and Expertise

Net Sales
Composition
Ratio

Net Sales for
Fiscal 2020

1%

2.3

billion yen

Net Sales (Billions of Yen)
2.2

2.3

・ Net sales and profit rose due to growth in rental income following the startof tenant operations mainly at a portfolio asset in Yamato City, Kanagawa
Prefecture (Sanki Yamato Site)・ Implemented facility renovations for portfolio assets
・ Conducted work to enable local residents to use a park in the Sanki Yamato
Site that will be jointly managed with Nippon Life Insurance Company, towhich the land is leased

1.7

2018

2019

2020

2021
Forecast

Basic Strategies for Fiscal 2021
• Effective use of portfolio assets• Maintenance and management of
portfolio assets• Raise revenues from building stockbased business by accumulating
leasing operations

42

SANKI REPORT 2021

and Investors

・ Need to improve office environments using advanced technologies such as AI
and IoT・ Growing need to conserve energy and create comfortable environments
・ Falling demand for offices due to changing work styles and spread of teleworking
・ Decline in rental fees and prolonged period of vacancies caused by massive
supply of office buildings

Major Results for Fiscal 2020

1.5

2017

Opportunities and Risks in the Business Environment

P. 75 Governance
P. 75 Corporate GovernanceP. 81 Board Chair Message
P. 84 Compliance
P. 88 Risk Management
P. 91 Dialogue with Shareholders

2.4

1.9

2016

Supporting Japan’s Antarctic Researchwith Sanki Technology(FY)

Policy and Outlook for Fiscal 2021
In fiscal 2021, we will seek sustainable development for the Real EstateBusiness by continuously applying Sanki Engineering’s technologies andexpertise to the maintenance and management of portfolio assets while further
striving to achieve operational efficiency.
We will also begin to implement measures in fiscal 2021 for establishing
the centralized management of Sanki Techno Park, including the Sanki Techno
Center and Sanki Yamato Building, and effectively using the facilities.

43┃ ESG Initiatives ┃Sustainability Management
philosophy of creating comfortable environments through engineering and widely contributing to social
development. Under the Medium-Term Management Plan “Century 2025” Phase 2 (FY2019–2021),
we disclosed our ESG policies and designated KGIs and KPIs to monitor the progress of our initiatives.
growth for the Group.

Under the system, we pursue our sustainability initiatives in each phase of our value chain while ensuringcommunication with diverse stakeholders and reflecting societal demands in our business activities.
▍Key Stakeholders of the Sanki Engineering Group

Creating a System of Sustainable
Management to Remain Our
Customers’ Company of Choice for
Many Years to Come

Customers

お客さま

Masayuki Kudo
Director, Senior Executive Officer and General Managerof the CSR Promotion Division

The CSR Promotion Division restructured its
organization in fiscal 2021 into a three-part systemcomprising the CSR Promotion Department,
Sustainability Promotion Department, and Internal
Audit Department. Sanki Engineering will begin an
extensive discussion toward formulating Phase 3,
which represents the final leg of our long-term vision“Century 2025.” As the section spearheading CSR
initiatives within the Company, we intend to fulfill
our responsibility by presenting concrete goals toformulate management strategies with a firm eyebeyond 2025 and toward achieving the SDGs by 2030
and realizing Japan’s carbon neutrality target by 2050.
In our business, we will strive to reduce CO2
emissions for the Sanki Engineering Group as a whole

Shareholders andInvestors

while also lowering the environmental impact of ourcustomers’ businesses by developing technologies
for maximum energy conservation and energy
creation and providing services, thereby contributing
to the establishment of a sustainable society. Internal
reform is also a major focus for realizing sustainable
management. We must address the labor shortage
and diversification in society by accelerating thedevelopment of our workplace environment throughefforts such as applying DX to save labor in ouroperations and promoting work style reform andgender equality. We will advance our sustainabilityrelated activities in a united effort with management
to remain our customers’ company of choice for many
years to come.

Business
Partners

Partners

Employees

Outline of
Shareholders

Nature of theRelationship

Main Responsibilities of the
Sanki Engineering Group

Building owners, realestate developers,
manufacturers,
financial and insurancecompanies, department
stores, hospitals,
schools, research
institutes, etc.

We are aware that our duty
is to meet customer needs
and do our utmost to resolve
social issues by drawing
on our diverse component
technologies related to social
infrastructure.

• Resolve issues for customers
and society at large• Provide construction andtechnical services with highadded value• Enhance customer
satisfaction in terms of
quality, delivery, and cost

Number of shareholders:approx. 14,861 (as ofMarch 31, 2021)

Gaining the understanding
and trust of shareholders
and investors is essential
for developing a sustainablebusiness, and we place astrong emphasis on disclosing
appropriate information andengaging in communication.

• Enhance corporate value• Provide a stable return ofprofits and appropriate
allocation of management
resources• Conduct timely andadequate disclosure ofcorporate information• G eneral shareholders
meeting, shareholder
newsletters•R esults briefings, oneon-one IR interviews, andresponse to inquiries• IR website, Sanki Report•S hareholder surveys

Subcontractors,
general contractors,
material/machinery
manufacturers,
building maintenancecompanies, etc.

Our business partners support
our businesses and are key
allies in achieving mutual
growth and development.
We consider it our mission
to conduct fair business
transactions and foster
relationships of trust.

• Build fair, equal, andtransparent business
relationships• Foster relationships of trustand collaboration• Ensure occupational safety
and create good working
environments• Respect human rights•D ialogue through daily
procurement activities
 ollaboration and support•Cthrough the SubcontractorGroup•C orporate Ethics Hotline

Universities, research
institutes, architecture
offices, etc.

Acquiring excellent
knowledge from externalbodies such as universities
and research institutes
is indispensable for fully
applying our component
technologies, which results incontributing to the resolutionof many social issues.

• Promote open innovation• Build equal and fairrelationships• Industry-academic
collaboration
 ialogue at the Open Lab•D

Number of employees
Consolidated: 2,548
Non-consolidated: 2,048(as of March 31, 2021)

Our employees constitutethe very foundation of ourbusiness activities. We
acknowledge that the Group
derives its competence fromthe individual abilities of its
diverse human resourcescharacterized by the Sanki
Spirit.

•E
 nsure equal opportunityand fair evaluation•C ultivate human resources,develop capabilities, andpromote diversity•E nsure occupational safety
and create good working
environments•R espect human rights• Interviews with supervisors
and training•V arious reporting andconsulting channels•L abor-Management
Council•W ebsite, intranet• In-house surveys

Areas aroundconstruction sites andoffices

Our business activities are
directly connected to the local
community. We intend todirectly address issues faced
by local communities andcontribute to the developmentof these places throughongoing dialogue as a good
corporate citizen.

•D evelop social
infrastructure•P ay due consideration to
local communities and theenvironment•D isclose information• Branch and branch officecounters• Briefings related toconstruction work
• Dialogue on contributions
to the local community

Central ministries andagencies, municipal
governments, etc.

We believe that ourpartnerships withadministrative bodies are
essential for serving society’s
needs as we take on public
works related to social
infrastructure.

•C omply with laws,
regulations, andadministrative guidance•P ay taxes•D evelop social infrastructure•C ontribute to local disasterprevention•V arious notifications•B ranch and branch officecounters•B riefings and reports related
to construction work•D
 ialogue through industry
associations

Framework for the Sustainability Promotion System
Since fiscal 2019, we have sought to develop aninternal framework for promoting ESG and SDGs
by holding cross-departmental ESG CCU meetings
once a month to share information and exchange
views among working groups. In addition, we havecontinually conducted seminars on sustainability for
all executive officers and employees. In April 2021,
we set up the Sustainability Promotion Department,
entrusted with planning and promoting ESG and SDGs,
and a management-level preparatory taskforce has

44

SANKI REPORT 2021

been meeting since July with the aim of establishinga committee that will consider sustainability-related
measures for the entire Group. Looking ahead, we
will further promote sustainability management withdue consideration to our long-term sustainability
policies, goals, and measures along with the MediumTerm Management Plan “Century 2025” Phase 3.
Reference
Corporate Ethics Committee
Page 76

Local
Communities

Governments andAdministrative
BodiesMajor Methods ofEngagement•D ialogue through sales
activities and meetings
 ebsites and showrooms•W•E xhibition at trade showsand exchange of views

SANKI REPORT 2021

Sustainability Management

Through these efforts, we seek to contribute to the creation of a sustainable society and achieve sustainable

Sanki Engineering’s Stakeholders

ESG Initiatives

In pursuing activities for achieving sustainability, the Sanki Engineering Group is guided by its management

45

S

G

Environment

SocialGovernancenvironment
Environmental Management at Sanki Engineering

Sanki Engineering Environmental Policy
Established April 1, 2015 Revised April 1, 2020

The Sanki Engineering Group recognizes environmental issues as key management issues and will actively
engage in protecting the working environment, local environment and global environment as a corporate
citizen. We have established our environmental goals and framework of action as follows.
1. We will strive to prevent environmental pollution and work further toward conserving resources and energy, reducing
industrial waste, promoting recycling, preserving biodiversity and protecting ecosystems.
2. We will actively develop proposals on resource and energy conservation when designing facilities.
3. We will comply with laws and regulations related to the environment and with external requirements agreed to by the
Sanki Engineering Group.

FY2021 Goals

Providing products and services to help reduce CO2
emissions of customers

Reducing CO2 in business activities

TargetTarget

CO2 reduction proposals in SANKI YOU EcoContribution Point System (consolidated)

CO2 emissions (actual results of our business activities)(non-consolidated)

More than 300 proposals

1% lower than in previous fiscal year

Major Action Policy and Initiatives for FY2021
Strengthen our proposal-making capabilities related
to CO2 reduction and increase proposals

Promote energy conservation in business activities

FY2020 Results
CO2 reduction proposals
in SANKI YOU Eco Contribution Point System(consolidated)

214 28,430

CO2 emissions (actual results of our business activities)(non-consolidated)

6,046

Contribution to reduction:

Orders received:

Number of proposals: 379(FY2019: 181 orders received)

t-CO₂

t-CO₂

(FY2019: 6,377 t-CO2)*(FY2019: 27,624 t-CO2)
Evaluation:

Evaluation:*Figures for FY2019 have been retroactively corrected following
a revision in the method of aggregation.

Level of progress made in FY2020 on goals set for FY2021：Target achieved：On schedule to achieve the target

46

SANKI REPORT 2021

：Fell short of achieving the target

Reference
Quality and Environmental
Management System
Page 55

Environment● Environmental Management System
Under our system for implementing environmental management, headed by thepresident, each division reports on the status of its activities, and decisions onaction plans are made during ISO Promotion Meetings and company-wide QMS
and EMS secretariat meetings.

ESG Initiatives

EE● Major Activities in Fiscal 2020
We pursue our activities by having each section set environmental goals aligned with
their respective operations. In fiscal 2020, we reinforced the functions for checking
our EMS activities as a major policy, which included reviewing internal audits andconstruction audits. No issues were reported regarding noise, dust, or odor atconstruction sites.
In May 2019, Sanki Engineering Co., Ltd. and Group company Sanki Kako
Kensetsu Co., Ltd. were found to have unlawfully altered the measured values for
two out of 31 data items required for disclosure at an incineration facility constructedby Sanki Engineering. We addressed the issue by providing an explanation at a
meeting with local residents organized by the relevant regulatory body, temporarilysuspending the ISO 9001 certification of the Environmental Systems Administration
Division at Sanki Engineering and the ISO 14001 certification of Sanki Kako Kensetsu
from September to October 2019, voluntarily suspending the use of the ISO 9001
and 14001 certifications by Sanki Engineering and Sanki Kako Kensetsu from April
to September 2020, taking disciplinary action by cutting executive compensation,organizing ethics seminars for the relevant departments, and formulating internal
auditing checklists. In March 2020, we implemented corrective work, verified theperformance of the relevant facility, and received approval from a third-party institution
and the owner of the facility. We have since maintained appropriate management forthe operation of these facilities. The Sanki Engineering Group is aware of the gravityof this incident and has sought to prevent a recurrence by continuously bolstering
its management system. This includes educating employees on compliance andenvironmental management and conducting internal audits.
● Assessment and Response to Environmental Risks and Opportunities
We use the JOB Environmental Aspects Assessment List consisting of 10 aspects
and around 60 items to identify environmental issues that are unique to eachconstruction site, bylaws governing site location, regional agreements and more.
Prior to the start of construction, we seek appropriate action by conducting anenvironmental risk assessment for each project to address differences in the type,
scope, and regulatory requirements with respect to environmental risks, dependingon the project type, such as medical institutions and commercial facilities, and thesurrounding environment, community, and nature of construction work. Given the
spread of COVID-19, it was added as an assessment item in fiscal 2020.

1.	Use of resources andenergy2.	Reduction and proper
disposal of waste● Developing Environmental Leaders
We encourage employees to acquire environment-related qualifications in responseto regulatory changes.

7. Legal compliance▍Number of Employees with Environment-Related Qualifications (as of April 1, 2021)
Qualification
Certified environmental measurer

Non-consolidated

Consolidated

8

9Supervisor of management of industrial waste subject to special control

185

203

Pollution prevention manager (cumulative total)

75

104

Environmental Aspects Assessed
under the JOB Environmental
Aspects Assessment List

3.	Abnormal situations andoutflow of contaminants
4.	Consideration for areas
surrounding construction
sites
5.	Consideration for uniqueenvironmental needs
6.	Natural disasters
8. Other local bylaws
9.	Temporary materials andequipment, and office andother supplies
10. Other aspects

SANKI REPORT 2021

47

675.5

624.5

610.5

Environment

SocialGovernance▍Proposals for CO2 Reduction and Outcomes
FY2017

Trans-Heat Container for delivering
thermal energy

Environment▍R&D Expenditures Related to Environmental Preservation

G

that contributes to decarbonization and solving social issues to proactively offer
energy-saving proposals and promote our global environmental preservation
activities.

The Risk Management Committee continuously monitors the impact of climatechange on the Sanki Engineering Group in an effort to prevent and minimize
any risks. Looking ahead, we will analyze and assess the magnitude of the
impact of each risk and opportunity presented by climate change.
● Contributing through Our Business Activities (Products and Services)
The Sanki Engineering Group seeks to help customers save and generateenergy to reduce CO2 emissions and cut lifecycle costs through its businessactivities by enhancing the functionality and comfort offered by thetechnologies and products of each of its businesses. In our LCE business,
we seek to reduce environmental impact across the entire product lifecycle,
from planning and design in facilities construction to operational maintenanceafter completion and also renovation. This assists in shifting to a decarbonized,
zero-waste society as well as environmental preservation. Our MediumTerm Management Plan designates numerical targets for the number of
CO2 reduction proposals we present customers. We will continue to expand
business contributions to save and create energy, such as biomass power
generation plants, and pursue resource circulation through wastewater
treatment facilities and waste treatment facilities.

S

ESG Initiatives

Response to Climate Change

E(CO2 Reduction Unit: t-CO2)

FY2018FY2019FY2020

NumbersCO2
reduction

NumbersCO2
reduction

NumbersCO2
reduction

NumbersCO2
reduction

Consolidated

353

47,905411

50,072405

45,685379

68,810Non-consolidated

321

46,143370

45,531377

44,756352

68,243

Consolidated

166

16,949183

20,699181

27,624

214

28,430Non-consolidated

157

16,599163

16,608163

27,221200

28,296

Proposal

Orders received

The logo of the SANKI YOU EcoContribution Point System expresses
our aspiration to contribute to social
development and create harmony with
the natural environment.
ECO2: We reduce CO 2 emissions throughour Contribution to ecology▍SANKI YOU Eco Contribution Point System

Customers
Woody biomass gasification plant ropose
1. P
energysaving
solutions

Propose using energy-saving
equipment to reduce CO2 emissions

2.	Proposal
adoptedSanki Engineering(Millions of Yen)

647.7

3.	Convert each tonne of
reduced CO2 to 100 yen

424.8

4.	Donate to environmental
conservation groups

Environmental
conservation activity

2016

2017

2018

2019

2020

（FY）

● Registered ZEB Planner

Sanki Engineering is a registered ZEB Planner, which seeks to promote thewidespread introduction of ZEBs* introduced by Japan’s Agency for Natural
Resources and Energy, under the Ministry of Economy, Trade and Industry.
As a ZEB Planner, we act as the contact point for customers planning to adopt
ZEB in construction projects and play our part in developing a decarbonizedsociety by supporting ZEB planning.
● SANKI YOU Eco Contribution Point System

The Sanki Engineering Group’s SANKI YOU Eco Contribution Point System
contributes, along with our partners, to preventing global warming and realizing
a sustainable society. Under the system, when we propose an energysaving solution that reduces CO2 emissions to a customer and that proposal
is adopted, the amount of the achieved emissions reduction is converted
to Eco Contribution Points (100 yen per tonne), which are used to subsidize
environmental conservation activities. In fiscal 2020, customers adopted 214 ofour proposals, resulting in donations of 2,843,000 yen (equivalent to a 28,430
t-CO2 reduction), raising the overall total of donations since the start of the
program in fiscal 2010 to more than 20,000,000yen, with approximately 18,000
trees planted, equivalent to an area of 5 hectares. We will leverage this system

48

SANKI REPORT 2021

● Activities Commemorating the Tenth Anniversary of the SANKI YOU Eco*Net-Zero Energy Buildings maintaincomfortable environments while reducing
annual energy consumption to as close
to zero as possible by enhancing energy
saving performance using solar power
generation and other measures.

Contribution Point System
To express our gratitude to the many customers who have supported the SANKI
YOU Eco Contribution Point System over the years, we carried out Kansha-noMori forestation activities to commemorate the system’s tenth anniversary. In
fiscal 2020, we made donations to four organizations to support environmental
preservation activities for creating forests (tree-planting projects).
▍Donation History for Tree-Planting Projects (FY2020)
Recipient

Project

Donation

Silva Association

Planting trees in a forest surrounding Shonan
Village (Yokosuka City, Kanagawa Prefecture)

952,600 yen

Shinwa Gakuen

Planting trees in a forest surrounding Shonan
Village (Yokosuka City, Kanagawa Prefecture)

940,000 yen

NPO Mori wa Umi no Koibito

Planting trees in the Hikobae Forest on
Mt. Yagoshi (Ichinoseki City, Iwate Prefecture)

670,000 yen

NPO Environmental Relations

Kansha-no-Mori forestation under the SANKI
YOU Eco Contribution Point System (Kai City,
Yamanashi Prefecture)

1,500,000 yen

SANKI REPORT 202149

6,046 t-CO

3,743 t-CO2

2

Energy Saving Systems Installedat Group Facilities● Initiatives for Energy Conservation• Energy Conservation Activities
In fiscal 2020, energy consumption was 1,943 kl, and CO2 emissions
generated by energy use was 3,344 t-CO2 at the head office and other offices.
As a major initiative for fiscal 2020, we sought to effectively operate thefacilities at the Sanki Techno Center while limiting power consumption byimplementing telework to promote our energy saving activities. We also strive
to reduce energy use at the Sanki Techno Center and Yamato Product Centerby incorporating several energy-saving systems, including those that apply our
proprietary technologies.
▍Energy Consumed by the Head Office and other Offices(Crude Oil Equivalent)*

1,800
104

1,696
115

2016

1,581

2017

•E
 coSearcher®, a real-time heatsource optimization system(proprietary technology)• selFort®, a smart HVAC
system for offices (proprietary
technology)

2,133
107

2,163
121

3,589
212

2,047
104

• Periloop, a thermal stratification
HVAC system (proprietary
technology)• Solar photovoltaic panels

3,281
221

2,026

2018

2,042

2019

3,060

4,012
199

■ Discharge by Group companies (t)■ Discharge by Sanki Engineering Co., Ltd. (t)

20000
20mm

98.7

98.0

17,9642,060

17,025

（FY）

2016

2017

• Initiatives at Construction Sites
We strive to limit CO2 emissions generated by our business activities bycompiling and managing the emissions discharged at construction sites where
Sanki Engineering is the prime contractor.
▍CO2 Emissions at Construction Sites (Derived by Energy Consumption)*

3,813

2018

15,904

213

3,606

2019

16,022

2016

50

SANKI REPORT 2021

2017

Explanation for handling CFC during HVAC
inspections

2017

18,482
1,971

97.2

96.6

17,321986

18,0291,377

16,335

16,511

20182019

Poster: “How to handle mercury-lacedindustrial waste”

16,6522020*Target rate: 90% or higher

（FY）

3,523
179
3,344

2020

（FY）

*Figures for FY2019 have been
retroactively corrected following arevision in the method of aggregation.

