KURITA WATER INDUSTRIES LTD. Integrated Report 2022

A Creator of Unique Value

Nakano Central Park East, 4-10-1 Nakano
Nakano-ku, Tokyo 164-0001, Japan
Tel: +81-3-6743-5000

KURITA WATER INDUSTRIES LTD.

https://www.kurita.co.jp/english/

Fiscal year ended March 31, 2022

Integrated Report 2022

Contents

Kurita Group Overview

2 History of Value Creation

Editorial Policy

4 Philosophy System

The Integrated Report features the Kurita Group’s vision for the medium to long term, as well as its management strategies,
business model, and management foundation for achieving this vision. The content is intended to increase the Company’s
corporate value by covering our dialogues with stakeholders, including shareholders and investors.

5 Business Fields
6 Main Business Flows
8 Management Resources
9 Performance

Organizations Covered
Kurita Water Industries Ltd. and Consolidated Subsidiaries

10 Interview with the President

Kurita Group
Business Strategy

17 Financial Strategy

Period Covered

18 Kurita’s Value Creation Story

Fiscal 2022 (April 1, 2021 to March 31, 2022)

20 Medium-Term Management Plan Maximize Value Proposition 2022
(MVP-22) and CSR Policy
22 CSR Initiatives* Some content includes initiatives that fall outside of this period.

Information Disclosure System on the Company’s Website

Financial Information

26 Digital Strategy Division

Non-Financial Information

28 DX Initiatives

The Kurita Group’s
Businesses

30 Innovation Division
32 R&D Activities

Sustainability
https://www.kurita.co.jp/english/sustainability/
index.html

Investor Relations
https://ir.kurita.co.jp/en/index.html

33 Utilizing Intellectual Property
34 Engineering Division
36 Quality and Safety initiatives
38 Japan Sales Business Division

MD&A and Consolidated Financial Statements
https://ir.kurita.co.jp/en/reports/financial_statements/index.html

Sustainability Reporthttps://www.kurita.co.jp/english/csr/
download/index.html

Financial Data
https://ir.kurita.co.jp/en/financial_information/index.html

ESG Data
https://www.kurita.co.jp/english/csr/csr_
data/index.html

40 Global Business Division
42 Review of Operations by Segment
42 Water Treatment Chemicals
44 Water Treatment Facilities

Corporate Governance Reporthttps://ir.kurita.co.jp/en/corporate_
governance/governance_policies/index.html

46 Directors, Members of the Audit & Supervisory Board,and Executive Officers

The Platform for
Value Creation

48 Corporate Governance
58 Risk Management

Integrated Report

62 Human Resources Management
68 Environmental Improvement Activities
72 Compliance
74 Respect Human Rights
76 Financial Information
85 Corporate Information

Financial Information/
Corporate Information

Copyrights and Trademarks, etc.

Our company or our licensers hold the copyrights for all the materials posted in this report. You may not use them beyond the range of use
legally permitted for private use, etc.: you cannot, for example, copy, process, transfer, or distribute them without consent from therespective copyright holders.
Trademarks (products, services, logos) used in this report belong to the Company or to owners who have approved the Company’s useof the trademarks.

Disclaimer

This report contains forward-looking statements from Kurita Water Industries Ltd. and its consolidated subsidiaries pertaining to plans andstrategies. These forward-looking statements are based on currently available information, and actual results may vary significantly from theforward-looking statements contained in this report due to a range of variable factors.

Kurita Water Industries Ltd. Integrated Report 2022

Kurita Water Industries Ltd. Integrated Report 2022

1

Kurita Group Overview

2003

History of Value Creation

Achieved 100% wastewater reclamation

2022

Established the new research and development base, “Kurita Innovation Hub”

Founded in 1949 to sell water treatment chemicals for boilers, the Kurita Group started out providing value to customers
by supporting the safe and efficient operation of their facilities. In the years since then, the Group has steadfastly focused

2002

water and the environment. The Group will continue to build on this progress by providing stakeholders with new value,

Launched ultrapure water supply businessaiming to realize its corporate philosophy, “Study the properties of water, master them, and we will create an environment

Kurita Group Overview

on providing this value to customers, contributing to the development of industry and society by solving issues related to2020

Merged four U.S. subsidiaries, including acquired companies
A precision tool cleaning company in the U.S. becomes a subsidiaryin which nature and humanity are in harmony.”2018