● Introduction of a Digital Manifest
With the aim of ensuring the proper disposal of industrial waste, in fiscal
2018, we completed a system for introducing digital manifests, which is now
available to all departments. The rate of introduction of digital manifests to thetotal number of manifests issued was 98.1% against the target of 100.0% on
a non-consolidated basis in fiscal 2020. To comply with regulatory revisions
obligating the use of digital manifests, we will continue to reinforce our system
for accurately monitoring the status of disposal and recommend that business
partners who have yet to connect to the digital manifest system do so.
▍ Rate of Introduction of Digital Manifests (Non-consolidated)(Unit: %)(Unit: t-CO2)

746
525

Governance

Recycling rate* for Sanki Engineering Co., Ltd. (%)

97.8

1,003

2016
3,819

1,943

2020

Social▍Waste Discharged at Sites where Sanki Engineering is the Prime Contractor and at the
Sanki Techno Center

Product Center◦ Yamato■ Group companies (t-CO2)■ Sanki Engineering Co., Ltd. (t-CO2 )

3,377
1,696

Techno Center◦ Sanki▍C O2 Emissions Generated by Energy Consumption at the Head
Office and other Offices*■ Group companies (kl)■ Sanki Engineering Co., Ltd. (kl)Environment

Environment*Scope of data: head office, other offices,and construction sites

Offices*
Total EmissionsG

ESG Initiatives● Current State of Industrial Waste
With respect to industrial waste discharged at our construction sites, we seek
to understand the current status by compiling data on waste discharged at sites
where Sanki Engineering is the prime contractor.
We have maintained the recycling rate for industrial waste, excluding
waste disposed at final landfill sites, at high levels above 90%, and the rate
was 96.6% in fiscal 2020. We will continue to promote proper disposal bymonitoring and analyzing the discharge of industrial waste. In fiscal 2020, thewaste disposal cost for construction sites was 495,768,000 yen. Furthermore,
we have been properly disposing waste CFC and halons, the cost of which was
46,606,000 yen in fiscal 2020. In addition, following the revision of the Waste
Management and Public Cleansing Act, we created and distributed posters
to disseminate the revisions in storage and disposal procedures for waste
containing mercury. We also prepared a flow chart for the proper disposal ofasbestos in order to address needs arising from an increase in renovation work.

▍CO2 Emissions from Sanki Engineering’s Business Activities in FY2020(Derived by Energy Consumption)

2,303 t-CO2

S

Proper Disposal of Waste● Initiatives in Our Business Activities
Sanki Engineering seeks to reduce its CO2 emissions by compiling andmanaging emissions generated by its own business activities. We set
numerical targets for CO2 emission reductions in the Medium-Term
Management Plan. We will also begin consideration toward disclosing Scope 3
data and formulating a medium- to long-term vision on CO2 emissions.

Real Estate Leasing

E

465

411

399

2018

2019

2020

68.5

67.9

2015

2016

88.4

91.4

96.0

98.1

2017

2018

2019

2020

47.2

（FY）

2014

（FY）

SANKI REPORT 2021

51

Environment Feature

Contributing to Upgrading the Wastewater Processing
Facility and Constructing the Basic Observation Building
ESG Initiatives

Contributing Human Resources andTechnologies to a Research Project Focusedon the Future of the Global Environment

Once the four-year Showa Base Cleanup Project for bringing
back accumulated waste to Japan was launched in 2005,
Sanki Engineering staff occasionally performed tasks in areas■ History of Activities by Expedition Members Dispatched by
Sanki Engineering

outside their expertise, such as operating heavy machinery.
Meanwhile, the biggest challenge in the 2010s was upgradingfrom delivering the necessary materials to the full-scale rollout, and this important mission was accomplished by a series

Sanki Engineering has dispatched 16 employees to Japan’s Antarctic
research project, starting with the 33rd Antarctic Research Expeditionin 1991 to the 62nd expedition in 2020. Understanding the Antarctic
helps to decipher the future of the Earth and humankind, which isessential for creating a sustainable future. The technologicalcapabilities fostered through our business is being put
toward supporting the research project under theextreme environmentof Antarctica.

of staff dispatched by Sanki Engineering, who passed on their
passion to the next members.
Sanki Engineering selects its Antarctic expedition
members by seeking applications from employees. At first, theIt took three years to construct the Basic Observation

opportunity to work in Antarctica was only open to employees

Building, which was completed in November 2019.

Environment Feature

1957 (2nd): Delivered roller conveyors for the second expedition.
1991 (33rd): F irst Sanki Engineering employee participated in the wintering
party of the 33rd expedition.
2011 (53rd): Began construction of a new wastewater treatment facility.
2014 (56th): Rollout of the new wastewater treatment facility.
2018 (60th): Began construction of the Basic Observation Building.
2019 (61st): Completed construction of the Basic Observation Building.
2020 (62nd): Maintaining and managing major buildings of the Showa Base.

the antiquated wastewater treatment facility. It took five years

Environment

南極

Supporting Japan’s Antarctic
Research with
Sanki Technology

As of October 2021, two of our employees areof the Environmental Systems Business who were water
treatment and waste treatment engineers. However, a project

seconded to the National Institute for Polar Research. One

for constructing the new Basic Observation Building at theis currently stationed at the Showa Base as a member ofShowa Base emerged in the late 2010s, which required

the wintering party of the 62nd expedition, and anotherconstructing an HVAC and plumbing facility, thus creating an

is scheduled to depart with the 63rd expedition team in

opening for employees of the Facility Construction Business.

November. While their role is to undertake construction
operations to support members conducting the actual

Environmental Conservation Operations of the Showa Baseobservations, their work is indispensable for maintaining

Sanki Engineering’s connection to Antarctica goesseconding an engineer to the National Institute forback to 1957, when we delivered 30 roller conveyors

Polar Research.

for the second expedition to carry materials to the

The expedition comprises experts from a broad

newly opened Showa Base. Time went by, and amid

range of areas, and Sanki Engineering’s engineers

growing public awareness of environmental issues,

are mainly responsible for environmental

the Protocol on Environmental Protection to theconservation. It was normal then for most waste

Antarctic Treaty was added in 1991 to the Antarctic

to be either burned outside the base or left nearby.

Treaty System, which stipulates that Antarctica

There was a clear need to establish a process forshall be used exclusively for peaceful purposes.

sorting and disposing of the waste generated

This generated momentum for fostering experts inby daily life and research activities. And today,

environmental technology at the Japanese Antarctic

maintenance and management of the waterbase. In this context, Sanki Engineering dispatchedtreatment and HVAC facilities have become vital

staff for the first time to the 33rd expedition by

work that cannot be performed by anyone else.

Japanese Antarctic Research Expedition (JARE)
JARE is a national project for understanding the environmental changes in the Antarctic
region and Earth system. The first expedition was launched in 1956 and led by the JARE
headquarters under the Minister of Education, Culture, Sports, Science, and Technology.
The National Institute for Polar Research bears responsibility as the core organization
for planning and implementing observation plans, organizing the expedition team andmanaging base facilities. The expedition is divided into a summering party that conducts
research from December to February and a wintering party that stays throughout the year.
Members of the expedition must be experts in their respective areas, since observations
are conducted while living at the Showa Base by a limited number of people.

the research expedition itself. Sanki Engineering
will continue to contribute its human resources andtechnologies to this research project that has its sights on
the future of the global environment.

Memories
AkihitoUmezawa

33rd
WinteringParty

In retrospect, it was possible for me to become the first employee
to tackle the waste issue of the Showa Base as a representativeof the Company, despite being only a fourth-year employee atthat time because I was fearless. Through a chance connection
from my university days, I was able to participate in the Antarctic
research expedition.
In fact, the peculiarity of the Antarctic environment was
beyond my imagination, and it seemed to defy simple solutions.
Even so, having participated as an engineer while trying to fulfill
my assigned role, I was able to learn the process of decisionmaking, execution, and verification in relation to the essence ofengineering. I feel that Sanki Engineering’s continued involvementin the Antarctic research expedition has become part of its
corporate culture and a key asset.

61stWintering
Party

YusukeMuramoto

I was able to take part in the Antarctic research expedition as a
Sanki Engineering employee thanks to the constant challenges
met by Mr. Umezawa and others that came before me. As amember of the 61st wintering party involved in activities at theShowa Base, I mainly worked outdoors during the summer thatthe sun does not set. During the winter, work mainly consistedof indoor facility management, and I kept busy by dealing withmalfunctions and other issues. I will never forget setting footon Antarctica and experiencing a world covered in ice. The
Antarctic expedition is responsible for many missions, so thelimited number of team members must handle tasks outside theirrespective areas of expertise. In the midst of this environment,
I realized that I had to constantly challenge myself, even if I did
not know how I could make it, by taking action and figuring out
solutions along the way.

Photo credit:
National Institute of Polar Research

52

SANKI REPORT 2021

SANKI REPORT 2021

53

S

G

Environment

SocialGovernanceocial
Initiatives to Ensure Quality

Quality Control

FY2021 Goals▍Framework for Promoting the Quality and Environmental Management System
Top Management (President)

Reduce the number of problems and complaints
during construction

Introduce new labor-saving construction technology

TargetTargetReduction rate for number of problems and complaints
during construction (consolidated)

Number of sites introducing new labor-saving
construction technologies

Reduce by 5% year-on-year through divisional collaboration

ISO Promotion Conference

Reports on Company-wide activities
and decisions on plans
Held in September 2020

Approves annual policy
on QMS and EMS

General Manager of the Quality and Environmental Management Office
Company-wide QMS and EMS Office
Conference

Two sites per year

Held in February 2021

Eachdivision

Major Action Policy and Initiatives for FY2021

Management Meeting◦ ISO9001

2 companies:
Sanki Engineering Co., Ltd.
Sanki Kankyo Service Co., Ltd.

◦ ISO14001

3 companies:
Sanki Engineering Co., Ltd.
Sanki Kako Kensetsu Co., Ltd.
Sanki Kankyo Service Co., Ltd.

Quality Control

We will raise customer satisfaction and deliver new value for society by fully demonstrating the SankiEngineering Group’s comprehensive capabilities and proposal-making capabilities to provide products andhigh-quality systems that meet customer needs in each business area.

Group Companies with ISO
Certification

SocialBasic Principle● Philosophy on Quality and the Quality Management System
Since April 2017, we have been operating an integrated quality management
system based on the ISO 9001 (QMS) and ISO 14001 (EMS) standards.
In fiscal 2020, we held discussions on revising the quality management
procedures for the Facilities Construction Business toward improving
construction quality during the Company-wide QMS and EMS Office
Conference. In fiscal 2019, the quality management of a Sanki EngineeringGroup project was found to be out of compliance. This resulted in thetemporary suspension of ISO 9001 certification at the relevant division andof ISO 14001 certification at the relevant Group company. In response to theincident, Sanki Engineering voluntarily suspended the use of its ISO 9001 andISO 14001 certifications for six months from April 2020. We have taken further
action to ensure the stringent execution of our quality management system. In
fiscal 2020, we also implemented initiatives accompanying the expansion andrelocation of divisions covered by the ISO certification.

ESG Initiatives

S

E

Our Response to ISO 9001 andISO 14001 Noncompliance(FY2019)◦ Voluntary suspension of
ISO 9001 and ISO 14001
certifications◦ Penalty for directors(reduced compensation)◦ C onducted ethics seminars
for relevant divisions

Reference
Major Activities in Fiscal 2020
(Environment Section)
Page 47

Company-wide QMS and EMS Office(Labor Safety, Health, Quality Management& Environment Promotion Office)Divisional Managers (heads of sections, general managers of the headquarters,
general managers of research centers, heads of business divisions, presidents ofbranches and branch offices)
Divisional Management Review

Conduct training and seminars toward preventing
problems and complaints

Encourage employee proposals for labor-saving ideas in
the construction process

Reports on divisional activities andformulation of plans (twice per year)

Quality and Environmental Management Officer
Divisional QMS and EMS Office

Sales, Design, Production, Construction and Office Duties

ISO 9001 Scope of Accreditation

https://www.sanki.co.jp/en/csr/social/quality/

FY2020 Results● Quality Management Activities
Reduction rate for number of problems andcomplaints during construction (consolidated)

Down

30

% from FY2019(FY2019: down 31.6% from FY2018)
Evaluation:

Level of progress made in FY2020 on goals set for FY2021：Target achieved：On schedule to achieve the target

54

SANKI REPORT 2021

Number of sites introducing new labor-saving
construction technologies

6

sites

(FY2019: 11 sites)
Evaluation:：Fell short of achieving the target

We advance construction quality with an emphasis on improving
communication. Enhancing our support for construction sites and offering
rapid, constructive responses to problems and complaints are areas in which
we consistently seek to raise our standards.
● Understanding Customer Satisfaction and Reflecting Feedback
In our work to improve construction quality, we conduct a customer
satisfaction survey at the completion of construction work and reflect the
feedback in our operations. In fiscal 2019, we received highly positive feedback
from about 90%* of the 795 respondents. Looking ahead, we will continue
to incorporate customer opinions into our operations to enhance construction
quality.

*Calculated by regarding the following
options in responses deemed as “highly
positive feedback.”
Facilities Construction Business: score of
4 (“Somewhat satisfied”) or higher out of
5; Plants & Machinery Systems Business:score of 3 out of 3 (“High”); Environmental
Systems Business: score of 70 points or
higher out of 100

SANKI REPORT 2021

55

休日工事明け、電話等の復旧忘れにより、トラブルが発生するケースが多発しています。

Upon receiving orders
Design Review

Governance

Quality Risk Assessment

A poster for raising awareness of
preventing problems and complaints iscreated each month and displayed atworksites.

Conducted by the Quality Risk
Subcommittee of the Risk Management
Committee. Divisions related to technology
and the Quality Control Center set thetargets, identify and address quality risks.

At the start of construction

During construction

Commencement discussions
Conducted by divisions related totechnology, onsite managers, divisions
related to branches and branch offices, andthe Quality Control Center. Check aspects
concerning quality, construction work, costs,
processes and safety and identify items
requiring changes in specifications, and planand instruct concrete measures, as wellas consider design changes. Decide on aconstruction method (procedures).

Construction audits
Confirmation of construction work, including
design changes, is led by divisions related
to technology, onsite managers, divisions
related to branches including branch offices,and the Quality Control Center.
Completion audits
Check whether quality targets are being
achieved, as well as instructions forcorrections as needed.

Initiatives for Improving Quality by Promoting DX

Reference
Feature 2
Promoting the Smile Project
Page 28

Quality Control

Reviews led by the Design Division’s Design
Center and Quality Control Center Design
to scrutinize construction operations fromthe aspects of cost and quality. Increase
accuracy of design drawings.

We hope to raise the level of construction quality by promoting DX, such as ICT
and BIM.
We established the BIM Promotion Center in April 2019 to launch our
initiative for medium- to long-term use of BIM from the perspectives of making
design drawings more precise and setting optimal construction periods. From
here on, we will implement in-house education for promoting the use of BIM.
In R&D, we will develop digital tools for design, construction and acceptanceinspections in our drive to improve construction quality and promote work
style reform by saving the labor required in construction work and alleviating
the burden of management operations.
We also set up the DX Promotion Section in April 2021 to apply DX to
operations across the Company, including construction sites, while also
creating a comfortable workplace environment.

Digital Tools Developed by the
Sanki Engineering Group◦ Automated robotic air flow
meter
Automatic measurement of air
flow from air conditioner vents.
Expected to reduce man-hours
by 75% compared to theconventionally used process.

Air-flowmeasurement
by anautomated
robot

Enhancing Our Technologies● Technical Awards for Improving Construction Methods and Operational

Processes
We began presenting awards in fiscal 2017 for excellent ideas that improve
operational processes, such as raising efficiency, in addition to ideas that
improve construction work. In fiscal 2020, we received 2,040 applications.
● Fostering Human Resources to Sustain Our Technological Level

The Sanki Techno Center fosters human resources by helping employees
acquire basic skills, brush up on skills, and attain qualifications. Due to the
spread of COVID-19, in fiscal 2020 we conducted new employee training
online for 2.5 months, including basic skills training and safety training.
We also conduct training for construction managers every three years, andthe content is based on number of years of experience (not implemented infiscal 2020 due to COVID-19). As for the skills of our engineers, we develop
them through hands-on practice and drills using actual machinery and facilities
at the Sanki Techno Center.
Quality check by a quality assurance
administrator

SANKI REPORT 2021

Social▍Initiatives on Design and Technical Operations at Construction Sites● Initiatives for Design and Technical Operations
We are working on improving quality throughout the construction process fromplanning and design to completion. In design, we identify and resolve issues at
an early stage by enhancing design reviews of design drawings, regardless ofwhether they are Sanki Engineering’s drawings or those of other companies.
In technological management, we are facilitating onsite operations after thestart of construction work by holding commencement discussions to decideon construction methods, procedures and policies that result in higher quality.
Moreover, we avoid falsifications and deficiencies in quality across allprocesses by having line staff and the Quality Control Center conduct stringent
checks and follow-ups. We will continue to improve quality and hand down
technical expertise by having highly skilled quality assurance administratorsand technical experts conduct audits during and after construction, implement
quality checks and corrections, and mentor junior employees.

56

Environment

復旧忘れにご用心！！

Initiatives to Ensure Quality at Construction Sites● Improving Productivity and Maintaining High Quality
Sanki Engineering implements the Smile Site Plan, which creates a rewarding
workplace to maintain high quality while satisfying both customers and theCompany by reducing workloads at construction sites and creating effective
working environments where staff can focus on their jobs.
Under the Smile Site Plan, we are leveling operations by establishing an
operational support system for the processes of sales, design, procurement,
construction management and quality management to improve productivity
while maintaining high quality. We are simultaneously improving productivity
and maintaining high quality with a particular focus on preventing rework,
problems and complaints by verifying design and having pre-construction
reviews before the work is started to avoid quality risks.

G

SocialComplaints
We accumulate and share our quality-related experiences across the Company
by means of technical documents in order to prevent the occurrence ofincidents and complaints related to quality or, in the event they do occur,
to handle them quickly and effectively. Information about problems andcomplaints are distributed to construction engineers through a flash bulletin,
weekly bulletin (a weekly meeting of the Problems and Complaints Evaluation
Committee, which is also attended by Group companies), and monthly bulletin,
which not only reports the occurrence of issues but also discusses theircauses, corrective measures, and preventive measures. In addition to efforts
to share information, quality risk assessments are conducted by the Quality
Risk Subcommittee set up under the Risk Management Committee. We are
striving to prevent problems and complaints by identifying risks that may affectquality and quickly taking action.
We have been seeking to reduce the number of problems and complaints
by setting qualitative targets and in fiscal 2020 reduced them by 30% (down
20 cases) year-on-year thanks to various measures related to providing onsite
support. Looking ahead, we will bolster our measures to raise customer
satisfaction.

S

ESG Initiatives● Sharing Information and Preventing the Occurrence of Problems andE

Training for new employees

SANKI REPORT 2021

57

E

S

G

Environment

SocialGovernance

FY2020Qualification

Non-consolidated

Consolidated

106

93

103

1,142

1,327

1,132

1,324

40

45

39

45

Architect
Facilities construction architect

215

227

205

215

Electrical engineers

158

228

160

229

Chief electrical engineers

27

37

27

38

First class instrument engineers

298

309

302

312

Fire protection engineers

685

762

688

767

1,666

1,924

1,655

1,939

Qualified managing engineers

Occupational Health and Safety Policy and Structure

Note: Cumulative figures are shown for all
qualifications.

The Sanki Engineering Group was one of the first in the construction facilities industry to introduce an occupational
health and safety management system (Sanki OHSMS) in 2001 and has since engaged in activities in partnership with
subcontractors. Under the Sanki Engineering Group Basic Health and Safety Principles, we formulate a Companywide healthand safety activities plan based on the Safety Guidelines for each year. Also, we seek to visualize our PDCA cycles, including
the analysis of risk factors and implementation of remedial and preventive actions.