Launched Medium-Term Management Plan “Maximize
Value Proposition 2022 (MVP-22)”
Reshaped the group philosophy system

1962

Founded as a company in the Water Treatment
Chemicals business (boiler water treatment
chemicals) in Kobe

1975

Listed stock on the First
Section of the Tokyo Stock
Exchange and the Osaka
Securities Exchange

Established a water treatment facilities
operation and maintenance subsidiary
Established first overseas subsidiary in
the Water Treatment Chemicals business

1986

Kurita Group Business Strategy

1949

Deployed precision tool cleaning services

1965

Expanded into process
treatment chemicals

2015

Commenced the ultrapure watersupply business in South Korea
Acquired a water treatment
chemicals business in Europe

1961

1958

1973

Expanded into maintenance services

Entered the electronics industry

Established a subsidiary in
Singapore as the regionalbase in Southeast Asia for
the Water Treatment
Chemicals and Water
Treatment Facilities
businesses

1989

Established thecorporate philosophy

1991

2017
2019

Launched soil remediation services

1951

Entered the Water Treatment
Facilities business

Acquired water treatment-relatedcompanies in the United States

2021

Net sales

Expanded into
engineeringcleaning services

A water treatment chemicals company in the Middle East becomes a
subsidiary
Acquired a water treatment chemicals company in Canada

1950

1960

1970

Post-War Recovery Period (1949–1954) /High Economic Growth Period (1954–1973)
Kurita’s founder developed an innovative business model thatcombined optimal treatment and effect verification based ondata with the experience-based treatment that was themainstream approach to boiler water treatment in Japan at thetime. The principle of “Providing the unique value that only
Kurita can create” became the driving force for realizing themodel, and it lives on today in the Kurita Group’s DNA. Against
the background of development in Japanese industry, theCompany established the three functions of water treatment
chemicals, water treatment facilities, and maintenance services.
By supporting the steel, pulp and paper, and petrochemicalindustries with water treatment solutions, the Company
achieved steady growth.

Kurita Water Industries Ltd. Integrated Report 2022

1980
Stable Growth Period(1973–1991)

Development as an
Environmental Company
and Establishing a Positionin the Field of Water
Treatment for Electronics
Industry

1990

2000

2020

Period of AI and IoTAdvancement (1999–)

Information Society
Development Period (1991–1999)
As areas all over Japan experienced worsening pollution
issues accompanying economic growth, Kurita made its
mark as an environmental company by working to solve
pollution due to industrial and household wastewater. In
the 1980s, Kurita established a firm position as aprovider of water treatment solutions for the electronics
industry by meeting the industry’s growing demand foradvanced water treatment with ultrapure watertechnology. In 1989, marking its 40th anniversary, Kurita
formulated the current corporate philosophy. It shared
its mission of creating shared value with society in thefields of water and environment, and expanded its
business to include soil remediation.

2010

New Business Model
Deployment and Global
Business Expansion

In 2002, as the electronics industry continued to develop
even further with the advance of IT, Kurita developed a
new service contract-type business model in the form of
the ultrapure water supply business. Subsequently, theCompany continued to change its business model, creating
various new services that identified customers’ issues fromthe perspectives of saving water, reducing CO2 emissions,and reducing waste, and provided solutions for them.
From 2015, the Company began full-fledged expansion
into overseas business through M&A, and is promoting
global development of total solutions.

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

2

The Platform for Value Creation

1953

Kurita Establishes theSpirit and Business thatForm its Foundation

The Kurita Group’s Businesses

1978

Listed stock on the Second Section of
the Tokyo Stock Exchange and the
Osaka Securities Exchange

3

Kurita Group Overview

Philosophy System

Business Fields

The missions that the Kurita Group aims to fulfill in society, its medium- and long-term visions, and its ways of thinking andSocial and Industrial Issues and Water Treatment Solutions

values as the foothold for achieving them are stipulated as the Kurita Group Philosophy System.
(extreme weather andnatural disasters)

Kurita Group Overview

Social and industrial issues

Climate change

CO2 (Greenhouse gas)

Solutions

CO2 emission reduction

Corporate
Philosophy

Study the properties of water, master them, and we will create anenvironment in which nature and humanity are in harmony
1. Kurita Group will contribute to facilitate the coexistence and shared prosperity of the natural environment and humansociety by creating shared value with society through water.