Occupational Health and Safety

Consolidated

98

SocialConstruction managing engineers (civil works/
construction/electrical construction/pipe-laying
works)

Occupational Healthand Safety

FY2021

Non-consolidated

Professional engineers

ocial
ESG Initiatives▍Number of Personnel with Quality-Related Qualifications (Totals as of April 1 for EachFiscal Year)S

Basic Health and Safety Principles

https://www.sanki.co.jp/en/csr/social/safety/▍Major Skill Development Activities for Fiscal 2020
Initiatives

Initiatives at the
Sanki Techno
CenterInitiatives forpassing ontechnology

Initiatives
for Groupcompanies andsubcontractors

Training

Details of Training

Results

Training for new
employees◦Seminar for new employees , basic
skills training

60 participants

Correspondence
course forattaining
qualifications◦Exam preparation for employees whowant to be construction managing
engineers and fire protection engineers

78 participants

On-the-job
training bytechnical experts◦Practical on-the-job training offeredby technical experts selected fromall branches who participate in onsite
commencement discussions andconstruction audits

19 technical experts
1,044 site visits(cumulative total)

Conferenceon electricalconstruction
quality for all
branches◦Test of practical skills for electrical
technicians from subcontractors of all
branches, written exam based on pastcases. Participants receive the internallycertified qualification, Sanki Engineeringcertified Class A Electrical Engineer

Explanation ofproblems andcomplaints◦Introduce cases at briefings and liaison
meetings held at branches and branch
offices

FY2021 Goals

16 subcontractors
17 participating
technicians

Number of sessions
Tokyo branch: 6
Kansai branch: 25
Chubu branch: 11
Kyushu branch office: 22
Hokkaido branch office: 2
Chugoku branch office: 3
Hokuriku branch office: 15

Reduce the number of accidents

Implement the Accident Prevention
Measures for Subcontractors

Continuation of the Health and
Safety Training

TargetTargetTargetReduce by 20% year-on-year
through cooperation among
divisions (Sanki Engineering
Co., Ltd. and business partners)

Visits to subcontractors
Ratio of accidents involving
inexperienced workers

Promote health and safety
training sessions for employees
and subcontractors

Major Action Policy and Initiatives for FY2021
19th conference on electrical construction
quality

Preventive measures and training
for reducing accidents

Measures for preventing accidents
involving inexperienced workers

Continuation of the Health and
Safety Training

Collaborating in the Industry through Open Technology
To the Aluminum Plumbing Equipment Association (APEA) we provided
construction instructions for the Aluminger®* aluminum refrigerant piping
method we developed. By promoting the adoption of our method, which
reduces labor by 25% compared to conventional methods, we are contributing
to standardizing environmentally sound technology across the entire industry.
Moreover, we support the cause of the “IP Open Access Declaration
against COVID-19,” launched at the initiative of companies and universities
to prevent the spread of the novel coronavirus, and participate in this initiative
to play our role in ending the pandemic. We are contributing nine proprietary
technologies deemed useful for preventing infections, such as our clean room
units, which have been installed in medical and research facilities.

58

SANKI REPORT 2021

*A new construction method whereby
lightweight aluminum pipes are usedinstead of copper pipes, and they areconnected with specialized tools to savelabor.

FY2020 Results
Number of accidents: (Sanki Engineering
Co., Ltd. and business partners)

3

cases

(FY2019: 11 cases)
Evaluation:

Ratio of accidents: involving inexperienced
workers:37%(FY2019: 41%)
Evaluation:

Promote training and guidance on topics
such as the use of ICT
Health and Safety
Training for
employees andsubcontractors

201

sessions(FY2019: 227 sessions)

Evaluation:

Level of progress made in FY2020 on goals set for FY2021：Achieved：On schedule to achieve the target：Behind schedule to meet the target

SANKI REPORT 2021

59

Health and Safety Environment of the Construction Industry

2. Enhance partnerships• Bolster collaboration with subcontractors• Exchanging disaster information among Group companies• Bolster site-support system
3. Provide education for raising reliability• E ducation targeting younger (up to five-year) employees and midcareer (ten-year) employees based on training for foremen and safety
managers for bolstering leadership skills.
• Provide health and safety education for employees of subcontractors

SANKI REPORT 2021

(112)

In-house health and safety training

187

(－)

811

(739)

2,618

(1,856)● Accidents in Fiscal 2020
In 2020, 11 accidents occurred (3 lost workday accidents, 8 with no lost
workdays), decreasing in number as well as severity compared with 2019.
According to our analysis, this was the result of practices taking root among
employees such as pointing and calling as well as safety checks before
starting work. Meanwhile, most of the accidents involved shortcomings inwork procedures, which will require a continuous effort to promote thoroughcompliance with the rules and raise the level of our activities by sharing
information.

● Frequency rate for Sanki Engineering● Average frequency rate for the general construction industry*3◆ Severity rate for Sanki Engineering◆ Average severity rate for the general construction industry*3

2. Initiatives for mental health

Period: The data compilation period
was changed from the calendar year to
the fiscal year starting with fiscal 2020
results.
*1 F
 requency rate: calculated as thenumber of deaths and injuries causedby accidents in the construction site
per one million working hours; thisfigure indicates the frequency with

0.69
0.64
0.11

0.86
0.81
0.18

1.30

1.69
1.11

0.30

0.29

7

8

2016

2017

0.00
1

0.24
0.03

2018

0.03
11
2019 (Year)

which accidents occur.
*2 S everity rate: calculated as the numberof lost workdays caused by accidents
in the construction site per one
thousand working hours; this figure

0.44

0.10
0.02

3
2020

*Limited to training by in-house
instructors, not including training at
designated educational institutions

Number of accidents: interrupted work for
one day or longer■ Number of accidents

1.09

Online health and safety training

Scope: Sanki Engineering construction
sites (Sanki Engineering Co., Ltd. andbusiness partners)▍Number of Accidents, Frequency Rate*1 , and Severity Rate*2

0.03● Safety and Quality Conventions and Safety Patrols

60

Instructional video on preventing falls to be viewed
before using full harness-type equipment

Occupational Health and Safety

Accident Case Studies 2020

Every year in June, the preparatory month for National Safety Week, SankiEngineering holds safety and quality conventions at each branch, branch officeand division at 11 domestic sites and 2 overseas sites. In fiscal 2020, theconvention was held online due to the spread of COVID-19 and attended by thepresident and the Central Safety and Health Committee Chairperson. We also
conduct special joint safety patrols, during which the president and directors tour
23 construction sites in the summer and before and after year-end.

134

Total

Let’s convey our safety culture. Each one of us is responsible for detecting hazards—Ensuring health and safety is the first step in building trust

Health 1. Initiatives for health management

Governance1,486 (1,005)

Health and safety training for foremen

Other client-focused training

Outline of Activities in Fiscal 2020: Policy of the Central Safety and Health Committee Chairperson

Key Actions
Safety 1. Prevent accidents associated with repetitious tasks• Continuous implementation of SC30 measures• Disseminate information tools for managers and workers• E stablish rules on the use of scaffolding materials and educate
employees• Implement systematic patrols•O rganize Joint Nationwide Disaster Liaison Meetings (provisional
name)SocialNumber of Participants (from Subcontractors)

Special education and other courses

Initiatives in Fiscal 2020

SloganEnvironment▍Number of Participants in Health and Safety Training (Fiscal 2020)*
Type● Key Items Implemented in Fiscal 2020
In fiscal 2020, there were fewer accidents than in previous years. As in theprevious fiscal year, however, there were occurrences of falls or tumbles andtraffic accidents, which have been occurring with greater frequency every year.
We are seeing an increase in accidents during commuting or work breaks aswell, and while experienced workers in their 40s accounted for about 35% of
all accidents, there was a decline in the proportion of workers with five yearsof experience or less. To reduce accidents, we sought to educate employees
in fiscal 2020 by publishing a new compilation of accident case studies anddisseminating an instructional video on safety and a health handbook.

G

SocialGiven the continuing concerns about the COVID-19 pandemic situation, which could
become worse, the construction industry is facing the need to carry over efforts from2020 to reinforce strict adherence to measures for preventing infections at construction
sites. The industry must also respond to persistent issues such as securing engineers
and skilled workers, raising operational efficiency and productivity, reducing the risks ofindustrial accidents caused by the labor shortage and a decline in experienced workers,
as well as addressing work style reforms including long working hours and mental
health. From here on, an influx of workers from other industries is expected due tohigher unemployment caused by the economic downturn and the protracted period ofself-imposed business suspensions. It is therefore important to reinforce health andsafety management addressing new workers, including those who are elderly.

S

ESG Initiatives● Health and Safety Training
For our own Group employees and for staff employed by subcontractors, SankiEngineering provides training led by in-house instructors or at designated training
institutes. Specifically, for newcomers to the construction site, we distribute healthand safety handbooks and organize joint training sessions with the Sanki Healthand Safety Cooperative Association. In fiscal 2020, we introduced health andsafety training according to the skills of individual employees on a trial basis anddeveloped a foundation from which to expand the position-based program acrossJapan. As in the previous year, we focused on conducting special training sessions
using full harness-type equipment with the aim of preventing falls, in view ofregulatory revisions. Due to the spread of COVID-19, we shifted most of thesetraining sessions online to effectively implement health and safety education.

E

(FY)

indicates the severity of the accidents.
*3 S ource: Survey on Industrial Accidents,
Ministry of Health, Labor and Welfare

Action Policies for Fiscal 2021

Safety patrol by the president

In view of the latest developments in society and industry, contribution to the
SDGs and ESG, and the types of accidents that occurred in 2020, we are focusing
on the following key action areas for safety in fiscal 2021: (1) Prevent accidents
associated with repetitious tasks, (2) Develop sustainable partnerships, and (3)Provide education for raising reliability based on the new methodology.

SANKI REPORT 2021

61

G

Environment

SocialGovernance

ocial
Building Fair, Equal and Transparent Business Relationships

Supply Chain● Overview of Procurement

The procurement cost of materials and equipment used by Sanki Engineering
for construction work is approximately 31.6 billion yen, with domestic
suppliers representing the source for nearly all procurement. The impact of the
COVID-19 pandemic on delivery has been negligible (as of August 2021).
● Thoroughly Ensuring Fair and Transparent Transactions

FY2021 Goals

Further enhancing procurement
efficiency
TargetDigitize operations

Exchanging opinionswith business partners

Strengthening cooperation throughsubcontractor groups

TargetTargetExchange opinionswith business partners(twice a year)

Expand the scope of participation
for the nationwide
liaison meeting

Major Action Policy and Initiatives for FY2021
Enhance the entire
Procurement Web system

Continue exchanging opinionswith business partners

Continuation of the Sanki Healthand Safety Cooperative Association
during the COVID-19 pandemic

FY2020 Results
Percentage of digitized operations(non-consolidated)

91%(FY2019: 88%)

Number of participants in the Sanki Healthand Safety Cooperative Association
Suspended due tothe COVID-19 pandemic(Number of companies we exchanged
opinions with in FY2019: 26 companies)

11 30
in Julyin December(FY2019: 38 in July; 23 in December)
Evaluation:

Evaluation:

Level of progress made in FY2020 on goals set for FY2021：Target achieved：On schedule to achieve the target

SANKI REPORT 2021

Evaluation:：Fell short of achieving the target

To build and maintain fair, equal and transparent relationships with ourbusiness partners, we develop and distribute an order procedure manualthat prohibits the abuse of a superior bargaining position and strive to ensure
thorough compliance by providing employee education each year. Upon
starting business with a new company, such as a construction subcontractor,
materials manufacturer, agent, or expense-related business partner, we assign
a business partner code based on objective standards covering various areas,
including the registration status of quality and environmental management
systems, financial conditions, procurement track records, delivery, pricing, andresponse to problems and complaints. In addition, the provisions of a basic
sales contract include product safety, quality control, intellectual property, legal
compliance, and the exclusion of anti-social forces.
● Execution of Action Plans
Reducing costs and improving our profit ratio are important initiatives in our
new medium-term management plan, and to this end we helped negotiate
prices for the entire Company and manage Company-wide procurement
information through centralized purchasing and the sharing of our findings
through in-house price surveys. In digitizing the ordering process and claim
forms for completed work, we added an in-house function for using iPads
for acceptance inspections on the Procurement Web. We held introduction
briefings for our business partners and created an instruction manual. We
continued to expand digitization by following up with our business partners infiscal 2020. As a result, the number of digitally processed forms now accounts
for about 91% of all orders. In addition, we sought to further boost operational
efficiency by incorporating cloud-based ordering, as we had done forprocessing claim forms for completed work, at the requests of our business
partners.
● Exchange of Views with Business Partners
We exchange views with Procurement Web users at our major business partners.
In fiscal 2020, we sought to prevent the spread of COVID-19 by suspending
visits by our procurement department staff to specialty contractors, suppliers
and agents to exchange views. In fiscal 2021, we will develop an optimal
procurement environment by using web conferencing to exchange views.

1. F air Market Competition andTrading
2. Protection of the Global
Environment
3. C ontribution to Society
Through Business Activity
4. Respect for Human Rights
5. I nformation Security Risk
Management

Supply Chain

The Sanki Engineering Group Code of Conduct and Action Guidelines stipulate that we engage in fairtransactions with all business partners. We promote free market competition and conduct business in goodfaith and in accordance with the relevant laws and individual contracts while at the same time fulfilling oursocial responsibility by following the Sanki Engineering Group Procurement Policies. We also uphold the
Sanki Engineering Environmental Policy to promote environmentally sound procurement activities, including
green procurement, as part of our environmental management. Under these principles, we endeavor to build
trust with our business partners to jointly provide high-quality systems and services to customers.

Procurement Policies (excerpt)

Social● Basic Philosophy
We established the Sanki Engineering Group Code of Conduct and Action
Guidelines to engage in fair, equal and transparent transactions with all
business partners. In April 2021, we formulated the Sanki Engineering Group
Procurement Policy and have been seeking the compliance of all business
partners.

Basic Principle

62

S

ESG Initiatives

SE

6. Construct a partnerships

Sanki EngineeringGroup Procurement
Policies

Procurement website

Exchange of views with business
partners in fiscal 2019

SANKI REPORT 2021

63• Effective use of database• Evaluation checklist for specialty construction• OJT for calculating the procurement target

176 sessions
1,268 participants

Other basic
knowledge• Basic knowledge about accounting• Compliance• How to read financial statements

3 sessions
48 participants● Operation of Internal Whistleblowing Hotlines
We operate the Corporate Ethics Hotline to prevent any improper transactions.
Also, we are striving to conduct fair transactions with our business partners byproviding them with information on how to use the hotline and asking them inletters for their cooperation in ensuring that business activities are sincere and fair.

Reference
Whistleblowing System
P. 84

Strengthening Cooperation with Business Partners● Promoting Green Procurement
As part of our environmental management, Sanki Engineering procures goods
that comply with Japan’s Act on Promotion of Procurement of Eco-Friendly
Goods and Services by the State and Other Entities (Green Purchasing Act), andconfirms the aggregate results.

Major Regulation-Compliant Goods
Procured by Sanki Engineering◦ Lighting equipment◦ Transformers and condensers◦ H VAC equipment● Providing Assessment Feedback to Business Partners

To raise quality and improve operations across the supply chain, we annually
survey the status of our business partners and, as part of this initiative, conduct
an assessment of their safety management. We visit and provide them withfeedback on the assessment results and exchange information on improvements
as needed to enhance their safety management capabilities.
● Joint Improvement Activities with Subcontractor Groups
Sanki Engineering has established subcontractor groups at each branch, branch
office, and division as part of our effort to bolster our construction system. In
addition to monthly liaison meetings, we implement joint labor-saving projects
and hold seminars to enhance technical skills and thoroughly enforce quality
management and supervision of safety and health at construction sites.
Moreover, we review the status of safety and health management and offer
guidance by organizing safety and health education as well as courses on
obtaining qualifications led by Sanki Engineering employees, and by conducting
joint patrols.
The Sanki Health and Safety Cooperative Association meets twice a year. In
fiscal 2020, we held the meetings online due to the spread of COVID-19, anda total of three meetings were conducted to encourage an active exchangeof views. Led by subcontractors directly involved in construction, the meetingis expected to raise awareness about disaster prevention. In fiscal 2020, themeetings were attended by a total of 55 employees from our Group and 52 from

64

SANKI REPORT 2021

SocialGovernance

Number of Sanki Super Meister
Award Recipients◦ FY2019: 18◦ FY2020: 17
Number of Sanki Best Partner
Award Recipients

Supply Chain● Awards Programs
We established the Sanki Super Meister System to certify and commend
foremen of Group subcontractors whose superior construction techniques
have significantly contributed to elevating the quality of our construction work,and the Sanki Best Partner Program, to commend subcontractors who havesignificantly contributed through their superior levels of management andconstruction skills, and for having consecutive years of zero accidents. We
also provide subsidies designed to encourage further quality improvements to
subcontractors to which the foremen belong, from the standpoint of promoting
consistent contributions to quality improvements at construction sites.

Results

Generalprocurement

Environment

ESG Initiatives

Content

Gsubcontractor groups. Sanki Engineering directors, including our chairman andpresident, also attended the meetings and stressed the importance of maintaining
and improving safety awareness throughout the Group, including business
partners.

▍Outline of Main Training Sessions (FY2020)
Theme

S

Social● Seminars and Training for Procurement Staff
We organize seminars and training as needed to promote appropriate
procurement activities and enhance the purchasing and negotiating skills of
procurement staff. In addition, we encouraged procurement staff to obtainregistered qualifications for Certified Procurement Professionals (CPP),
construction business accountants, and fundamental information technology
engineers, among others, to enhance their skills and knowledge.

E◦ FY2019: 145◦ FY2020: 172● Support System for the Acquisition of Qualifications
To support subcontractors in upgrading their technical skills, we subsidize theacquisition of qualifications, and we have been publicizing the system during
Central Safety and Health Committee meetings to encourage its use.
● Technical Guidance in Collaboration with Subcontractors
Our new employee training includes technical guidance offered bysubcontractors, while the Sanki Techno Center is used to train the new hires
and mid-career employees of subcontractors. This collaborative approach totraining helps us to maintain cooperative relationships with subcontractors.
(Since fiscal 2020, training has not been conducted due to the COVID-19
pandemic).
● Providing Support to Stabilize the Management of Subcontractors
As of March 2020, we are making all our payments in cash to subcontractors
with capital of less than 40 million yen by modifying the payment terms.
In addition, in view of the impact of COVID-19, we signed a line of credit
agreement in May 2020 with a financial institution that enables flexible andstable borrowing and repayment of funds toward supporting the cash flowof subcontractors that constitute important stakeholders. Also, we support
the stable management of subcontractors to pursue sustainable growth
together.

VOICE

Practicing Safety First, Even During the Pandemic

As the COVID-19 pandemic places considerable limitations on in-person communication, SankiEngineering has maintained the stance that enhancing partnerships is a key for safety. We havetherefore conducted both safety training and the biannual Sanki Health and Safety Cooperative
Association’s meetings online. I believe these efforts have encouraged an active exchange of
information and two-way communication, resulting in concrete improvements to our partnerships andbolstering the level of our safety management.
Thanks to the efforts, the Cooperative Association was able to proceed with operations with a senseof security.
Online national meeting of Sanki Health and
Safety Cooperative Association

Mr. Hisanori Nose President, Fukutani Seisakusho, LLC. Chairman, Kyushu Sanki Health and Safety Cooperative Association

SANKI REPORT 2021

65

G

Environment

SocialGovernanceocial
Promoting Diversity

Human Resources

Smile Work Guideline
https://www.sanki.co.jp/en/csr/social/smile-project/

FY2021 Goals

Improve internal communication

Balance work and life through the Smile ProjectTa r g e t

Ta r g e tStrengthen the system
for gathering employee feedback

Monitor and take action according to the situation
Average monthly overtime work per person
Rate of paid leave taken per person

Major Action Policy and Initiatives for FY2020
Consider measures to strengthen the system
for gathering employee feedback

Continue monitoring and consider additional measures

FY2020 Results
Opinion exchange session with the president(President CCU)

13

times with a total of

80

participants

55.3 29.0

Evaluation:

Level of progress made in FY2020 on goals set for FY2021：Target achieved：On schedule to achieve the target

SANKI REPORT 2021

Average monthly
overtime work perperson (consolidated)

Rate of paid leave
taken per person(consolidated)

%

hours

(FY2019: 57.4%)(FY2019: 34.3 hours)

Evaluation:

Evaluation:：Fell short of achieving the target● Respect for Human Rights
We declare our respect for human rights in the Sanki Engineering Group
Code of Conduct and Action Guidelines, which prohibits discrimination basedon nationality, gender, age, and disability. We also endeavor to instill respectfor human rights across the Company through various means, including
educational programs. We have set up guidelines for preventing harassment, asystem offering consultation on harassment, and other workplace issues. And
we have a counter staffed by qualified external counselors and the Women’s
Hotline, through which callers can consult with female advisors. Additionally,
we seek to incorporate results of our compliance awareness survey whenmonitoring human rights issues.