Factories in various industries
Water resource depletion
Industrial water
Tap water andsea water

Production process

Utilities

Yield increase

Labor andpersonnel saving

Energy saving

Facility preservation andextension of useful life

Water
treatment

2. Kurita Group will generate new functions and value for water, through further exploration and exploitation of the

Wastewater reclamation

Corporate
Vision1. Kurita Group will seek to create shared value with society such as environmental preservation and the effective use ofresources, and will realize its corporate philosophy, by continuing to innovate and through businesses contributing to thenatural environment, industry and people’s lives.

Water treatment chemicals

Water Treatment for Factories– Water Treatment for Factories - Support for All Processes
Raw water

Cooling water

Chilled water

Water treatment facilities
Steam

Wastewater<Utilities>
The Kurita Group’s Businesses

Manufacturing processenhancement” and “reduction of environmental impact.”

full use of Kurita’s technologies, products and services in water treatment chemicals, water treatment facilities andmaintenance services.

Water<Manufacturing plants>

2. Kurita Group will, as an indispensable partner, create value for customers such as “pursuit of safety,” “productivity
3. Kurita Group will evolve its “service business” and will provide customers, at speed, with comprehensive solutions making

Water purification

Soil and groundwater
remediation

Groundwater depletion,
ground subsidence“A Creator of unique value to the solution of water and environment,”
contributing to the realization of a sustainable society.

Water pollution

Rivers, lakes,
and sea areas

Soil and groundwaterpollution* The corporate philosophy was set out in 1989 to mark the 40th founding anniversary of the Company.

Kurita Group Business Strategy

making full use of its unique technologies, products and services.

WatersavingGroundwater

Waste reduction
Wastewater
treatment

Business continuity

fundamental properties of water.

3. Each individual of Kurita Group will adopt its customers’ point of view and solve their water and environmental issues, by

Tight capacity oflandfill sites

Process treatment
chemicals

Water treatment system
Wastewater
treatment chemicals

Power generation
systems

Cooling towers

Air conditioning
systems

Cooling water
treatment chemicals

Refrigeration
systems

Pre-treatment

The basic policy encompasses the management direction and aims of the Group and forms the foundation of the Kurita
Group Philosophy System

Basic Policy

1. Kurita Group Code of Conduct
3. Basic Policies for Constructing
an Internal Control System

6. Kurita Group Human Rights Policy
7. Kurita Group Anti-Bribery Policy

4. CSR Policy

8. Kurita Group Antitrust Policy

Wastewater
treatment chemicals

Boilers• Soft water production• Pure water production• Ultrapure waterproduction

Boiler water treatment
chemicals

Wastewater reclamation system

Industrial waste

RO membrane
treatment chemicals

The Platform for Value Creation

2. Corporate Governance Policies

5. Kurita Group’s Policy on BCM(Business Continuity Management)

Wastewater treatment system

RO membrane
treatment chemicals

Discharge

Water Purity and Related Applications

Core values

Tap water

Stipulates the basic values guiding judgments and actions to be shared by all officers and employees in conducting
business activities.

Pure water
RO membrane-treated water

Ultrapure waterIon exchange-treated water

Theoretically pure water

Applications
Transparency

Integrity

SafetyCompatibility* Diagram shows
example applications
only and are notnecessarily limited tothe shown level ofwater quality

Low purity

Kurita Water Industries Ltd. Integrated Report 2022

Electronic components
cleaning
Cosmetic raw
materials

Mechanical parts
cleaning
Water supply forhigh-pressure boilers
Humidification air
conditioning

Kurita Group Philosophy System https://www.kurita.co.jp/english/philosophy_vision/index.html

4Water for mixing
drinksMechanical parts
cleaning

Financial Information/
Corporate Information

Fairness

Water for pharmaceuticaland medical use
High purity

Kurita Water Industries Ltd. Integrated Report 2022

5

Kurita Group Overview

Main Business Flows
KuritaUltrapurewater supply

Owned
assetsOperation &management

MaintenanceFee

Water treatment target areas

Issues facedby society

Sensor equipment
Remote monitoring
Automated control

Facility operation
improvement
proposal

Water treatment example:
electronics factories
Raw water
Facility onsite
inspection

Wastewater
reclamation system

Pre-treatment
systemReclaimed water

Performance
analysis

MaintenanceDeionized waterproduction system

Water treatment
outcome report
Water treatment
improvement proposal

Dilutedwastewater

Select and propose
appropriate
chemicals

Watertreatmentchemicals

Lab testing

Concentrated
wastewater

Identify
issuesWastewater
treatment
systemUltrapure waterproduction system

Order

Semiconductor, FPD
manufacturing
processes

Pilot testing

Recovery ofmarketable
substances

Kurita Group Business Strategy

Issues faced bycustomers

Water quality
analysis

Kurita Group Overview

Chemicaltreatment

Customermanufacturing
process

Water
supplyPlanning & design

Discharge

Specification
documents

Performance analysis

Estimate

Specification
documents

Detailed designs

Construction &engineering

Parts procurement

Test operation

Work scope
finalized
Equipment
acceptanceinspection andhandover

Order

Estimate

Engineeringcleaning

Review
construction andtechnologies

Order

Cleaning method
proposal

Order

Estimate

Installation of
temporary equipment

Temporaryequipment
dismantled andremoved
Cleaning process

Personnel
deployment
Results report

Pipe engineering work

The Platform for Value Creation

Identify
issuesThe Kurita Group’s Businesses

Water
treatment
facilities

Planning & design

Parts procurement

Wastewater
treatment
Replacement ofconsumables
Customerplant

Precision Toolcleaning

Discuss andpropose cleaning
methodKurita cleaning facility
Receive tools and
jigs

Order

Customerplant

Cleaning

Packaging

Modification work

DeliveryStart up
Performance
testing

6

Kurita Water Industries Ltd. Integrated Report 2022

Geographical andhistorical groundsurveyOrder forsurveyGeneral survey
Detailed surveyCountermeasures
Plan formulated

Order forremediation
work

Remediation
measures
implemented

Monitoring

Acceptanceinspection

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

Soil
remediation

7

Kurita Group Overview

Management Resources (Fiscal years ended March 31)

Performance (Fiscal years ended March 31)

Financial Capital

Net Sales

Human CapitalInterest-Bearing Debt

(Millions of Yen)

(Millions of Yen)

242,442

253,089

271,914

Number of Employees
by Region
6,737

55,371

52,123

7,465

7,661

Ratio of Female
Directors and Employees

267,749

264,807(Millions of yen) (%)

288,207

(%)

24.5
22.2

10.1

25.0

32,94429,47026,65423.7

59,477(Millions of Yen)

Kurita Group Overview

Equity Attributable to
Owners of Parent

Business Profit and Business Profit Margin

11.0

11.4

2021

2022

24.9

18.2
11.5

9.6

2021

2022

2020

2021

2022

2020

2021

2022

Japan
Asia
North & South America
EMEA** Europe, Middle East and Africa

2020
Japan

2020

2021

2022

R
 atio of female directors(non-consolidated)R atio of female employeesR atio of women in
management positions

Asia

2021
North & South America

2022

2020

EMEA

Business Profit (Millions of Yen)

Sales increased due to the impact of consolidating water treatment
chemicals companies in the Middle East and Canada and a recovery indemand for water treatment chemicals overseas, as well as growth in themaintenance, precision tool cleaning, and ultrapure water supply
businesses in Japan and overseas.

• Business profit = Net sales - Cost of sales - Selling, general and administrative expenses

Return on Assets (ROA) and Return on Equity (ROE)

Dividends per Share and Dividend Payout Ratio(%)

Intellectual Capital
Number of Patents(Millions of Yen) (%)(Millions of Yen)

Group Network

73

1,555
1,042

194

146

118
2020

116
2021

5,693

1,067

2.1

5,317

5,386

2.0

1.9

2022

106,358

117,603

ROA

2020

2021

2022

2020

2021

2022

R&D expenses (Millions of yen)R
 atio of R&D expenses to
net sales (%)

Energy Consumption

2.43

2021

2020

2021

Japan

Overseas

2020

2021

43.8

2022

Dividend payout ratio (%)

Kurita’s policy is to continuously increase dividends where possible. In linewith that policy, the dividend was increased for the 18th consecutive year.
There was an increase in the dividend payout ratio due to an increase inearnings per share.