Human Resources

Guided by our management philosophy, “We place significance on communication and mutual respect,”
we endeavor to create a working environment and a corporate culture in which all employees grow with theCompany, respect individuality, and are able to succeed and thrive. We know that the technical capabilities
and skills of our employees are valuable assets and that each employee is an invaluable human resource. We
are therefore creating a comfortable working environment that fosters the development of human resources
based on our unique Sanki spirit, which enables them to work to their full potential. In January 2020, weestablished the Smile Work Guidelines, which outline the basic policies for our working environment andhuman resource development.

SocialWe believe that creating working environments in which various personnel
are able to demonstrate their particular capabilities will raise the value of ourcompany. With this in mind, we are cultivating a corporate culture that respects
the diversity of employees and establishing various programs toward our goal of
creating a working environment that is even more pleasant for employees.

Our Commitment to Employees

66

S

ESG Initiatives

S

E

Reference
Whistleblowing System
Page 84

Reference
Compliance Awareness Survey
Page 86● Respecting Diversity in Employment
We seek to bring on board human resources that differ in gender andnationality as well as in talent and personality. Staff from the sales, design,technology, and other divisions join the Human Resources Department toensure fairness based on multiple perspectives. As of April 1, 2021, 27 employees(6 women and 21 men) from China, Peru, South Korea, Thailand, Vietnam, theU.K., and Russia are working with us. Under our medium-term management
plan, we will continue to hire foreign nationals so that we steadily develop ouroverseas operations and promote diversity.
● Promoting Women’s Careers
We believe that creating opportunities in which our female employees canfurther demonstrate their talents would lead to the sustainable growth of
the Company and in turn boost our corporate value. In addition, we haveformulated an action plan to create an environment in which our female
employees can continuously develop their careers based on the Act ofPromotion of Women’s Participation and Advancement in the Workplace—commonly referred to as the Act for Promoting Women’s Careers—and are
pursuing various measures to promote women’s careers. With the results offiscal 2020, we have set new action plan targets that start in fiscal 2021.

Action Plan Based on the Act for
Promoting Women’s Careers
Plan period: A pril 1, 2021 toMarch 31, 2026

◦Increase the average lengthof service for women by 10%
from April, 2021.
◦Raise the ratio of women in
management positions to
3% (average of constructionindustry).

▍Action Plan Based on the Act for Promoting Women’s Careers
Plan period: April 1, 2016 to March 31, 2021
Goals

Results (as of April 1, 2021, non-consolidated)

1

Increase the average length of service for womenby 20% or more from now.

2

Double the current ratio of female career-track
employees in the sales department.

7.1%（1.05 times increased）

3

Raise the ratio of women in managerial positions*to the construction industry average of 1%.

0.9%

13.5 years（9.0% increased）*Calculated by using the number excluding
the section chief, and therefore differingfrom the “number of managers” referred
to on page 71● Career Change System
In 2019, we established new career types, namely career-track position andoperational position, and introduced a system that allows employees to change their

SANKI REPORT 2021

67

Younger Employees

68

SANKI REPORT 2021

Mid-career Employees

Executives

Management candidate training

Fourth-year training

Section chief training

Department manager training

Seventh-year training

Qualification training
Safety experiential training
Corporate ethics training
Mid-career staff training

Corporate Ethics Training

Qualification training
Technical experiential training
Facilities Construction
Equipment Division

New employee training
Third-year construction work training
Sixth-year construction work training
Ninth-year construction work training

Qualification training
Plant & Machinery

New employee training

Systems Divisions

Inspector education

Training on our products and systems
Quality & Environment
System training

ISO 9001/ISO 14001
New employee training

Mid-career staff training

Education to develop internal auditors

Creating a Working Environment that Reflects Employee Feedback●P ersonnel System for Workplaces Where People Can Grow

We maintain training systems associated with each career path, such as
management training, technical training, and training by field of expertise in orderto strengthen specialized skills, technical skills, and management skills.
We take advantage of the Sanki Technology Center to conduct various

Online New employee Training

New employee training

Developing and Evaluating Human Resources● Education and Training Systems

Governance

Leadership position training

Second-year training

Management Training

Safety Training● System for Reemploying Workers Following Retirement
Seeking to provide employment opportunities for older employees withadvanced skills and expertise, we led the industry by introducing a system
for the reemployment of employees following retirement. In fiscal 2020, wereemployed 224 retired employees on a consolidated basis.

Our personnel system ensures equal opportunity as well as fair evaluation andtreatment for all employees while also supporting employee initiatives for selfdirected career development.
We introduced an early career system for young employees to provide
them with experiences in different jobs early on in their career development.
We also introduced individual interviews by personnel managers for employees
in their third and fifth years of service. And once a year all employees fill in a
Career Development Sheet and receive feedback through an interview with
their supervisors. To collect their opinions, we have another system thatallows employees to bypass their superiors and speak directly with the Human
Resources Department through, for example, an interview with this department,
depending on the content of the sheet. These measures are offered separatelyfrom the evaluation system.
In addition, we strategically appoint diverse human resources as core
employees. As of March 31, 2020, 145 mid-career hires on a consolidated basis
were in management positions.

Social▍Training Systems

New employee training％

Environment

Human Resources

2.10

G

SocialAs of June 2021
Employment rate of persons
with disabilities(non-consolidated)

Technical Training● Creating Workplaces for Persons with Disabilities
We continue to hire persons with disabilities and are working to create anenvironment in which they can work comfortably over long periods. As of June 2020,
the employment ratios of persons with disabilities are 1.99% and 1.77% on a nonconsolidated and consolidated basis, respectively. As of June 2021, the employment
ratio of persons with disabilities was 2.10% on a non-consolidated basis.
In recruiting, we expanded our channels and at the same time matched
applicants with each department and provided care upon acceptance. Also, in orderto retain human resources, we hold problem-solving seminars, opinion exchange
sessions, and management training to promote understanding among managers,
for employees who are hearing-impaired. In addition, we are promoting theimprovement of our working environment so that all employees can play an activerole by, for example, installing lamps in all offices that bear evacuation instructions
for hearing-impaired employees in the event of a disaster and by providing closed
captioned presentations at safety education and financial results briefings.

training programs.
In fiscal 2020, we conducted all new employee training sessions online for
two to three months to prevent the spread of COVID-19.
In fiscal 2021, we also conducted online training sessions for new
employee using methods consistent with online training, such as increasing
the use of groups to work with each other than in the previous fiscal year toencourage communication among new employees.

S

ESG Initiatives

career type to either. Job relocation is excluded from the requirements for the careertrack position, and the system is designed to enable a wider range of employees tothrive. As of April 1, 2021, there are 66 instances of employees changing their career
type for a work style that better suits their particular stage in life.

E● Gathering Employee Feedback

Since fiscal 2016, we have continually held Century Communication Up (CCU)
discussion events in accordance with the Century 2025 long-term vision. In fiscal
2020, in consideration of preventing the spread of COVID-19, we held the third
President’s CCU, a dialogue between the president and employees, online. Over
13 sessions, about 80 employees participated, and their opinions and proposals
have been applied toward making improvements in our operations and systems.
In fiscal 2020, we also conducted a survey questionnaire on the working
environment among our employees. For the item on employee awareness, 70%of the employees felt that the Group’s business is useful to society*. We willconsider introducing measures based on the results of the survey questionnaire.
Average education andtraining costs per employee
in FY2020 (consolidated)

61,000yen/year● Sound Employer-Employee Relationships

President’s CCU using VR

The Human Resources Department and employees union at Sanki Engineering
meet monthly to discuss improvements in the working environment andthe development and operation of Company systems. Also, we provide theemployees union with opportunities to present their proposals or requests tomanagement and have been implementing measures based on the dialogues.

*The percentage of employees whochose the “Sanki Engineering Group iscontributing to society” option to thequestion “Please choose the option(s)below with which you agree. (Multiple
answers allowed.)”*The cost was decreased as a result of
the shift to online training and events
not held in response to the COVID-19
pandemic. (90,000 yen in FY2019)

SANKI REPORT 2021

69

E

S

G

Environment

SocialGovernance▍Major Programs Supporting Work-Life Balance (Non-consolidated) (as of April 2021)
Area● Acquiring the Kurumin Mark and Recognition for Supporting Childcareby the City of Nagoya
In 2015 Sanki Engineering was granted an update for the Kurumin mark, acertificate granted by the Tokyo Labor Bureau of the Ministry of Health, Labourand Welfare and based on the Act on Advancement of Measures to Support
Raising Next-Generation Children, for meeting certain criteria as a company
supporting childcare. In 2014 the Chubu Branch became the first construction
equipment company to be recognized by the City of Nagoya as a company
supporting childcare, and the certification was updated in 2017.

Half-day/hourly off
Anniversary leaveWork

FY2020 rate of paid leave taken(consolidated)

55.3
29.0

％

Average monthly overtime work
per person (consolidated)

hours

Reserved leave

A planned paid leave on special dates for employees or their families, requested at the start of the fiscal year.
The Company’s own Premium Friday, a scheme based on that launched by the Japanese government.
Employees are encouraged to take a full or half day of paid leave on monthly payday and avoid overtime.
The use of reserved days off for childcare, nursing, or volunteer activities.

Telecommuting andtelework system

Aims to improve operational efficiency and business continuity during childcare and nursing care or in theevent of emergencies such as natural disasters and pandemics.

Sliding work hours

Employees can slide the start and end times forward or back for business or non-business reasons insofar
as this does not interfere with their work.
Employees who have left the Company for unavoidable reasons such as childbirth, childcare, nursing care, ora spouse’s transfer can apply for reinstatement.
Can be obtained for the requested period of time up to when the child turns one year old.

Sanki Smile Day

Return to Work programChildcare Childcare leave
Nursing leaveandnursing
Shortened work hours
care
Support for childcare leave and reinstatement
Special childcare/nursing leave

FY2016

Childcare leave

VOICE

Page 28

Since the launch of the Smile Project, we have focused on raising employee awareness and improving
our leave programs. As a result, we have increased employee awareness of “taking leave” andpromoted the improvement of the leave programs. In fiscal 2021, under our new slogan “Let’s do ourbest to live a prosperous life,” meaning that we are striving to be a company where each employee can

MaleFemale

Total

Male

Female

Total

Male

FemaleTotal

Consolidated

1

15

16

2

18

20

7

11

18

9

27

36

7

33

40

Nonconsolidated

1

12

13

2

14

16

7

9

16

7

24

31

7

27

34

─

100.0

100.0

100.0

100.0

88.9

93.8

100

96.3

97.2

100.0

100.0

100.0

Nonconsolidated

─

100.0

100.0

100.0

100.0

88.9

93.8

100

100

100

100.0

100.0

100.0

Consolidated

0

0

0

0

0

0

1

0

1

1

1

2

0

0

0

Nonconsolidated

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

─

54.0

76.1

57.1

54.3

76.3

57.4

53.4

67.1

55.3

─

Consolidated

69.5

50.5

49.9

78.2

53.7

53.0

74.2

55.9

51.9

74.4

55.1

52.5

65.8

54.5

─

─

─

─

─

─

─

─

─

37.4

14.7

34.3

31.7

12.3

29.0

30.6

13.8

28.3

31.2

13.3

28.6

35.0

14.7

32.0

34.5

13.6

31.3

33.0

13.3

29.9

consolidated▍Employee Data (as of March 31 of Each Fiscal Year)

Average years ofservice
Number of new
recruits
Numberof rehired
employees after
retirement

FemaleFY2017
Total

Male

FemaleFY2018
Total

Male

FemaleFY2019Total

Male

FemaleFY2020Total

Male

Female

Total

2,041
Consolidated（653）

298 2,339
2,079（5） （658） （664）305
2,384 2,072（5） （669） （602）322 2,3942,152（5） （607） （646）

349
2,501
2,190
（7） （653） （643）358 2,548（8） （651）

1,678
Nonconsolidated （572）

255 1,933
1,698（3） （575） （586）271 1,969 1,694（5） （591） （528）273 1,967 1,705（3） （531） （526）287 1,992
1,740（3） （529） （527）308 2,048（4） （531）

Consolidated

─

─

─

─

─

─

44.5

38.2

43.7

44.7

38.3

43.8

44.7

38.8

43.8

Nonconsolidated

43.8

36.5

42.8

43.8

36.3

42.8

43.9

37.1

43.0

44.1

37.6

43.2

44.2

38.0

43.2

Consolidated

─

─

─

─

─

─

17.3

13.0

16.7

17.3

12.9

16.7

17.5

13.2

16.9

Nonconsolidated

19.0

13.3

18.2

18.8

13.2

18.0

19.0

13.9

18.3

19.3

14.1

18.5

19.4

14.0

18.6

Consolidated

81

20

101

105

21

126

106

17

123

102

28

130

99

31

130

Nonconsolidated

60

16

76

88

21

109

75

11

86

74

23

97

75

27

102

Consolidated

235

5

240

217

5

222

223

9

232

229

11

240

212

12

224

Nonconsolidated

183

4

187

164

3

167

161

5

166

169

8

177

173

9

182

─

─

1.77

Ratio of people
with disabilities*1(%)

Consolidated

─

─

─

─

─

─

─

─

1.89

─

─

1.94

Nonconsolidated

─

─

1.69

─

─

1.78

─

─

1.93

─

─

1.97

─

─

1.99

Turnover rate
due to personalreasons*2 (%)

Consolidated

─

─

─

─

─

─

─

─

─

─

─

─

1.7

2.2

1.8

Nonconsolidated

─

─

─

─

─

─

─

─

─

─

─

─

1.5

1.6

1.5

*1 As of June 1 of each fiscal year
*2 Ratio of retired employees to the total number of employees in each fiscal year

Figures in parentheses indicate the number of managers.

▍Employees by Age (as of March 31, 2021)

do their best in their position and smile, we are promoting work style reform to solve the problem oflong working hours, mainly for employees working at specific sites.

70

Total

47.6

Average age

Aiming to Be a Company Where All Employees Smile

Yuichiro Higuchi Manager of Personnel Section, Human Resources Department, General Affairs and Human Resources Division

FemaleAverage monthly overtime Consolidated
Nonwork (hours per person)

Number of
employees

Feature 2
Promoting the Smile Project

FY2020Male

FY2016

Reference

FY2019

Total

Male

Certified as 3 stars in the NIKKEI Smart
Work Management Survey

FY2018

FemaleNonconsolidated●P romoting the Smile Project

Sanki Engineering launched the Company-wide Smile Project, led by the president,
in fiscal 2015 to promote work style reform. We have been implementing
initiatives across the Company to create a better working environment. In fiscal
2017, we set up the Smile Site Plan, a committee dedicated to construction sites.
In addition, we worked on efforts to lessen the operational load of construction
managers and enhance capabilities and quality at our construction sites. In
fiscal 2020, we launched the Smile Plan, consisting of four subcommittees, toestablish a system that enables all departments to work together as one. As aresult of these efforts, we were certified as 3 of 5 stars in the 4th NIKKEI Smart
Work Management Survey, which selects advanced companies that challenge
the productivity revolution through work style reform. Looking ahead, we willcontinue to promote our work style reform under the employee-first principle.

FY2017

Male

Consolidated

Reinstatement afterchildcare leave (%)

Rate of paid leave taken(%)
City of Nagoya
certification forcompanies supportingchildcare

Can be obtained multiple times and up to 20 days in total for childcare and nursing care.

▍Number of Employees on Leave and Work Hours

Nursing care leave

The Kuruminmark for supportof raising nextgeneration children

Can be obtained five times for up to 180 days per person on nursing leave.
Employees caring for children or other family members can apply for shortened or sliding work hours. In thecase of childcare, the program applies to children up to the third grade of elementary school.
An interview is held with the supervisor before and after applying for childcare leave.

Human Resources

We have been augmenting our programs in response to employee requests
for broad support of a healthy balance of work and personal life so both maleand female employees can continue to work with a sense of security while
attending to various life events. In addition, we are promoting improvement of
the environment that enables flexible work styles by reviewing our work andleave programs. During the state of emergency declared due to the spread of
COVID-19, we responded to the government’s request by expanding the use of
telecommuting and implementing new employee training online.

Consecutive leave for construction managers

Social●P romoting Work-Life Balance

Details
Five consecutive days of leave for each five-year period of employment using employee’s reserved leave.
Three consecutive days of leave after staying at a construction site for more than six months or before moving
to another site.
Paid leave for half a day or by the hour.

ESG Initiatives● Maintaining and Improving Employee Health
We introduced a 24-hour toll-free health consultation service to offer advice on health,
medical, nursing, and childcare issues for employees and their families. The service
was set up outside the Company, and caller privacy is strictly protected. We have also
been working to prevent employees from developing mental health issues.

Promoting Work Style Reform

ProgramRefresh leave

10s

20s

30s

40s

50s

60s

70s

Male Female Total

Male Female Total

Male Female Total

Male Female Total

Male Female Total

Male Female Total

Male Female Total

Total

Consolidated

0

1

1

368

97

465

466

106

572

519

98

617

560

41

601

250

14

264

27

1

28

2,548

Nonconsolidated

0

1

1

324

93

417

383

90

473

381

79

460

451

35

486

180

9

189

21

1

22

2,048

SANKI REPORT 2021

71

S

G

Environment

SocialGovernance

ocial
Afforestation and Arboriculture Activities at
the Sanki Forest and Kansha-no-Mori

Local Communities

FY2021 Goals

Contribute to regional
disaster prevention

Support cultural activities forthe next generation

Contribute to conservationof the local environment

Ta r g e t

Ta r g e t

Ta r g e t

Total number of regional disasterprevention activities

Support cultural activities

Participate in environmental
beautification activities

Major Action Policy and Initiatives for FY2021
Plan and implement support for
cultural activities

Participate in environmental
beautification activities

Commemorative tree planting at the Sanki Forest

Coordination with Local Communities

Local Communities

As stated in the Sanki Engineering Group Code of Conduct and Action Guidelines, “We seek tocontribute to society in order to aid in the development of local communities as a good corporate
citizen and member of society,” and our activities reflect this principle. Looking ahead, we will
participate in local activities and help develop communities while maintaining active communication
with stakeholders in the areas where we operate.

SocialWe have been planting and nurturing trees at the Sanki Forest in Kai City, Yamanashi
Prefecture, since 2015, when we planted a thousand trees there to commemorate the90th anniversary of our founding. In October 2020, we created and planted trees at a newlocation, called the “Kansha-no-Mori” adjacent to the Sanki Forest to commemorate thetenth anniversary of our “SANKI YOU Eco Contribution Points” system.

Our Approach to Local Communities

Participate in regional disasterprevention activities

ESG Initiatives

SE● Agreement for the Provision of Facilities in Times of Disaster and Other Activities

In fiscal 2013, we concluded an agreement with Yamato City, Kanagawa Prefecture,
to provide the Sanki Techno Center as a temporary shelter for those unable to returnhome in the wake of a disaster. The center functions to serve regional disasterprevention such as by stockpiling supplies, including emergency food and Japanesestyle futon bedding. In fiscal 2020, we signed a new agreement that allows thecenter to be used as an operation base for emergency firefighting teams gatheredfrom across Japan in the event of an earthquake or other large-scale disaster. And
we concluded an agreement with Yamato City on the emergency recovery of watersupply and sewage facilities. Under the agreement, we will work to restore thefunctions of the city’s water quality management centers promptly in the event they
are damaged by a disaster. In addition, in response to a request from the Yamato City
Government, we have been providing safety training for its staff since fiscal 2019.

A space in the Sanki Techno Center for
sheltering people unable to return homein the wake of a disaster● Cleanup and Environmental Beautification Activities
Each branch, branch office, and Group company participates in cleanup activities inareas around their offices or construction sites as well as environmental beautification
activities organized by local governments. In fiscal 2020, employees of Group company
Sanki Kako Kensetsu conducted a cleaning campaign along roads near the waste
treatment facility, which the company operates and manages. In addition, employeesof Sanki Kankyo Service cleaned the streets near water treatment and other facilities.
On a Group-wide basis, we carried out activities in more than 33 local communities.

Earthquake Reconstruction Project
FY2020 Results
Conducted activities at
Carried out activities under thelarge-scale disaster agreement
between Yamato City and the
Yamato Engineering Center

Held a Great East Japan
Earthquake reconstruction
concert called “Kizuna 2021
with Japanese Tsugaru
Shamisen”

33

sites

(FY2019: 41 sites)
Evaluation:

Level of progress made in FY2020 on goals set for FY2021：Target achieved：On schedule to achieve the target

72

SANKI REPORT 2021

：Fell short of achieving the target

In May 2012, the year following the Great East Japan Earthquake, Sanki Engineering
launched the Earthquake Reconstruction Project, a Company-wide action team within
the Tohoku Branch. Since then, it has developed proposals for putting its comprehensive
engineering capabilities toward the early reconstruction of local infrastructure. Today,
we have expanded from our initial business activities to embodying new ventures andengaging in social contribution activities.
In fiscal 2020, during the COVID-19 pandemic, we held a concert called “Kizuna
2021 with Japanese Tsugaru Shamisen” and posted a video of the event on our official
YouTube channel with prayers for recovery from the Great East Japan Earthquake.
In addition, we visited the Hamadori area of Fukushima Prefecture to preserve thememory of the earthquake disaster and support reconstruction. We also provided boxedlunches containing ingredients from the Tohoku region at the cafeteria of the Sanki
Techno Center as part of our in-house “Supporting Tohoku Reconstruction! Gift fromTohoku” project in coordination with “Let’s Eat to Provide Support!”—an initiative byGreat East Japan Earthquake
reconstruction concert “Kizuna 2021 withJapanese Tsugaru Shamisen”

SANKI REPORT 2021

73

E

S

G

Environment

SocialGovernanceGovernance
ESG Initiatives

the Food Industry Affairs Bureau of the Ministry of Agriculture, Forestry and Fisheries.
Going forward, we will continue to provide recovery support as a corporate citizen.

Corporate Governance●O pening the Sanki Environmental Garden to the Local Public

Corporate Governance Guidelines

Our Group company Sanki Kankyo Service actively invites elementary school children
for field trips at its offices and water purification plant.
In June 2020, the Suttsu office in Hokkaido received 17 students from Suttsu
Elementary School. In September, the Imakane office in the same prefecture
welcomed 38 students from Imakane and Tanekawa Elementary Schools. In addition,
the Suttsu office in Hokkaido welcomed nine students from Oshoro Elementary
School in October, and the students learned about the role and workings of thesewerage system. We also organize facility tours for local residents.

Children playing at Sanki Environmental Garden

Corporate Governance

The Sanki Environmental Garden, adjacent to the Sanki Techno Center, is open
round the clock to the local community, providing a place for many children fromneighboring daycare centers to play. In January 2021, almost two years after
it opened, the number of visitors reached 20,000. We expect that the Sanki
Environmental Garden will continue to be used as a place in the community torelax and to nurture the next generation over the long term.
● Sanki Kankyo Service Welcomes Social Studies Tours by Local Schools

GovernanceSupporting the Development of the Next Generation

We established the Sanki Engineering Corporate Governance
Guidelines to clarify the Sanki Engineering Group’s basic philosophy
and policy on corporate governance. Once a year, we review thestatus of our compliance with the Corporate Governance Code andrevise it as needed.
We will continuously seek to enhance our corporate governanceunder the guidelines in order to achieve sustainable growth for the Groupand strengthen its corporate value over the medium to long term.
Sanki Engineering Corporate Governance Guidelines

https://www.sanki.co.jp/en/corporate/governance/guideline.html

Corporate Governance System● Corporate Governance System

Support for Sports Promotion and Revitalization
Since 2018, we have been an official sponsor of Yamato Sylphid, a women’s soccer teamin Yamato City, Kanagawa Prefecture, where the Sanki Techno Center is located. In the
final game of the 2020 Plenus Nadeshiko League Division 2 in November, we held the
Sanki Match Day at Yamato Nadeshiko Stadium as part of our contribution to the local
community. The team won a splendid victory and was promoted to Division 1.
We also sponsor the non-profit organization Japan Deaf Rugby Football Union (Deaf
Rugby), Japan Handball Association, and East Hokkaido Cranes, an ice hockey teamin Kushiro City, Hokkaido Prefecture. Going forward, we will continue to contribute tosociety by supporting sports while at the same time promoting the creation of a working
environment that encourages employees to proactively engage with local communities.

Yamato Sylphid women’s soccer team on
Sanki Match Day in 2019

We adopted a Company with Board of Company Auditors system withdedicated, full-time auditors as our form of corporate governance. Under
this structure, the auditors and the Board of Auditors exercise oversightover the execution of duties by directors, the accounting auditors auditing
the financial statements and other documents as well as the Board of
Directors responsible for making decisions on material issues. In addition,
to increase management efficiency and simultaneously speed up thedecision-making process, we employ an executive officer system inwhich we divide management functions between the Board of Directors,
responsible for decision-making and supervision functions, and executive
officers, responsible for the execution of business affairs.

▍Summary of the Corporate Governance System (as of June 23, 2021)

Donations and Contributions

Number of
Persons

East Hokkaido Cranes

We extend donations to universities and research institutes and sponsor culturalactivities by the Japan Philharmonic Orchestra, the Japan Chamber Music
Foundation, and other institutions. We also support nature conservation activities
in developing countries in the Asia-Pacific region and other areas as well as thetraining of guide dogs by continuously collecting donations for this cause andencourage our employees to give blood donations at the head office. Moreover,
our branches, branch offices, and Group companies each take part in a varietyof activities in which anyone can get involved, such as by donating used stamps
and cards. We also contribute to Mitsui Group social contribution activities
through our support for the Mitsui Volunteer Network, which promotes thevoluntary efforts of retired, former employees of Mitsui Group companies.

74

SANKI REPORT 2021

Chairman of the Board of Directors
Directors (women)
External directors (independent directors)
Executive officers (women)
Those also serving as directors
Auditors (women)
External auditors (independent auditors)

Corporate Governance
Report (in Japanese)

https://www.sanki.co.jp/
corporate/governance/
report.html▍Frequency of Major Meetings (FY2020)
Frequency

Board of Directors

12

98.5%

Board of Auditors

8

100%

Management Meeting

31–(attended byonly internal
officers)

External Directors
11 (0)4 (4)37 (0)
5
5 (0)
3 (3)

Average
Attendance ofExternal Officers

Meeting

SANKI REPORT 2021

75

One substitute auditor

Appointment/Dismissal

Business auditing
Accounting auditing

Accounting auditing

Appointment/Dismissal

Accounting Auditors

Discussion
and reporting

Corporate Ethics Committee
Internal Finance Control
Committee

Article 10—●

ReportingPrinciple 1-7

Procedures for related party transactions

Article 9.3
Article 18.4—●

Advisory Committee on
Nomination and Remuneration

Principle 2-6

Roles of corporate pension funds as asset
owners

Article 16—●

Business principles and business plans

—

●

●

Basic views and guidelines on corporate
governance

Article 2—●

Policies and procedures for determining the
remuneration of directors and auditors

Article 31—●

Policies and procedures for nominating
directors and auditors

Article 18
Article 20
Article 21
Article 22
Article 24
Article 25—●

Reasons for nominating directors andauditors

Article 23—●

Matters to be resolved by the Board of
Directors and scope of matters delegated to
management

Article 18—●

Independence standards for external officers(Appendix)
Independence
standards forexternal officers—●

Principle 3-1 Full
Disclosure

President

Discussion, andreporting onimportant matters

ReportingExecutive officers
Leadership and supervision

Monitoring, guidance, support and education

Internal Audit Department
Auditing

Sections, centers, headquarters, research institute, business division,business departments, branches and branch offices, subsidiaries*1 The Articles of Incorporation stipulate that the number of directors shall not exceed 16.
*2 One of the auditors possesses a considerable degree of knowledge of finance and accounting.

Board of Directors
The Board of Directors holds a meeting led by the chairman,
elected by and from among the directors, at least once a month todecide on important matters and supervise the status of executionof business affairs.
Board of Company Auditors
The board consists of auditors, by and from whom a chairperson
is selected, and meets at least six times a year to monitor the
status of governance and audits the execution of duties bydirectors as an independent body entrusted by shareholders.
Members attend board and other important meetings, review thestatus of operations and assets, and maintain close contact withthe accounting auditors, Internal Audit Department, and internal
controls departments. A supplementary external auditor has been
appointed to fill any future external auditor vacancies.
Internal Audit Department
This department conducts internal audits of the execution ofoperations by business execution departments in accordancewith the Auditing Plan for that fiscal year. It verifies the internalmanagement system including its appropriateness and efficiency.
As necessary, the department exchanges opinions with or makes
proposals concerning the improvement or correction of a problem
to the internal controls departments and reports the results of its
audits to the president and auditors.
Advisory Committee on Nomination and Remuneration
This committee, which meets as needed, consists solely of external
directors and deliberates on the nomination and remuneration ofcandidates for directors.
Management Meeting
The meeting consists of directors and executive officers nominatedby the president and, in principle, meets twice a month. As a76

SANKI REPORT 2021

Report*4

Principle 1-4(Ernst & Young ShinNihon LLC)

Management Meeting

Policy Meeting

Disclosed Location
Website*3

Basic policy on cross-shareholdings andvoting rights

Election, dismissaland supervision

Leadership andsupervision

Guideline*2

Principle

Reporting

Risk Management Committee

SocialGovernancedecision-making body for fundamental and key matters related
to the execution of business affairs, the meeting deliberates andmakes decisions from the standpoint of overall management.
Executive Officer Committee
Consisting of executive officers and presidents of the Group
companies, the committee meets at least four times a year
to communicate the policies expressed by the president andexecutive officers responsible for departments, report on thestatus of business execution by each executive officer and Group
company president, and discuss initiatives for achieving the
medium-term management plan.
Corporate Ethics Committee
The committee consists of executive officers and is chaired by thepresident. The executive officers responsible for corporate ethics
and nominated by the president oversee all matters related tocorporate ethics. The committee meets twice a year to deliberate
on implementation plans for the pervasion and observance of theCode of Conduct and Action Guidelines.
Internal Finance Control Committee
This committee consists of chairman, president, and executive
officers. It is chaired by the president and meets four times a year,
assuming a central role in Group-wide control, including review
and decision-making concerning important matters regarding
internal controls for financial reporting.

Supplementary
Principle 4-1.1

Principle 4-9

Supplementary
Principle 4-11-2

Concurrent positions of external officers

Article 26—●

Supplementary
Principle 4-11-3

Evaluating the effectiveness of the Board of
Directors

Article 29—●

Supplementary
Principle 4-14-2

Training policy for directors and auditors

Article 30—●

Principle 5-1

Policy on system development and efforts
to promote constructive dialogue withshareholders

Article 32—●*1 Version 2018*2 C ompany’s Corporate Governance
Guidelines*3 Company’s website*4 C ompany’s Corporate Governance Report

Corporate Governance

Liaison Meeting of External Officers

Executive Officer Committee

Appointment/Dismissal

Board of Directors

11 directors*1 including 4 external directors
Exchange of opinions,establishing common awarenessConsultation

4 external directors
3 external auditors

Environment

Governance

5 auditors *2 including 3 external auditorsG

ESG Initiatives

The principles required to be disclosed in the Corporate Governance Code*1 are
as follows.

General Shareholders’ Meeting

Board of Company Auditors

S● Compliance with the Corporate Governance Code▍Corporate Governance System (as of June 23, 2021)

Appointment/Dismissal

E

Sanki Engineering
Corporate Governance
Guidelines

Corporate Governance
Report (in Japanese)● Strengthening the Effectiveness of the Governance System
We are strengthening our system in line with the Sanki Engineering Corporate
Governance Guidelines.

Efforts in Fiscal 2021
Response to the Revised Corporate Governance CodeIn response to the 2021 revision of the Corporate Governance Code, we increased thenumber of external directors from three to four to raise the ratio of external directors to
the total number of directors to over one-third. Preparation for launching the Sustainability
Committee, consisting of directors, is also underway.

Risk Management Committee
The committee consists of members of the Management Meetingand chairpersons of various subcommittees appointed by the
executive officer in charge of risk management. It meets fourtimes a year and oversees risk management for the entire Group.
Currently, the executive officer in charge of risk management is
the president.

SANKI REPORT 2021

77

Change in Articles of Incorporation
Board of Directors and the balance between execution and supervision will be necessary toestablish a more sophisticated governance system and work to improve corporate value over the
medium to long term.
Meetings
The discussion standards for the Board of Directors’ meetings and management meetings were

Position

A liaison meeting, comprising external directors and auditors, is held once every quarter to openly

Name

Yukiteru
Yamamoto

exchange views, thereby sharing necessary information and developing a common awareness of

Independent Years
Officer
Served

●

7
years

●

3
years

Mr. Kazuhiko Kashikura has served as an executive officer of Sumitomo Mitsui
Banking Corporation and has managed several of its group companies as a top
executive, and he thus has abundant experience and broad insight in corporate
management. The Company selected Mr. Kashikura as an external director for
his experience and insight developed through this background.
Mr. Keiji Kono, as a financial specialist, has held managerial positions in major
departments of the Bank of Japan. He has also served as an executive officer
at Chugai Pharmaceutical Co., Ltd., where he managed the IT management
department as the head of the division and promoted social contribution
activities overseas. He thus possesses a wide range of knowledge andexperience in those fields. The Company selected Mr. Kono as an external
director for his experience and insight developed through this background.

Strengthening of the Transparency and Supervisory Function of the Board of Directors
An external director (independent officer) was appointed as the chair of the Board of Directors toenhance the transparency and oversight function of the Board of Directors.

Kazuhiko
Kashikura
External
Directors*1

Remuneration, we revised the composition to include only external directors.

● Assessing the Effectiveness of the Board of Directors
The directors conduct an annual self-assessment to verify their deliberation
process and identify possible improvements as well as to analyze and evaluate
the effectiveness of the process toward improving the effectiveness ofoverall governance and disclosing a summary of the results. In fiscal 2020,
we conducted a non-anonymous self-assessment questionnaire to evaluate
the effectiveness of the Board of Directors for all directors and auditors andexchanged opinions on the evaluation. The Board of Directors discussed issues
identified from analyzing the results of these questionnaires and the exchangeof opinions as well as improvements to be made and the future direction.

Keiji
Kono

●

ー

*2

AkihikoMatsuda

●

ー

*2

Shozo
Fujita●Issuesidentified

Futureinitiatives

78

Measures and future direction to improve the issues identified are as follows.
(1) Find ways to create time for discussions(2) Provide information on discussions at the management meetings(3) Promote information sharing with the Advisory Committee on Nomination and Remuneration(4) Provide more internal information to external directors (including site visits)(5) Devise ways to prepare materials(6) Enhance discussions on management plans(7) Enhance discussions on sustainability

SANKI REPORT 2021

YutakaAtomi

ToshiakiEgashira●●

Independence Standards forExternal Officers (Attachment for
the Sanki Engineering Corporate
Governance Guidelines)

https://www.sanki.co.jp/
en/corporate/governance/
guideline.html*1 All external directors and external
auditors are independent.
*2 Appointed as an external director of theCompany in June 2021.

Mr. Akihiko Matsuda has served as an executive officer of Tokyo Gas Co., Ltd.
and has managed several of its group companies as a top executive. He thus
has a wealth of experience and a wide range of insight across all aspects ofenergy-related businesses. The Company selected Mr. Matsuda as an external
director for his experience and insight developed through this background.

3
years

Mr. Shozo Fujita has expertise as a public prosecutor and attorney-at-law as well
as abundant experience and wide-ranging insights through experience includingthat acquired as representative director and president of the Resolution andCollection Corporation and as a director who serves as an audit and supervisoryboard member at other companies. The Company selected Mr. Fujita as
an external auditor for his experience and insight developed through his
background to audit the Company.

2
years

Mr. Yutaka Atomi has long been engaged in education and research atuniversities, serving in positions including president of Kyorin University, andhe thus possesses deep insight and abundant experience regarding university
management. The Company selected Mr. Atomi as an external auditor for
his experience and insight developed through this background to audit theCompany from an objective and fair standpoint.

2
years

Mr. Toshiaki Egashira has served in positions including representative director
and president of Mitsui Sumitomo Insurance Company, Limited, and he thus
possesses abundant operational experience and wide-ranging knowledge
regarding corporate management. The Company selected Mr. Egashira as
an external auditor for his experience and insight developed through thisbackground to audit the Company from an objective and fair standpoint.

▍Overview of FY2020 Effectiveness Assessment
External
Auditors*1

Reasons for Selection
Mr. Yukiteru Yamamoto has served in positions including representative director
and president of Mitsui Life Insurance Company Limited (currently Taiju Life
Insurance Company Limited) and was active as an executive member of the
Policy Board of the Japan Business Federation from August 2013 to March
2017, and he thus possesses abundant operational experience and wideranging knowledge regarding corporate management. The Company selected
Mr. Yamamoto as an external director for his experience and insight developed
through this background.

such information.

The issues extracted from the results of the self-assessment questionnaire and opinion
exchange meetings are as follows.
(1) P roactively express opinions from a Company-wide perspective on agenda items outside thearea of responsibility(2) E nhance the provision of information on the progress of discussions and opinions atmanagement meetings(3) D evise ways to secure time for discussion such as by omitting explanations for someagenda items(4) D etermine how the Advisory Committee on Nomination and Remuneration should provide
information including the status of deliberations to the Board of Directors(5) Ensure that external directors have opportunities such as construction site visits(6) Make materials easy to understandGovernance▍External Officers’ Terms in Office and Reasons for Selection

Liaison Meeting of External Officers

To enhance the transparency and neutrality of the Advisory Committee on Nomination andSocial● Appointment of Directors and Independence of External Officers
Our officers possess a wealth of work experience and knowledge as well as
deep insight and ethical understanding.
The Advisory Committee on Nomination and Remuneration considers
candidates for directors and submits the results to the Board of Directors
for deliberation. Appointments are finalized by a resolution at the generalshareholders’ meeting. We have established standards on the independenceof external officers to raise the objectivity of their oversight of management.

reviewed to improve the effectiveness of the governance system.

Revision of the Composition of the Advisory Committee on Nomination and Remuneration

Environment

Corporate Governance

Review of Discussion Standards for Board of Directors’ Meetings and Management

G

Governance

The maximum number of directors was changed from 12 to 16, given that the diversity of theS

ESG Initiatives

Efforts to DateE

● Officer Remuneration

Sanki Engineering has established the Advisory Committee on Nomination andRemuneration under the Board of Directors, to nominate candidates for directors andto deliberate on remuneration. To strengthen the transparency and neutrality of thecommittee, we revised the composition in fiscal 2020, from a structure consisting of
the president and external directors to one consisting of external directors only.
The remuneration for directors comprises, within the limits adopted by our generalshareholders’ meeting, of fixed remuneration, bonus, and stock options. Each fiscal
year, we decide amounts, with due consideration for balancing each of the elements,
in order to raise the level of motivation for maximizing corporate value in tandem withthe long-term interests of shareholders.

Composition of the Advisory
Committee on Nomination andRemuneration◦Individuals who provide
explanations:- President- Directors appointed by thepresident and committee
members as necessary◦Committee (report):
all external directors

Composition of Officer Remuneration◦Fixed remuneration: paid
according to rank and scopeof responsibilities◦Bonus: portion linked toperformance during the period◦Stock options: granted
according to rank as a longterm incentive

SANKI REPORT 2021

79

E

S

G

Environment

SocialGovernance

Message from the Chair of the Board of Directors
Bonus

Directors(excluding
external directors)◯◯

External directors◯◯

Auditors(excluding
external auditors)

◯

◯

－

External auditors

◯

◯

－

Stock Options

Procedure◯
Determined by the Board
Excluding non-operational of Directors following
deliberation by the Advisory
executive officers
Committee on Nomination and－Remuneration

Persons Receiving
Payment

contribute to the sustainable growth
Total Payment(Millions of Yen)

Directors (external directors)

14 (3)

557 (61)

Auditors (external auditors)

6 (3)109 (36)● Internal Controls• Basic Policy and Systems for Internal Controls
Under its Basic Policy on Internal Control System, Sanki Engineering is developing
and operating a system to ensure the legality, soundness, and transparency of its
operational execution. Moreover, we have established a whistleblowing systemthat comprises contact points for corporate ethics in general, dedicated contact
points for reporting violations of the Anti-Monopoly Act, and a system for reportingto the fulltime auditor as efforts to stringently enforce compliance.
The Board of Directors makes decisions on matters stipulated in laws,
regulations, and the Articles of Incorporation as well as on matters related to the
execution of operations while also supervising to ensure the proper execution ofoperations. The Management Meeting is held to ensure the effective executionof duties in accordance with the rules for discussion and reporting. Moreover, forthe free exchange of opinions, the Liaison Meeting of External Officers, consistingof external officers, is convened to exchange necessary information and shareawareness of such information. To ensure effective auditing, the auditors attend
important meetings, offer their opinions as necessary, receive reports fromaccounting auditors and the Internal Audit Department, instruct that this department
investigate and report on its findings if needed, and discuss matters as required.
In addition, the full-time auditor serves as the auditor of Group companies andseeks to ascertain the status of internal controls across the Group by regularly
exchanging opinions with the internal audit department and Group company
presidents, receiving reports from the accounting auditors, and exchanging
information.