2022

Number of Certified Companies
ISO9001
ISO14001
18

637
28

18

19

31

Water Savings at Customers –Amount of Water Intake Used in
Our Business Activities

CO2 Emissions Reduction at
Customers – CO2 Emissions from
Our Business Activities

Waste Reduction at Customers– Waste Generated from
Our Business Activities(million m3)(1,000 t)*2

(1,000 t)

113
97

2020

2021

2022

2020

2021

2022

2020

2021

2022

2020

316

91
215

2021

2022

43

45

2020

2021

152

2022

2020

2021

Financial Information/
Corporate Information

603

Kurita Group KPI: Customer Impact Reduction – Kurita Group Impact*1 The Kurita Group has defined products, technologies, or business models that contribute significantly to water-saving, CO2 emissions reduction, and waste
reduction compared to previous levels as the “CSV business.” The reduction of environmental impact from customers’ operations is calculated based on resultsof applying the CSV business. Further information about the CSV business can be found on page 24.

(TJ)

629

2022

38.8

Dividends per share (Yen)

ROE

52

2021

38.1

The Kurita Group aims to support environmental impact reduction*1 in the operations of its customers to offset and even exceed theenvironmental impacts of its own business. To this end, we have set numerical targets for the “amount of the reduction in environmental
impact of customers - the amount of the Kurita Group’s own environmental impact,” with regard to water, CO2, and waste.

25

2020

2022

ROE and ROA both decreased following a decline in profit attributable toowners of parent after the Company posted finance costs resulting fromthe subsequent measurement of liabilities related to a forward contractconcluded with non-controlling shareholders of U.S.-based Pentagon
Technologies Group, Inc.

Social and Relationship Capital

2.84

2020

4.1

• ROA = Profit attributable to owners of parent ÷ Total assets (Average) × 100• ROE = Profit attributable to owners of parent ÷ Equity attributable to owners of parent (Average) × 100

Natural Capital

2.79

4.7

76

133
127

Number of registered patents
Japan
Overseas
Number of filed patents
Japan
Overseas(million m3)

4.9

7.0

72.00

66.00

62.00

161,034

1,413

Water Intake

7.7

The Platform for Value Creation

980

7.6

The Kurita Group’s Businesses

Property, Plant andEquipment

72
1,523

(Yen) (%)

Manufactured Capital
R&D Expenses and Ratio of
R&D Expenses to Net Sales

B usiness Profit Margin (%)

Business profit increased due to an improvement in the cost of sales ratio,
mainly due to an improved product mix resulting from an increase in theratio of services in the Water Treatment Facilities business, and the impactof higher sales, despite an increase in selling, general and administrative
expenses following a recovery in sales activities.

Kurita Group Business Strategy

2020

13.2

2022

*2 “CO2 emissions from our business activities” include emissions generated from the ultrapure water supply business, which comes under Category 13 of Scope 3,
as well as emissions in Scope 1 and 2 stipulated in GHG (Greenhouse Gas) protocol.

8

Kurita Water Industries Ltd. Integrated Report 2022

Kurita Water Industries Ltd. Integrated Report 2022

9

Kurita Group Business Strategy

Interview with the President

Kurita Group Overview

Continuing to transformthe Kurita Group to create
new shared value with society
We have been forced to fundamentally rethink ourvalues after what the world has gone through in thelast few years. The pandemic, geopolitical risks, climatechange and other developments have converged in

Kurita Group Business Strategy

complex ways to change society’s priorities andtransform the way people do business. In today’s highly
unpredictable world, the role of companies is again
being questioned – how they should act and what value
they should provide.
As the Kurita Group grapples with this essential
question of its purpose in society, we feel a strong
sense of responsibility to ensure business continuity at

The Kurita Group’s Businesses

our many customers, whose businesses underpin
society and industry. In the face of far-reaching societal
changes, our unwavering mission is to provide newvalue to society and industry by solving issues forcustomers, ultimately helping to realize a sustainable
society – the goal of our corporate philosophy.
To continue creating new shared value with society,we need to be more flexible and drive change
ourselves. To do that, the Kurita Group is transforming

The Platform for Value Creation

itself. By dismantling preconceived ideas and opening
up new possibilities in water treatment, we aim to meetthe expectations of all our stakeholders.