• Ensuring the Reliability of Financial Reporting
The Internal Finance Control Committee meets four times a year to conduct our
financial reporting in accordance with the internal control framework stipulated
based on the Financial Instruments Exchange Act of Japan. Moreover, we
promote the establishment and appropriate operation of an internal control system
to safeguard the reliability of our financial reporting by having the committee
deliberate on the assessment and response with respect to the accounting risks
within each department and Group company. A report is produced in adherencewith the internal control reporting system to ensure that internal controls related
to financial reporting are being exercised effectively. In the report for fiscal 2020,accounting auditors expressed their opinion that our financial reports were
presented in an appropriate manner in terms of all material aspects.

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an independent standpoint andDetermined throughconsultation among auditors▍Remuneration for Directors and Auditors* in Fiscal 2020
Category

I will support our management from

*The number of officers covered includes
four directors as well as an auditor who
retired at the conclusion of the 96th
Annual General Meeting of Shareholders
on June 25, 2020.

of our corporate value.

Reference
Whistleblowing System

Yukiteru Yamamoto

Page 84

External Director

I am aware that as external directors, we are expected
to support management from an independent
viewpoint to meet the expectations of all stakeholders,
including shareholders, and to sustainably raise ourcorporate value. Corporate common wisdom may
differ somewhat from the public’s common sense.
Although many longstanding managers have diligently
and sincerely adopted the Sanki Standard, at somepoints circumstances may nevertheless arise thatreveal that some may be unknowingly relying too
much on corporate wisdom and attitudes. That is why
I steadfastly focus on my responsibility to maintain an
objective viewpoint and proactively express my opinionsfrom the perspectives of shareholders and the public.
During the seven years since I took office as anexternal director in 2014, the Company has reformed
the Board of Directors in a variety of ways. For
instance, it has strengthened its governance system incompliance with Japan’s Corporate Governance Code,which has been in effect since fiscal 2015. It has also
increased the number of its external officers and held
liaison meetings of external officers while implementing
measures to enhance the board’s effectiveness.
As pointed out in the recent evaluation of board
effectiveness, some issues remain to be addressed,
such as the lack of comments from internal directors
on areas outside of their responsibilities, the relatively
few opportunities for external officers to visit sites, andinsufficient information on the progress of deliberations
at management meetings. Even so, I feel that we are

Message from the Chair of the Board of Directors

Fixed
Remuneration

GovernanceCategory

ESG Initiatives▍Elements and Procedures for Remuneration for Directors and Auditors (as of June 23, 2021)

making steady progress.
As an external director, I was appointed chairof the Board of Directors on June 25, 2020, and I
understand this appointment to be part of the reforms
we have been advancing for some time. Since theboard is in a position to supervise the execution ofoperations by management, the appointment of an
independent external director as chair of the board
must be of great significance. Even so, it makes nosense if the board does not function effectively andproactively. As the chair, I intend to encourage as manymembers as possible to express their opinions and to
strive to enhance deliberations and make meetings
more effective. I am also working with the secretariat
to improve the ways meetings are run, such as byexplaining items more concisely and creating more
opportunities to present agenda items in advance.
In the current fiscal year, we will start discussions
on the formulation of Phase 3 of our Medium-termManagement Plan, the last four years of our longterm vision “Century 2025.” This is an important planthat will determine the next 100 years of the Group.
I believe that the Board of Directors has a vital role toplay in discussing the overall vision for our mediumto long-term direction and growth strategies. Thanks
in part to the impact of the quarterly liaison meetingsof external directors, we have been able to effectively
share issues and establish a relationship of trust withmanagement. We will all work in concert to contributeto the sustainable development of Sanki Engineering.

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External● Directors

ESG Initiatives

Executives of the Sanki Engineering Group (as of June 23, 2021)

GovernanceTsutomu
Hasegawa
Joined the Company in 1975. He has many yearsof experience in the division management of
the Facilities Construction Business and Sales
Administration Division. Since assuming the post ofrepresentative director and president in 2015, he has
been in his current position since 2020.
Apr. 1975 Joined Sanki Engineering Co. Ltd.
Apr. 2020 Appointed as representative director
and chairman of the Company (current
positions)Representative
Director andPresident

Hirokazu
IshidaJoined the Company in 1983. He engaged in the
Facilities Construction Business for many years. In
2018, he served in the key post of general managerof the Management Planning Office. He wasappointed to his current position in 2020.
Apr. 1983 Joined Sanki Engineering Co., Ltd.
Apr. 2020 Appointed as representative director
and president of the Company (current
positions)

Director

Director

Director

Director

Joined the Company in 1972. He has many years ofexperience in operation and division management of
the Facilities Construction Business. Since 2017 he hasserved as general manager of the Mechanical & Electrical
Contracting Headquarters. He also leads the Labor
Safety, Health, Quality Management & Environment
Promotion Office.

Joined the Company in 1985. After gaining experience
as an engineer in the Facilities Construction Business,
including many overseas assignments, he served as
general manager of the Facility Systems Division. He
has been in his current position since 2021.

Joined the Company in 1984. Engaged in researchand development and an energy conservation-related
business, and he served as head of the R&D Center in
2018. He has been in his current position since 2021.

Joined the Company in 1982. He amassed a wide
range of operational experience as an engineer in
the Facilities Construction Business. Thereafter, heserved as a manager responsible for the technology
development departments. After serving as a fulltime Audit & Supervisory Board member starting in
2016, he has been in his current position since 2020.

Eiji
Mitsuishi

Apr. 1972 Joined Sanki Engineering Co., Ltd.
Jun. 2017 Appointed as director, senior executive officer
and general manager of the Mechanical &Electrical Contracting Headquarters of theCompany (current positions)

Masayuki
Kudo

Kazuaki
IijimaApr. 1985 Joined Sanki Engineering Co., Ltd.
Apr. 2021 Appointed as director, senior executive
officer, general manager of CSR
Promotion Division (current positions)Apr. 1984 Joined Sanki Engineering Co., Ltd.
Jun. 2021 Appointed as director, managing
executive officer, and general manager
of Plants & Machinery Systems
Business Division (current positions)

External Director

External Director

Hirotoshi
Fukui

Apr. 1982 Joined Sanki Engineering Co., Ltd.
Jun. 2020 Appointed as director, senior executive
officer, general manager of General
Affairs and Human Resources Division(current positions)Executives of the Sanki Engineering Group

Representative
Director andChairman

Chair of the Boardof Directors
Director

External Director

External Director

Yukiteru
Yamamoto

Kazuhiko
Kashikura

Joined the Company in 1984. He engaged in accounting
and finance-related operations and the promotionof internal control. He has also served as a manager
responsible for the administration departments including
general affairs and human resources. He currently serves
as general manager of the Accounting Division.

Served in positions including representative director
and president of Mitsui Life Insurance Company
Limited and was also active as an executive memberof the Policy Board of the Japan Business Federation.
Since June 2014 he has been an external director of
the Company.

Served as an executive officer of Sumitomo Mitsui
Banking Corporation and top executives at the samegroup companies. Since 2018, he has been an
external director of the Company.

Held managerial positions in major departmentsof the Bank of Japan. From 2010, he served as an
executive officer at Chugai Pharmaceutical Co., Ltd.,and he has been in his current position since 2021.

Served as an executive officer of Tokyo Gas Co., Ltd.
and managed several of its group companies as a
top executive. He has been in his current position
since 2021.

Apr. 1984 Joined Sanki Engineering Co., Ltd.
Jun. 2020 Appointed as director, executive officer,
general manager of the Accounting
Division, and chief financial officer of theCompany (current positions)Apr. 1977 Joined Mitsui Mutual Life Insurance Company
Jun. 2020 Appointed as director and chair of the Boardof Directors of Sanki Engineering Co., Ltd.

Apr. 1977 Joined The Mitsui Bank, Ltd.
Jun. 2018 Appointed as external director of SankiEngineering Co. Ltd.

Apr. 1980 Joined the Bank of Japan
Jun. 2021 Appointed as external director of SankiEngineering Co. Ltd.

Apr. 1985 Joined Tokyo Gas Co. Ltd.
Jun. 2021 Appointed as external director of theCompany (current position)

External Auditor

External Auditor

External AuditorLong involved in education and research at a university,
he has served as president of Kyorin University since2010 and is currently its honorary president. In 2019, hebecame an external auditor of the Company.

Has served in positions including president and chief
executive officer of Mitsui Sumitomo Insurance
Company, Limited. He has been in his current position
since 2019. He concurrently serves as a special advisor
to Mitsui Sumitomo Insurance Company, Limited.

YoshioKawabeKeiji
Kono

AkihikoMatsuda● Auditors

Full-time Auditor

Etsuji
Hitomi82

Full-time Auditor

Kazuo
Saito

Shozo
FujitaJoined the Company in 1970. He served in theaccounting and finance departments for many years.
In 2007, he became general manager of Internal
Audit Office and, in 2013, director of Sanki Kankyo
Service Co., Ltd. He has been in his current position
since 2018.

Joined the Company in 1974. He engaged in thetechnical field of the Facilities Construction Business.
He has had experience in department management
and served as the manager of technical administration
departments in the Facilities Construction Business. He
has been in his current position since April 2020.

Became a prosecutor in 1976 and registered as a lawyer
in 2011. He served in positions including representative
director and president of The Resolution and Collection
Corporation and as a director who is an audit andsupervisory committee member of another company.
He has been in his current position since 2018.

Apr. 1970 Joined Sanki Engineering Co., Ltd.
Jun. 2018 Appointed as full-time auditor of theCompany (current position)

Apr. 1974 Joined Sanki Engineering Co., Ltd.
Jun. 2020 Appointed as full-time auditor of theCompany (current position)

Apr. 1976 Became a prosecutor
Jun. 2018 Appointed as external auditor of SankiEngineering Co., Ltd. (current position)
Feb. 2019 Opened Shozo Fujita Law Firm (current
position)

SANKI REPORT 2021

YutakaAtomi

Apr. 1970 Began working at Surgical Department
I, Faculty of Medicine, The University ofTokyo
Jun. 2019 Appointed as external auditor of theCompany (current position)

ToshiakiEgashira

Apr. 1972 Joined Taisho Marine & Fire Insurance Co., Ltd.
Jun. 2019 Appointed as external auditor of the Company
Apr. 2020 Appointed as special advisor to Mitsui
Sumitomo Insurance Company (current
position)

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ESG Initiatives

Compliance▍Whistleblowing System

ReportBasic Philosophy

Board of Directors
ReportSanki Engineering Group Compliance Declaration, Sanki Engineering Group Conduct Standards

ReportReportSecretariat (CSR Promotion Division)

If the person wants to report

External hotline(consulting attorney)

https://www.sanki.co.jp/en/csr/policy/compliance.html#etc02

Harassment Consulting Office(external expert counsellor)

Sanki Engineering Group Code of Conduct and Action Guidelines

https://www.sanki.co.jp/en/csr/policy/conduct-code.html

Corporate Ethics Hotline
Fair Trade Hotline

Compliance Promotion System

Reference
Framework of the Corporate
Governance System
Page 76● Whistleblowing System
We set up the Corporate Ethics Hotline for reporting on compliancerelated issues and the Fair Trade Hotline for reporting on violations of
the Anti-Monopoly Act as well as the Women’s Hotline, which accepts
consultations from women, and the Harassment Consulting Office. Theinternal hotlines go to the full-time auditor and CSR Promotion Division,
while the external hotlines go to our consulting attorney’s office. We act
swiftly to resolve the issues that are reported, with due consideration forthe protection of anyone seeking consultation or providing informationin accordance with the Corporate Ethics Regulations. All of the reported
information is presented to the executives responsible for corporate
ethics, and important information is reported to the Board of Directors.
In fiscal 2020, there were 10 reported incidents (9 internally and 1
externally), and all incidents were handled appropriately.
The names of individuals who report to the Corporate Ethics Hotline
will be handled in secrecy by the executives responsible for corporate
ethics and will not be disclosed to others without the reporter’s priorconsent. The reporter will not be placed at a disadvantage for consulting
or reporting to the hotline. We are also distributing the Sanki EngineeringGroup Compliance Handbook to raise awareness of the systemthroughout the entire Group. The hotline is also available to business
partners, and the Company provides contact information.

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Women´s Hotline

Report and Consultation● Compliance Confirmation Sheets from All Executives and Employees
In order for all Group executives and employees to refresh their awarenessof the responsibilities they must fulfill in their respective positions and roles,
compliance confirmation sheets covering items such as observance of theCode of Conduct and Action Guidelines, and eliminating anti-social forces, aresubmitted at the beginning of each fiscal year.
▍Number of People Submitting Compliance Confirmation Sheets (Fiscal 2021)
Sanki Engineering(Target Employees)

Compliance Promotion Activities

Compliance confirmation sheets concerning
performance of duties*1

Number of Reports in Fiscal 2020
◦Corporate Ethics Hotline: 9◦Fair Trade Hotline: 0◦Women’s Hotline: 0◦H arassment Consulting
Office: 1

Compliance

Officers responsible forcorporate ethics

The Sanki Engineering Group strives to maintain legally compliant behavior based on corporate ethics
across all aspects of its operations by upholding the Sanki Engineering Group Compliance Declaration,
the Sanki Engineering Group Code of Conduct and Action Guidelines, and the Sanki Engineering Group
Conduct Standards.

We have established a Corporate Ethics Committee, chaired by thepresident, who nominates officers responsible for corporate ethics tooversee the committee’s activities. In principle, it meets twice a year
to review, monitor, and provide guidance with respect to complianceguidelines and action plans for the entire Group.

GovernanceFull-time auditor

40Group companies(Target Employees)(40)

2,120 (2,146)

Compliance confirmation sheets*2

38

(38)

439 (476)*1 Compliance confirmation sheets
concerning performance of duties are
submitted by directors and executive
officers.
*2 Individuals who have not submitted
compliance confirmation sheets areon maternity leave, receiving medical
treatment, etc.

● Response to Antisocial Forces
We clearly state to our business partners that we will sever any relationships with
antisocial forces as a condition of doing business, and we will ask them to submit a“Letter of Intent Regarding the Elimination of Antisocial Forces.” As of March 31,
2021, we have received the letter from a cumulative total of 3,845 companies.
● Corporate Ethics Training
Sanki Engineering conducts corporate ethics training for all employees on aregular basis in order to ensure thorough compliance with the Code of Conduct
and Action Guidelines. We also hold special separate training when mid-careerhires join the Company and new sales representatives are appointed.
▍Results of Corporate Ethics Training (Fiscal 2020)
Theme
Code of Conduct and Action
Guidelines, and compliance with
the Anti-Monopoly Act
Compliance with theAnti-Monopoly Act

TargetAll Group executive officers
and employees

Frequency and Participation (Attendance Rate)
10 sessions
2,598 employees(99%)*

Mid-career hires

13 employees(100%)

Newly assigned sales staff

21 employees(100%)*Follow-up training was conductedat later dates for those who had notattended.

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ESG Initiatives

Strengthening Compliance with the Anti-Monopoly Act● Compliance Awareness Survey

We conduct an annual awareness survey on issues such as compliance andCSR targeting all executive officers and employees.
The survey questions include those related to harassment in the workplace,customers, and business partners. Survey results are disclosed to all Group
executive officers and employees and used to monitor and improve theeffectiveness of our CSR activities and identify human rights risks.

Q Do you think that compliance behavior (social responsibility-conscious
behavior) has permeated our company?
Yes.

40%

Somewhat.

54%

I’m leaning toward “no” here.

5%

Q Please answer all of the following that apply to your current working
environment. (Multiple answers are allowed.)
I think that personal relationships in the workplace are relatively good.

73%

It seems easy to take various kinds of leaves.

60％

Your supervisor is willing to listen to opinions and suggestions.

54％

Q What do you think is important for creating a workplace where complianceviolations are less likely to occur? (Multiple answers are allowed.)
Improving personal morale and awareness79%

Improving communication in the workplace50%

Improving the organizational climate

26%*1 These were the top three answers.

Compliance

Survey period: June 2020 Participants: all Group executive officers and employees

The following are key stepped-up measures we undertook between fiscal 2013
and fiscal 2020. Applying the results of the compliance awareness survey, we
will continue our Group-wide effort to prevent violations of the Anti-Monopoly
Act in fiscal 2021.

Governance

Excerpted Results of a Questionnaire Regarding Compliance Awareness for 2020*1● Ongoing Promotion of Recurrence Prevention Measures

Policies and Manuals• Formulated the Sanki Engineering Group Compliance• Declaration and Sanki Engineering Group Conduct Standards• Issued and revised the Compliance Handbook.
• Issued and revised the Anti-Monopoly Act Compliance Manual• Clearly stipulated breaches of laws such as the Anti-Monopoly Act as grounds fordisciplinary action
Structural Reinforcements• Resolved to establish a comprehensive, Group-wide Anti-Monopoly Act Compliance
Program at a meeting of the Board of Directors and ran/implemented the program• Assigned a compliance manager in each division and began supervising the process for
deciding the bid amount for public works and operating a system of advance application
and reporting when attending a meeting with any companies in the same industry• Introduced regular rotations for sales staff assignments• Established a Compliance Risk Subcommittee within the Risk Management Committee• Reconsidered membership in outside groups• Began an in-house leniency system (voluntary reporting system).
• Established the Fair Trade Hotline for reporting on violations of the Anti-Monopoly Act andsought awareness among employees
Training and Education• Submitted compliance commitment letters● Harassment Prevention Efforts

We noted feedback and issues concerning harassment in the results of thequestionnaire and from the current state of reports, and we are taking action toprevent and eradicate any harassment by consistently carrying out preventive
education through corporate ethics training and division training. We also holdstudy sessions on remote harassment, which has become a concern due tothe introduction of telework.
● Compliance Audit

The Internal Audit Department seeks to strengthen compliance by providing
guidance on audits. In fiscal 2020, internal audits were carried out at 19
worksites including 17 domestic worksites and 2 domestic subsidiaries. In
addition, to foster compliance awareness at our construction sites, we visited
sites and conducted hearings with site managers via web conferencing.

Anti-Bribery Efforts
We are working to prevent corruption under the Sanki Engineering Group
Action Guidelines, which prohibits the provision of profits such as bribery andexcessive entertainment to public employees. In addition to a bribery programas part of our corporate ethics training, we provide e-learning to all employees.

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• Raised awareness of compliance-related hotlines• Top management visited all business bases to hold corporate ethics training sessions
through direct exchange with all Group executives and employees• Held special training on the Anti-Monopoly Act for newly assigned sales staff and midcareer hires• Conducted e-learning on the Anti-Monopoly Act for all employees

Respecting Human Rights
As globalization advances, social demands for response to corporate humanrights issues are not only being made on employees but also on the entire
value chain of business.
The Sanki Engineering Group endeavors to understand international
standards such as the Universal Declaration of Human Rights and the Guiding
Principles on Business and Human Rights. In addition, it is working tocomply with specific items regarding human rights as stipulated in the SankiEngineering Group Code of Conduct and Action Guidelines and the SankiEngineering Group Procurement Policies. We also request that our business
partners do the same through documents and by other means.

Sanki EngineeringGroup Code of
Conduct and Action
Guidelines

Sanki EngineeringGroup Procurement
Policies

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Risk Management● Risk Management Response▍Major Risk Countermeasures in Fiscal 2020

Risk Management Promotion System

Risks

We set up the Risk Management Committee, chaired by a risk
management officer, to centrally manage Group-wide risks andimplement an organized response. The committee monitors importantrisks throughout the Group, formulates a control plan, and monitors risks
reported by subcommittees and divisions. To enhance the effectivenessof our risk assessment and control, we have set up the Risk Management
Subcommittee to address specific risks under the Risk Management
Committee. In October 2020, we reorganized the subcommittee to create
an 11-subcommittee system. Moreover, the Internal Audit Department
conducts regular audits to check the status of risk management at eachdivision and verify the appropriateness of risk management.

• Analyzed the portfolio based on performance at the end of March and September

Supplier credit• Activated an alarm using bankruptcy predictions every month.
• Developed a supplier information database for use in times of natural disaster.

Labor• Formulated COVID-19 prevention measures• Implemented measures to correct overwork.

Information
security• Installed security software• Created telework security guidelines

Overseas• Took action to prevent the spread of COVID-19 overseas.
•	Reviewed procurement and storage methods for stockpiling disaster preparedness
supplies at each baseCompliance•	Identified department-specific risks through questionnaires and took preventive
measures.

● Risk Management Associated with COVID-19

In response to the COVID-19 pandemic, we established the COVID-19 Task
Force in April 2020 and have been implementing countermeasures as thesituation evolves. Also, the Risk Management Committee conducts regularmonitoring.

▍Framework of the Risk Management System (as of June 25, 2021)

President▍Risks and Opportunities Posed by COVID-19 to Business Activities

Management Meeting
Discussion on policy torespond to important risks

Report findings of deliberations

Risks• Shrinking capital investments due to economic stagnation•	Decreasing demand for office buildings in central urban areas due to the penetration of
teleworking• Deterioration in profit and loss due to construction delays and other factors

Opportunities• Growing demand for ICT facilities and medical and pharmaceutical facilities• Increasing needs for investment in improving the office environment and reviewing
workspaces due to changes in work styles• Need for unmanned operations to prevent the spread of COVID-19

ReportRisk Management Committee

Internal Audit Department
ReportChairperson:
Members:
Roles:

Audit

MonitorConvenes:

Divisions
Risk management division
All departments, centers, divisions,business divisions, businessdepartments, branches and branch
offices, and Group companies

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MonitorReport status

Risk management executive (president)
Management meeting constituent members and persons
nominated by the chairperson
1. Monitor important risks and formulate a control plan
2. Monitor risks reported by subcommittees and divisions
Once a quarter in principle and additionally as required

Subcommittees

Countermeasures

Customer credit

ReportMonitor-F acilities Construction
Business
Declining capital investment
 achinery Systems-M
Business
Declining capital investment
Deterioratingcompetitiveness

Risk Management

The Sanki Engineering Group has established a Group-wide risk management system based on its
Risk Management Rules to comprehensively identify risks that pose an obstacle to conducting normal
business operations and prevent such risks from materializing, and also to minimize loss in the case thatit does occur.

Each fiscal year, the Risk Management Committee identifies risks that affectbusiness activities and stipulates priority risk items for the next fiscal year. The
committee receives reports from the risk management subcommittees tomonitor risks and consider necessary countermeasures, provides instructions,and confirms the status of progress.
In fiscal 2020, the committee convened four times to review some of themonitoring indicators and the structure of the subcommittees. In addition, thecommittee discussed and responded to various issues such as risks linked toclimate change, confirmation of safety in times of disaster, risks associatedwith the Olympics and Paralympics, COVID-19 risks, and reporting procedures
when a serious risk occurs.

◦Business operation risks
 ommon to all construction-Cbusinesses
Securing human resources
Increase in materials andlabor costs
Overseas business risks
Accidents and disasters
during construction
Unprofitable construction

Governance

Basic Philosophy

ReportMajor Business Risks

ESG Initiatives

Risk Management Activities-E nvironmental Systems
Business
Changes in market
conditions
Long-term business risks-R eal Estate Business
Rent fluctuations◦Financial and other risks-C ustomer credit risk-S tock market fluctuations-R isks related to litigation, etc.
-S easonal fluctuations inbusiness performance egal violations-L-N atural disasters-C limate change- Infectious disease epidemic-L eakage of confidential or
personal information-System failure

Annual Securities Reportfor the 97th Business Term(from April 1, 2020 to March
31, 2021) in the “Businessand Other Risks” Section(pages 11–13) (in Japanese)

https://www.sanki.co.jp/ir/
library/doc/securities_R24q.pdf
Reference
Feature 3
Response to COVID-19

MonitorResponding to Disaster Risks with a BCP

Page 29

Committees and Management System

Customer

Financial

Supplier

Information
security

SafetyCentral Disaster Countermeasures
Committee
Corporate Ethics Committee

Legal

Overseas

Management(public relations)Management review of EMS and QMS

Labor

Compliance

Quality

Internal Finance Control Committee
Central Safety and Health Committee

The Sanki Engineering Group’s business continuity plan (BCP) aims toensure the safety of all related persons, including employees, through the
integrated efforts of all divisions and employees. The Company has also built
a framework to contribute to customers and society through swift business
restoration in collaboration with business partners. We have improved oursystem under normal conditions and clarified the codes of action and divisionof roles for times of disaster in order to ensure that restoration activities canbe implemented more promptly in the event of a disaster. To date, we have

Initial response
handbook for
employees in theevent of a disaster

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Initiatives to Ensure Information Security
We have established the Information Security Risk Subcommittee within the Risk
Management Committee to control information security measures Companywide and manage risks. In fiscal 2020, we held two subcommittee meetings. In
addition, we use checklists in a thorough assessment of the status of information
security measures during onsite inspections by supervisors at each branch andbranch office.

Disseminationof rulesAction• E-learning course for all Group executive officers and employees• Corporate ethics training, submission of compliance confirmation sheets (once a year)• Continuously sending alerts on information security•	Status review of information security countermeasures during onsite inspections(8 sites)

Information device • Encryption of information terminals• Regular inventory reviews (conducted once)
management

90

Prevention ofunauthorized use• ID and password management, and security measures for entering and exiting rooms• Confirmation using asset management tools• Preventing non-Company-owned PCs brought into the office from being connectedto the in-house network

Measures against
external threats• Antivirus measures and automatic updating of security patches (once a month)• Web filtering and countermeasures against unsolicited emails• Monitoring of illegal outbound data streams• Installation of security software capable of detecting malware intrusion at an earlystage

Measures forsocial media• Instill an understanding among Group employees using guidelines• Improving the level of security regarding social media

SANKI REPORT 2021

Basic Philosophy
BCP drill

Risk Management Manualfor Overseas Operations◦Response rules andprocedures for the head officeand overseas bases for use
during crises overseas

We clarified our basic approach to issues, including ensuring the rights and equal treatment ofshareholders, appropriate disclosure of information and transparency, and dialogue with shareholders,in the Sanki Engineering Corporate Governance Guidelines, established in December 2015. We areresolved to fulfill our responsibilities to shareholders and investors by following these guidelines.
Sanki Engineering Corporate Governance Guidelines

https://www.sanki.co.jp/en/corporate/governance/guideline.html◦Risk to body and life, theviolation of laws, responding
to the mass media, dealing
with litigation, etc.

FY2021 Goals

Manual to Ensure Safety
in Foreign Countries◦A practical guide on risk
avoidance and emergency
response for employees
working overseas◦Actions required in the eventof a terrorist attack or disaster,
the prevention of damage
from crime and other risk,
compliance with anti-corruption
and other laws, personnel/
labor management of locally
employed staff, religion, andother related matters

Hold more IR meetings

Provide consistent, steady returns to shareholders

Ta r g e t

Ta r g e t

15 more than in FY2018

Total return ratio: 70% or more

Major Action Policy and Initiatives for FY2021
Information Security Rules
and Standards

Provide return to shareholders basedon the Medium-Term Management Plan

Hold IR meetings for new shareholders◦Information Security
Management Rules▍Key Information Security Measures
Type

Dialogue with Shareholders and Investors

We have formulated the Risk Management Manual for Overseas Operations
for the head office and overseas bases as well as the Manual to Ensure Safety
in Foreign Countries for overseas employees, those traveling overseas on
business, and their families, which are revised each year. In addition, our auditors
concurrently serve as auditors of Group companies, and we are working to
improve our Group management system, including at overseas sites.

Dialogue with
Shareholders and Investors

Governance

Strengthening Risk Management in Overseas Operations

ESG Initiatives

relocated the directors’ offices from the upper floors to the lower floors toensure the functionality of the emergency response headquarters, conducteda drill on the assumption that the head office sustained damage and anotheroffice served as an alternative headquarters in the event of a major disaster,
modified the way we operate our safety confirmation system, and expanded
the use of the disaster information sharing tool throughout the Group.
As major BCP initiatives in fiscal 2020, we implemented (1) emergency
communication training and hazard map confirmation for times of largescale disaster, participated in by all Group officers and employees, and (2)improvement of disaster preparedness supplies.
Although we had formulated the Group’s BCP mainly for natural disasters,
we are now working to establish a Business Continuity Management System(BCMS) as a mechanism for effectively maintaining and managing the BCP in
order to ensure the effectiveness of risk response and subsequent recovery in
our overall business.

◦Information System Usage
Standards◦Information Security Risk
Management Standards◦Information Security Risk
Countermeasure Standards

FY2020 Results
IR meetings

40

Annualdividend

Acquisition oftreasury stock

Total returnratio

1 97.3(FY2019: 56 sessions)80(FY2019: 95 yen)

(FY2019: 1.95 million )(FY2019: 111.4%)

Evaluation :Evaluation :Evaluation :Evaluation :sessionsyen

Approx.

millionshares%Level of progress made in FY2020 on goals set for FY2021：Achieved：On schedule to achieve the target：Behind schedule to meet the target

SANKI REPORT 2021

91

E

S

G

Environment

SocialGovernance

P.94 Financial Report
P.102 Corporate Information,

Information Disclosure Based on Disclosure Policy
Sanki Engineering strives to disclose required corporate information in aneasy-to-understand, fair, speedy, timely, and appropriate manner pursuant tothe stipulations of our Disclosure Policy. We proactively disclose information
beyond legal mandates when we deem such information to be useful toshareholders and investors, in order to ensure management transparency.
● Reinforcing the Dissemination of Information
We are working to enhance our IR activities to reinforce our dissemination of
information, a key initiative laid out in the Medium-Term Management Plan“Century 2025” Phase 2. We are also seeking to increase recognition of the
Sanki brand and instill a deeper understanding of the Company by disclosing
our ESG policy in addition to our financial and capital policies and by creating
more opportunities for dialogue with shareholders and investors. Furthermore,
we facilitate the effective exercise of voting rights by shareholders andinvestors by offering greater convenience through efforts such as releasing
the convocation notice of shareholders’ meetings well in advance and posting
information at an early date on our corporate website, in English and Japanese.
● Communication with Shareholders and Investors
With regard to the general meeting of shareholders, we requested thatshareholders refrain from attending the actual meeting and posted on our
website a video explaining the exercise of voting rights in advance, thebusiness report, and issues to be addressed, prior to the meeting. As a result,
we were able to keep the number of physical attendants to a minimum on the
day of the meeting, during which all possible measures were taken to prevent
infection. A video recording of the general meeting of shareholders is available
on our website.
We engage our investors by holding results briefings for analysts andinstitutional investors twice a year. In fiscal 2020, a total of 60 individuals
participated. Forty IR meetings were also held, which we convene as needed
throughout the year. We are actively increasing opportunities to conduct
questionnaire surveys of shareholders to better understand their needs. We
also address the needs of overseas investors through an English language
version of our corporate website. In an effort to prevent the spread of
COVID-19, we conducted our briefing on consolidated results for fiscal 2020
online, as in the previous fiscal year.

• Obtained an AA Rating in the ESG/SDGs Assessment Loan Scheme
Sanki Engineering obtained an AA rating, the second highest on a sevenpoint scale, for the second consecutive year, for an ESG/SDGs Assessment
Syndicated Loan scheme in which the Sumitomo Mitsui Banking Corporation
extends loans based on an independent corporate evaluation conducted by theJapan Research Institute. We will continue to actively disclose information toincrease our recognition further as a company that excels in its initiatives anddisclosure related to ESG and to realizing the SDGs.

92

SANKI REPORT 2021

Financial Report
and Corporate
Information

Disclosure Policy
https://www.sanki.co.jp/en/ir/disclosure/Business Locations, andGroup Companies

P.104 Share Information
P.105 Third-Party Opinion

Medium-Term Management Plan“Century 2025” Phase 2 (FY2019–2021)
https://www.sanki.co.jp/en/ir/library/doc/
century_2025_phase2_2019.pdf

Investor Relations Website

Video about the General Meeting of
Shareholders

Sumitomo Mitsui Banking Corporation
ESG/ SDGs Assessment Loan

93┃ Financial Report and Corporate Information ┃Financial Report（Millions of yen）

Year ended March 31,
2011

Year ended March 31,
2012

Year ended March 31,
2013

Year ended March 31,
2014Year ended March 31,
2015

Year ended March 31,
2016

Year ended March 31,
2017Year ended March 31,
2018Year ended March 31,
2019Year ended March 31,
2020

Year ended March 31,
2021

Fiscal year
Orders received

147,129

175,291

165,800

168,295

173,398

183,270

185,880

191,113217,096

194,018

195,580

Balance carried forward

72,976100,272

111,414108,219

102,019

106,388

123,756

144,712

149,495

136,163

141,676

Net sales

151,794

147,994

154,658

171,496

179,598

178,901

168,512170,157

212,314207,684

190,067

Selling, general and administrative expenses

15,763

15,712

15,19915,60415,015

16,41916,526

18,466

21,046

21,436

21,255

Operating income or loss

3,843

2,525

2,391

2,818

2,951

6,509

6,012

6,593

10,637

10,674

7,498

Ordinary income or loss

4,239

2,268

2,680

3,146

3,809

8,135

6,880

7,434

11,204

11,224

8,196
5,901

Profit (loss) attributable to owners of parent*

2,124

176

(4,992)

1,763

2,461

5,327

4,698

3,906

9,046

7,576

Cash flows from operating activities

11,554(2,697)

9,729(9,403)

(139)

5,220

10,845

6,306

6,786

11,940( 483)Cash flows from investing activities

2,610(1,046)(9,481)(3,506)

3,440

5,520

(1,644)(2,510)(3,775)(303)( 1,423)

Cash flows from financing activities(1,883)(280)(1,028)(4,152)(2,901)(1,826)(2,458)

1,814(5,215)(8,955)( 6,974)

Cash and cash equivalents at end of fiscal year

45,13541,09740,36723,51023,66732,501

39,18744,866

42,61245,94637,087

Total assets

158,501

163,120

166,477

170,181

176,382

169,423

166,612

177,014

195,321

180,805

171,313

Net assets

79,833

79,662

76,932

74,91784,86984,55785,961

86,191

89,77287,364

91,699Number of employees

2,316

2,289

2,246

2,283

2,282

2,309

2,339

2,384

2,394

2,501

2,548

Financial Report and Corporate Information Financial Report

11- year Consolidated Financial Summary

As of end of fiscal year under review

Per share information
Earnings per share (yen)

29.67

2.46

(71.04)

26.46

38.30

83.84

73.91

63.02

150.02128.51103.12Book-value per share (yen)1,115.41

1,113.70

1,106.32

1,142.74

1,334.65

1,328.60

1,350.08

1,419.77

1,502.53

1,510.59

1,611.76

15.00

15.00

15.00

15.00

20.00

30.00

30.00

35.00

60.00

95.00

80.00

Equity ratio (%)

50.3

48.8

46.2

44.0

48.1

49.8

51.5

48.6

45.8

48.2

53.4

Return on assets (%)

2.6

1.4

1.6

1.9

2.2

4.7

4.1

4.3

6.0

6.0

4.7

Return on equity (%)

2.7

0.2

△ 6.4

2.3

3.0

6.3

5.5

4.5

10.3

8.6

6.6

Cash dividends (yen)Other information*The revised Accounting Standard for Business Combination and other standards have been applied since fiscal 2015. Accordingly, “Profit (loss) attributable toowners of parent,” as listed in fiscal 2015 and after, is equivalent to “Net income” listed for the consolidated fiscal years between fiscal 2010 and fiscal 2014.

(left axis) ● Orders received● Sales(right axis) ■ Operating income■ Ordinary income■ Profit (loss) attributableto owners of parent

Orders received and sales

300,000
250,000(Millions of yen)
Profit20,00015,000■ Change in Dividend Per Share and Consolidated Payout Ratio(left axis) ■ Annual dividend per share(right axis) ■ Consolidated payout ratio

(Yen)

100

(%)

620
600

80

200,000

580
60
10,000150,000

80
40

60

100,000
5,000
50,00000-50,000

40

20
0

20
2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

（FY）

0

*The payout ratio was not calculated for fiscal 2012 since the Company reported a net loss.

-5,000-100,000-150,000

942010

SANKI REPORT 2021

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020 （FY）-10,000

SANKI REPORT 2021

95

┃ Financial Report and Corporate Information ┃Consolidated Balance Sheet(Millions of yen)
As of March 31, 2020

(Millions of yen)

As of March 31, 2021

Assets

As of March 31, 2020

As of March 31, 2021

Liabilities and Net Assets
Liabilities:

Cash and deposits¥44,946¥36,087

Notes and accounts receivable on completed construction contracts and other

71,73965,598Notes payable—trade¥3,100¥–Electronically recorded monetary claims

5,063

6,487

Electronically recorded obligations—operating

1,626

873

Securities

2,999

2,999

Accounts payable for construction contracts

47,761

40,836

Short-term loans payable

6,869

7,135

Inventories:
Costs on uncompleted construction contracts
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets

2,589

2,343

542

493

2,901

2,057

(17)

(12)

130,765

116,054

Property, plant and equipment:
42,83743,594

Accumulated depreciation(32,841)(33,445)

Buildings and structures, net

9,996

10,148

2,007

2,025

(1,528)(1,621)

Machinery, equipment, vehicles, and tools, furniture and fixtures
Accumulated depreciation
Machinery, equipment, vehicles, and tools, furniture and fixtures, net
Land

478

404

3,107

3,107

634

539

Accumulated depreciation

(349)

(250)

Lease assets, net

284

289

Construction in progress89

22

13,957

13,972679

937

Lease assets

Total property, plant and equipment

Intangible assets

Lease obligations
Income taxes payable

189

133

1,505

840

Advances received on uncompleted construction contracts

7,493

8,580

Provision for bonuses

4,088

3,792

Provision for directors’ bonuses

242

230

Provision for warranty costs

411

788

50

–

Other

6,363

4,671

Total current liabilities

79,70567,882

3,850

3,460

Provision for loss on construction contracts

Noncurrent assets:
Buildings and structures

Current liabilities:

Noncurrent liabilities:
Long-term loans payable
Lease obligations
Liability for retirement benefits

292

274

3,465

1,710

Provision for directors’ retirement benefits

39–

Provision for loss on business of subsidiaries and associates

300

300

Provision for compensation for damages

190

－–

Deferred tax liabilities

30

285

Other

5,568

5,701

Total noncurrent liabilities

13,735

11,731

93,44079,614

Total liabilities

Financial Report and Corporate Information Financial Report

Current assets:

Net assets:
Shareholders’ equity:

Investments and other assets:
Investment securities
Long-term loans receivable

24,017

28,816

101

85

Asset for retirement benefits

3,407

5,233

Lease and guarantee deposits

1,462

1,456

Capital stock

8,105

8,105

Capital surplus

4,181

4,181

Retained earnings

74,15573,158Treasury stock(4,187)(3,859)Total shareholders’ equity

82,254

81,585

7,274

10,853626

873

Deferred tax assets

2,372

786

Other

5,379

3,516

Deferred gains or losses on hedges

Allowance for doubtful accounts(1,963)(419)

Foreign currency translation adjustment

Total investments and other assets

35,40340,348Retirement benefits asset and liability adjustments(2,286)(908)

50,04055,258

Total accumulated other comprehensive income

4,807

9,831

¥180,805¥171,313

Insurance funds

Total noncurrent assets
Total assets

Accumulated other comprehensive income:Unrealized gains on available-for-sale securities

Subscription right to shares
Total net assets
Total liabilities and net assets

96

SANKI REPORT 2021

–－

2

(179)

(116)

302

302

87,364

91,699¥180,805¥171,313

SANKI REPORT 2021

97┃ Financial Report and Corporate Information ┃Consolidated Statement of Income and Comprehensive Income