July 2022

Financial Information/
Corporate Information

Michiya Kadota

President and Representative Director

10

Kurita Water Industries Ltd. Integrated Report 2022

Kurita Water Industries Ltd. Integrated Report 2022

11

Kurita Group Business Strategy

Interview with the President

treatment as economic activity recovered. We also added
water treatment chemicals companies in the Middle East
and Canada to the Group to reinforce our operations in
those markets. In terms of profitability, selling, general andadministrative expenses increased in line with the growth insales, but business profit rose year on year and profitability
continued to improve, supported by an improvement in thecost of sales ratio due to a larger sales contribution fromhigher margin operations, such as maintenance, ultrapure
water supply, and precision tool cleaning in the Water
Treatment Facilities business. The Water Treatment
Chemicals business also reported steady earnings in
Europe and ASEAN, where we continued to overhaul the
product mix and business portfolio and adjust sales prices.
The business also curbed costs through ongoing measures
such as global procurement and improvements to
manufacturing efficiency, helping to reduce costs. In short,
it was a year when long-running efforts to reinforce theGroup’s earnings base paid off.

What progress did Kurita make with initiatives in the MVP-22 plan?

deploying them. We also worked on developing new
applications and new ways of providing existing products
and services. One example is our Kurita Dropwise
Condensation Technology, which saves energy by improving
the heat transfer efficiency of steam-based heatexchangers. We have identified a growing number of new
applications for this technology in a wide range ofindustries. Another is our existing Pure water supply
service, a standardized pure water supply service that is
gaining ground as a solution for customers who want torapidly ramp up new facilities. Even existing water treatment
chemicals are being moved to a service-based contract
model that also encompasses remote monitoring using
sensing technologies to optimize dosing, thereby reducing
costs and environmental impact. We also continued to
expand our “CSV business,” which we define as products,
technologies or business models that create shared value
with society by helping to significantly reduce water use,
CO2 emissions and waste. We have only just started rollingout these new business models, but they are alreadygaining momentum with customers.

The Kurita Group’s Businesses

We pushed ahead with measures to overhaul the Group’s
operations and change how our employees think and act,
resulting in many positive outcomes.
One of the key objectives of the Maximize Value
Proposition 2022 (MVP-22) plan is to build a robust earnings
base by pivoting to services. This involves transforming ourbusiness model and business processes so that they areanchored to the idea of our value proposition to customers
and society. With that goal in mind, we are leveraging theGroup’s strong cash flow to make aggressive and rapid
investments in our business on an ongoing basis.
To transform our business models, we have to moveaway from selling products – an approach that is exposed
to cost competition – to a new sales approach focused on
generating value for customers. We have developed
solutions models, essentially a package of services that are
deployable at a wide range of different customers. The
packages encompass products, technologies, services andcontracts that effectively tackle and resolve issues faced bycustomers. From the fiscal year ended March 31, 2022, we
shifted our focus from developing these models to

Kurita Group Business Strategy

In the past year, we made good progress with reinforcing
the Group’s earnings base, giving us greater capacity toadapt to changes in the operating environment.
While there was a lingering impact from the pandemic,
economic conditions started to recover as business activity
returned to normal in many countries. In the electronics
industry, the Group's main market, strong demand forsemiconductors spurred capital investment and capacity
utilization was at high levels at customer facilities.
Meanwhile, the rapid rebound in economic activity
disrupted global supply chains, with prices surging forvarious parts and materials, shortages emerging for somecomponents, and logistics costs rising sharply.
Amid these challenges, the Group mitigated risks andtapped into opportunities arising from these conditions,
supporting higher sales and profits year on year. Growth inorders and sales was driven by efforts to meet needs from
customers for increased production capacity in theelectronics industry and by higher demand for water

Q

Kurita Group Overview

Q

What is your view on Kurita’s operating environment and performancein the fiscal year ended March 31, 2022?

Developing new applications for existing products and services
Kurita Dropwise Condensation Technology

Pure water supply service

Factors Affecting Business Profit (YoY)(Billions of Yen)

400

+66

+19

200

100

295

(Kurita assets)
Pulp andpaper

Improved heat transfer efficiency

329

+2

Raw
water
Pure
water

Steel

Food
KuritaFiscal year
ended
March 31,2021

 igher sales in overseas Water Treatment
H
Chemicals business and Water Treatment
Facilities business for electronics industry

Increase from recovery insales activities
Costs for new R&D base roduct mix improvement in Water Treatment
P
Facilities businessDeterioration in Water Treatment Chemicals businessfrom surging raw materials costs
Efficiency gains in global procurement and production

etc.

Fiscal year
ended
March 31,2022

* Business profit is an internal earnings indicator, which is calculated based on net sales after deducting cost of sales and selling, general andadministrative expenses to give a more consistent picture of earnings. Business profit is not defined under International Financial ReportingStandards (IFRS), but the Company voluntarily discloses the indicator for reference purposes.