Consolidated Statement of Changes in Net Assets(Millions of yen)

Year ended March 31, 2020

Year ended March 31, 2021

For the year ended March 31, 2020

(Millions of yen)

Net sales:
Net sales of completed construction contracts
Total net sales¥205,247¥187,559

2,437

2,507

207,684

190,067

174,023

159,793

Cost of sales:
Cost of sales of completed construction contracts
Cost of sales on real estate business and otherTotal cost of sales

1,550

1,519

175,574

161,313

31,224

27,765886

988

32,11028,754Gross profit:
Gross profit on completed construction contracts
Gross profit on real estate business and otherTotal gross profit

Balance at the beginning of current period
Changes in items during the period
Dividends from surplus
Profit (loss) attributable to owners of parent
Purchase of treasury stock
Cancellation of treasury shares
Change in the scope of consolidation
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of the current period

Capital stock¥8,105

Capital surplus¥4,181Retained earnings¥73,750

Treasury stock
Total shareholders’ equity¥ (3,700)¥81,836(4,469)7,576(4,469)7,576(2,899)–210(2,412)
210–¥8,105–¥4,181

905¥74,155(2,899)
2,412

(487)
¥ (4,187)

418¥82,254

Selling, general and administrative expenses:
Employees’ salaries and allowances

7,580

7,591

Provision for bonuses

1,732

1,613

Provision for directors’ bonuses

242

230

Retirement benefit expenses

494

684

1,060

1,079

Depreciation
Other

10,324

10,055

Total selling, general and administrative expenses

21,436

21,255

10,674

7,498

Operating income
Non-operating income:Interest income

19

19

Dividends income

598

521

Insurance claim income

126

247

Waste disposal income

85

109

207

170

1,038

1,068

Interest expense

126

113

Commitment fees

–

33

Other
Total non-operating income

Accumulated other comprehensive income

Balance at the beginning of current period
Changes in items during the period
Dividends from surplus
Profit (loss) attributable to owners of parent
Purchase of treasury stock
Cancellation of treasury shares
Change in the scope of consolidation
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at the end of the current period

Unrealized gains onavailable-for-salesecurities

Deferred gains orlosses on hedges

Foreign currencytranslation
adjustment

Retirement benefits
asset and liability
adjustments¥9,450–¥ (94)¥ (1,652)(2,176)(2,176)¥7,274

(6)
(79)
(85)
¥ (179)

–
–
–

(634)
(634)
¥ (2,286)

Total accumulated
othercomprehensive
income¥7,704

Subscription
rightsto shares

Total assets¥231¥89,772

71
71
¥302

(4,469)7,576(2,899)–204(2,819)(2,407)¥87,364(6)(2,890)(2,896)¥4,807

Financial Report and Corporate Information Financial Report

Net sales of real estate business and other

Shareholders’ equity

Non-operating expenses:

Repair expenses for construction contracts

148

63

Other

211

160

Total non-operating expenses

487

370

11,224

8,196

Ordinary income
Extraordinary income:Gain on sales of noncurrent assets

274–

Gain on sales of investment securities

477–

Subsidy income

100–

Total extraordinary income

¥851

¥–

Impairment loss

55

1

Loss on retirement of noncurrent assets

68

79

Loss on tax purpose reduction entry of non-current assets

100–

Loss on sales of investment securities

38–

Loss on valuation of investment securities

60

19

Environmental expenses

69–

Office transfer expenses

96

68

Loss on valuation of shares of subsidiaries and associates

174–

Provision for loss on business of subsidiaries and associates

300

–

–

231

Extraordinary loss:

Compensation for damage
Total extraordinary losses
Profit (loss) before income taxes

962

399

11,114

7,797

3,490

2,232

Income taxes:
Income taxes-current

46

(336)

Total income taxes

3,537

1,895

Profit (loss)¥7,576¥5,901¥7,576¥5,901¥–¥–¥ (2,176)¥3,579

Income taxes-deferred

Profit (loss) attributable to:
Owners of parent
Non-controlling interests
Other comprehensive income:Unrealized gains on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income

–

2

(79)

63

(634)

1,378

(2,890)

5,023¥4,686¥10,924¥4,686¥10,924¥–¥–

For the year ended March 31, 2021

(Millions of yen)
Shareholders’ equity

Balance at the beginning of current period
Changes in items during the period
Dividends from surplus
Profit (loss) attributable to owners of parent
Purchase of treasury stock
Disposal of treasury shares
Transfer of loss on disposal of treasury shares
Cancellation of treasury share
Net changes in items other than shareholders’ equity
Total changes during the period
Balance at the end of the current period

Capital stock¥8,105

Capital surplus¥4,181Retained earnings¥74,155

Treasury stock¥ (4,187)

Total shareholders’ equity¥82,254(1,171)116(5,474)
5,901
(40)
40

–
¥8,105–¥4,181(40)(1,383)

1,383(5,474)
5,901(1,171)
75
–
–

(996)
¥73,158328¥ (3,859)(668)¥81,585

Accumulated other comprehensive income

Balance at the beginning of current period
Changes in items during the period
Dividends from surplus
Profit (loss) attributable to owners of parent
Purchase of treasury stock
Disposal of treasury shares
Transfer of loss on disposal of treasury shares
Cancellation of treasury shares
Net changes in items other than shareholders’ equity
Total changes in items during the period
Balance at the end of the current period

Unrealized gains onavailable-for-salesecurities

Deferred gains orlosses on hedges

Foreign currencytranslation
adjustment

Retirement benefits
asset and liability
adjustments¥7,274–¥ (179)¥ (2,286)

Total accumulated Subscription
Total net assets
otherrights to sharescomprehensive
income¥4,807¥302¥87,364

1,378
1,378
¥ (908)(5,474)
5,901(1,171)
75
–
–
5,003
4,334
¥91,699

3,579
3,579
¥10,853

2
2
2

63
63
¥ (116)

5,023
5,023
¥9,831

(19)
(19)
¥282

Comprehensive income attributable to:
Owners of parent
Non-controlling interests

98

SANKI REPORT 2021

SANKI REPORT 2021

99┃ Financial Report and Corporate Information ┃Consolidated Statement of Cash Flows(Millions of yen)

(Millions of yen)
Year ended March 31, 2020

Year ended March 31, 2021

Year ended March 31, 2020

Year ended March 31, 2021

Profit (loss) before income taxes¥11,114¥7,797

Net decrease (increase) in short-term loans payable

14

245

Depreciation and amortization

1,643

1,700

Proceeds from long-term borrowings

–

1,000

Cash flows from financing activities:

Cash flows from operating activities:

55

1

Repayments of long-term loans payable(1,390)(1,370)Loss on retirement of noncurrent assets

68

79

Purchase of treasury stock(2,899)(1,171)

Loss on tax purpose reduction entry of non-current assets

100–

Proceeds from exercise of stock options

Environmental expenses Office transfer expenses

69–

Repayments of lease obligations

Office transfer expenses

9668Cash dividends paid

(4,469)(5,474)

Loss on valuation of shares of subsidiaries and associates

174–

Net cash (used in) provided by financing activities(8,955)(6,974)

Increase (decrease) in provision for loss on business of subsidiaries and associates

300

–

–

231

(28)

(1,525)Compensation for damage
Increase (decrease) in allowance for doubtful accounts
Increase in provision for bonuses

(91)

(296)

Increase in liability for retirement benefits

395(1,594)

Decrease in provision for directors’ retirement benefits

(13)

(39)

Increase (decrease) in provision for loss on construction contracts

(429)

(50)

Interest and dividends income

(618)

(540)

Interest expense

126

113

Commitment fees–

33

Profit (loss) on sales of property, plant and equipment
Loss (gain) on valuation of investment securities
Subsidy income
Increase in notes and accounts receivable on completed construction contracts and other
Increase in costs on uncompleted construction contracts
Increase in notes and accounts payable on construction contracts and other

(274)

0

60

19

(100)

–

15,321

4,770

(429)

246

(16,009)(10,777)

Decrease (increase) in advances received on uncompleted construction contracts

4,025

1,088

Increase in other current liabilities

1,480(1,706)

Other

(837)

3,118

Subtotal

16,1982,737Interest and dividends received

619

540

Interest paid

(126)

(114)

Commitment fees

–

(29)

Income taxes paid

(4,516)(3,079)Payments for environmental expenses

(184)

–

Payments for office transfer expenses

(48)

(115)

Compensation for damage paid
Net cash provided by operating activities

–

(421)

¥11,940¥ (483)(17,000)

Effect of exchange rate changes on cash and cash equivalents

–

0

(211)

(203)

(45)

21

Net decrease (increase) in cash and cash equivalents

2,636(8,859)Cash and cash equivalents at the beginning of the period

42,61245,946

Increase in cash and cash equivalents resulting from inclusion of subsidiaries in consolidation
Cash and cash equivalents at the end of the period

698–¥45,946¥37,087

Financial Report and Corporate Information Financial Report

Impairment loss

Cash flows from investing activities:

10 0

Purchase of securities(16,000)

Proceeds from redemption of securities

16,10017,000Purchase of property, plant and equipment(1,839)(1,494)

Proceeds from sales of property, plant and equipment

812

0

Payments for retirement of property, plant and equipment

(58)

(93)

Purchase of investment securities

(284)

(23)

Proceeds from sales of investment securities

1,041

358

Execution of loan

(10)

–

Collection of loans receivable

20

15

Subsidies received

20

20

Proceeds from maturity of insurance funds

30

74

Other

(136)

(281)

Net cash used in investing activities(303)(1,423)

SANKI REPORT 2021

SANKI REPORT 2021

101┃ Financial Report and Corporate Information ┃Corporate Information, Business Locationsand Group Companies (as of April 1, 2021)

Corporate Information

Representative Offices and Group Companies Overseas

Domestic Business Locations

Company nameSanki Engineering Co., Ltd.

● Representative officeGroup company
Hokkaido
branchofficeDate of establishment
April 22, 1925
Stated capital
8,105.18 million yen

Hokuriku branch office

Representative
Hirokazu Ishida, President
Principal lines of business
Facilities construction, plant and machinery
systems, real estate
Number of employees (as of March 31, 2021)
Consolidated: 2,548
Non-consolidated: 2,048

Toyota branch office

Chugoku branch office
Kyoto branch
officeIbaraki branch office

Sanki Sangyo Setsubi Co., Ltd.
Established: May 1, 1980
Capital: 20 million yen
Business areas:• Safety management, installation, instrumentation
work, renovation, periodic maintenance, and upkeep ofgeneral equipment (production, transportation, etc.) as
necessary• Development and maintenance of computer software
for transportation management

10 2

SANKI REPORT 2021

AEROSTRIP
Corporation
Sale of aeration systems

Chiba branch office

Kyushu branch office

Head office
Tokyo branch
Yokohama branch office

Mikawa branch
officeShikoku branch officeKansai branch
Kobe branch
officeSanki Techno Center
R&D Center
Yamato Product Center

Shizuoka branch office

Consolidated Subsidiaries
Sanki Techno Support Co., Ltd.
Established: April 1, 1980
Capital: 100 million yen
Business areas:• Design, construction, operation/management, repair andmaintenance of HVAC, plumbing and electricity work
• Energy saving diagnosis and consulting• Building IP phone systems, call center systems andnetworks

Facility design, construction,
maintenance and consulting

Kanto branch office

Offices
Branches: 3
Branch offices: 15
Training Center:1
Laboratory
Factory: 1
Head office
8-1 Akashi-cho, Chuo-ku, Tokyo

Sanki Construction Engineering(Shanghai) Co., Ltd.

Tohoku branch office

Chubu branch

Sanki Kako Kensetsu Co., Ltd.
Established: September 1, 1980
Capital: 80 million yen
Business areas:• Design, construction, operation/management,
maintenance, upgrading and improving of waste
treatment facilities• Manufacture, sale and installation of solid-liquid
separators• Design, construction and maintenance/
management of water/wastewater treatment
facilities
Sanki Kankyo Service Co., Ltd.
Established: June 29, 1990
Capital: 50 million yen
Business areas:• Design, construction, management and work
contracting of environmental protection facilities,
including water supply and sewage facilities andwaste treatment facilities, etc.
• Operation, maintenance and management, andsale of chemical products for these facilities

Sanki Partners Co., Ltd.
Established: August 1, 1980
Capital: 10 million yen
Business areas:• Insurance agency, leasing and temporary staffing
Sanki Construction Engineering (Shanghai) Co., Ltd.
Established: July 20, 2005
Capital: 3.80 million U.S. dollars
Business areas:• Facility design, construction, maintenance and consulting
AQUACONSULT Anlagenbau GmbH
Acquired a controlling interest in September 2006
Capital: 18 thousand euro
Business areas:• Manufacture and sale of aeration systems
THAI SANKI ENGINEERING & CONSTRUCTION CO., LTD.
Established: May 6, 2008
Capital: 16 million baht
Business areas:• Facility design, construction, maintenance and consulting

Austria Office
AQUACONSULT
Anlagenbau GmbH
Manufacture and saleof aeration systems

THAI SANKI ENGINEERING &CONSTRUCTION CO., LTD.
Facility design, construction,
maintenance and consulting

Non-consolidated Subsidiaries

Affiliate Not Accounted for by the Equity Method

Tomakomai Netsu Service Co., Ltd.
Established: July 20, 1971
Capital: 165 million yen
Business areas:• Heat supply to multi-unit housing, and operation and maintenance of cleaning
center facilities

PFI Okubo Techno Resource Co., Ltd.
Established: December 3, 2004
Capital: 10 million yen
Business areas:• Updating, maintenance, management and operation of wastewater treatment
facilities and emergency generators at the Okubo Water Purification Plant,
Saitama Prefecture
Period of business:• 3 years and 4 months for design and construction; 20 years for operation,
maintenance and management

AEROSTRIP Corporation
Acquired a controlling interest in September 2006
Capital: 100 U.S. dollars
Business areas:• Sale of aeration systems

Financial Report and Corporate Information Corporate Information, Business Locations and Group Companies

The Sanki Engineering Group aims to build a comfortable environment for people and the Earth by leveraging“total engineering competency” in a wide range of regions and business domains. Together with our customers,
we will strive as a group to contribute to the realization of a sustainable society.

Sendai Kankyo Hozen Co., Ltd.
Established: November 7, 2016
Capital: 100 million yen
Business areas:• Management of operation and maintenance for the renovation work for key
facilities of the Sendai Clean Center

SANKI REPORT 2021

10 3

┃ Financial Report and Corporate Information ┃Share Information

Third-Party Opinion

to respond appropriately to sustainability

voluntary turnover rate, which is anotherissues and encourages the Board of Directors

commendable aspect of fiscal 2020.

Fiscal year

April 1 to March 31 of the following year

to formulate basic policies governing

Annual general meetingof shareholders

Late June each year

Trading unit
Number of authorized shares

100 shares
192,945,000■   O wnership Statistics

corporate initiatives on sustainability. Sanki

4. Clarification of the Value Creation Process

Engineering is currently preparing to set

In regard to disclosure, there was a major

up a Sustainability Committee that will

improvement in the diagram for the value

develop related initiatives for the entire

creation process, which is essential forGroup. The CSR Promotion Division, which

an integrated report. The latest diagram

will be responsible for implementation, has

makes the changes in the Group’s

1. Advances in Governance Reform

already made the transition to a three-entity

varied management resources easier

The Sanki Engineering Group has beensystem consisting of the CSR Promotion

to understand and clearly describes themaking strides with governance reform in

Department, Sustainability Promotion

relationship of mutual dependence with

Treasury stock: 1
2,942 thousand shares(4.93%)

Individuals and other: 14,415
14,867 thousand shares(24.92%)Financial
institutions: 30
23,509 thousand shares(39.40%)

Yoshinao Kozuma
Professor Emeritus,
Sophia University

Number of issued shares

59,661,156

Number of shareholders

14,861

Transfer agent and special
account management institution

Sumitomo Mitsui Trust Bank, Limited 1- 4-1,
Marunouchi, Chiyoda-ku, Tokyo

Stock exchange listing

Tokyo Stock Exchange

response to revisions to Japan’s Corporate

Department, and Internal Audit Department,

stakeholders. Moreover, the distinction

Securities code

1961

Governance Code (hereafter “Code”) in June

representing steady progress toward the

between “output” and “outcome” has2021. The addition of an external director isestablishment of a framework for promoting

been sufficiently expressed, as strongly

one example. The appointment of the newsustainability. Improvements have also

recommended under the revised IR

member raised the total number to fourbeen made in terms of disclosure, with the

Framework of the International Integrated

external directors and thereby satisfied the

addition of a sustainability management

Reporting Council. As a result, it is even“one-third or more” requirement under thesection in the Sanki Report this fiscal year,

easier to understand the story of Sanki

revised Code. More importantly, the Group

including a statement of commitment by

Engineering’s medium- to long-term value

is pursuing even more effective reforms.

the General Manager of the CSR Promotion

creation and its efforts in sustainability

When assessing the soundness of corporate

Division.

management.

and operational execution, as well as the

3. Efforts to Become a Worker-Friendly Company

5. Future Considerations

independence of the supervising body, areFrom the social perspective, the Group has

The value chain map is described in terms

key indicators. In the latest reforms, Sanki

demonstrated results in work style reform.

of business units and needs improvement.

Engineering not only increased the number

According to the data, average monthly

In sustainability reporting, the purpose ofof external directors but also appointed one

overtime work hours have continued tocreating a value chain map is to facilitate

as chairperson of the Board of Directors, thus

decline since fiscal 2018, while the samethe identification of risks associated withcreating an organizational divide between

downward trend was observed in data fromthe Group’s activities and business relations

supervision and operational execution. This

across the Group disclosed since fiscal 2019.

on the upstream and downstream portions

significantly strengthened its governance

Given that the actual status of overtimeof its global value chain. This is a particularly

structure as a Company with Board ofhours has become less visible due to remote

important tool for appropriately assessing

Auditors and led to a substantial advancework during the COVID-19 pandemic, thisthe less visible ESG risks that arise

in sustainability management—a major

is an area where the Group needs to keep

upstream in the supply chain, including

achievement in fiscal 2020.

bolstering its initiatives. Furthermore,procurement activities and businessapplications for childcare leave by maleassociates. On a related note, the inclusion

employees have remained steady, testifyingof human rights education in the training

to a supportive workplace environment.

curriculum for procurement staff also merits

The Group also began disclosing its

further consideration.

Foreign corporations and other: 212
12,991 thousand shares(21.78%)
Securities companies: 26
777 thousand shares(1.30%)

Other corporations: 177
4,573 thousand shares(7.67%)

Financial Report and Corporate Information Share Information / Third-Party Opinion

Share Information (as of March 31, 2021)

governance, the separation of supervision■   M ajor Shareholders

Name of Shareholder
Meiji Yasuda Life Insurance Company

The Master Trust Bank of Japan, Ltd. (Trust account)

Taiju Life Insurance Company Limited

Sanki Kyoueikai

Number of Shares Held(Thousand Shares)

5,630
4,596
3,134
2,803

Shareholding Ratio
(%)

9.93
8.10
5.53
4.94

2. Establishment of the Framework for Promoting
Sustainability

Nippon Life Insurance Company

2,324

4.10

Custody Bank of Japan, Ltd. (Trust Account)

2,112

3.72

Sanki Engineering Employee Shareholding Association

1,353

2.39

State Street Bank and Trust Company 505001

922

1.63

MSIP Client Securities

867

1.53

The Oita Bank, Ltd.

800

1.41

The revised Code requires listed companies

Response to Third-Party Opinion

Notes:
Although the Company holds 2,942 thousand shares of treasury stock, it is excluded from the list of major shareholders. Calculation of shareholding ratio excludes
treasury stock.

10 4

SANKI REPORT 2021

We are sincerely grateful for the valuable insights you have provided on the SANKI REPORT 2021.
This was a milestone report that marked the tenth year since we began publishing an integrated report, and we appreciate
your evaluation of our governance reform and establishment of a framework for promoting sustainability. We will further bolster
our sustainability management and continue to steadily expand our concrete initiatives.
We will make improvements in disclosing detailed information to enhance our sustainability reporting, including the relationshipbetween upstream and downstream activities, by presenting the value chain map, grasping our Scope 3 emissions, and othermeans.
We are resolved to make the best use of the SANKI REPORT to further advance our business activities and help realize asustainable society.

Takeshi Terazaki
Executive Officer and General Manager, Management Planning Office

SANKI REPORT 2021

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