Kurita Water Industries Ltd. Integrated Report 2022

Applying technology to more industries

To capture long-term growth opportunities and create
more value, we realized that we first had to expand ourbusiness base globally. Overseas, we have actively used
M&A to grow the Water Treatment Chemicals business,targeting companies in the U.S./Canada and in the Middle
East to acquire sales networks in North America and EMEA,
respectively. In an effort to secure competitive technologies
and services, we acquired Avista Technologies, Inc., which

Ultrapurewater

Remotemonitoring• Standardized unit
• Unmanned

Supports rapid capacity ramp up

supplies unique chemicals and services in the field of RO
membranes, and Pentagon Technologies Group, Inc., which
has advanced technology and expertise in the field of
precision tool cleaning, as well as strong links to customers
in the U.S. electronics industry. These acquisitions are not
only helping to boost profitability in target markets, but also
generating synergies with related businesses in the Kurita

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

0

12

Customer plant

Steam

Chemicals–53

New consolidations
300

Heat

Increase in
SG&A
expenses

The Platform for Value Creation

Increase in
net sales

Improvement
in cost of sales
ratio

13

Kurita Group Business Strategy

Interview with the President

Q

What role should the Kurita Group play in society over the long term?

What measures are planned for the final year of MVP-22?

14

Kurita Water Industries Ltd. Integrated Report 2022

Electronics companies often need to ramp up new facilities
rapidly, so we are working to automate facility design
processes and make parts and material procurement more
efficient, sometimes with the help of external partners, togive customers the quality they demand more quickly and at
a lower cost. Achieving carbon neutrality and building acircular economy are common challenges faced by allindustries. In April 2022 we established a dedicated team tol e ad t he d e v e l op me n t an d c o mm e rc i al i z a t i o n o ftechnologies and services that contribute to decarbonization
and waste reduction.
Meanwhile, reinforcing Kurita America’s earnings baseremains an urgent issue for us. Our first priority is to rapidly
establish a procurement and supply system to ensure
customers receive products and services in a timely

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

The fiscal year ending March 31, 2023 is the final year of
the MVP-22 plan. We will finish it off by completing work on
building a robust earnings base and by training humanresources to drive the Group’s ongoing transformation.
This will give us the foundations for the Group’s next phaseof growth.
To reinforce the earnings base, we will continue toreform our business models and business processes basedon strengths and weaknesses highlighted in the last year.
In the electronics industry, which we have positioned asa growth market, we will leverage our diverse customer base– ranging from cutting-edge chipmakers to suppliers ofgeneral-purpose electronic parts – and our extensive
portfolio of technologies and services to expand points ofcontact with sites in the industry and grow earnings.

The Platform for Value Creation

Q

Until now, the Kurita Group has achieved stable growthby operating in business domains related to water, which isneeded in all industries, with customers seeing us as theirpartner. But amid an increasingly uncertain businessoutlook, Kurita may lose its relevance if we fail to continuallyquestion how we do business and adapt to changes andnew values in society. Instead of sticking to existing
approaches, we must explore new possibilities and create
new value in water treatment. That will mean developing
new solutions, and without doubt, our people will be thedriving force in that process. We will think and act
proactively in response to change – for society, for ourcustomers, and to realize our vision for the Kurita Group.
Getting the most out of our people will be more important
than ever. Actively targeting management resources onhuman resources development, along with our existing andongoing investments in asset-owning services businesses
and M&A, will help us build an even stronger foundation for
long-term growth.

The Kurita Group’s Businesses

The various developments of the last few years have
converged in complex ways to dramatically change society’svalues worldwide. New lifestyles created by the pandemic
are spurring the digitization of society. This has been
compounded by growing geopolitical risks that are making
the semiconductor sector, and the electronics industry as
a whole, a vital part of our social infrastructure. Amid
growing calls for carbon neutrality and the creation of acircular economy, companies are also under increasingpressure to change how they do business, including intheir supply chains.
So, what should be Kurita’s response to thesefundamental changes in society? Throughout its long
history, Kurita has supplied products and services tocustomers that support industry and society. I believe
Kurita's role is undoubtedly to help customers continue
operating their businesses, no matter how much societychanges, by providing water treatment support, ultimately
contributing to the creation of a sustainable society. To
fulfill this role, we ourselves also have to build an operating
structure that is resilient to changes in society, allowing us
to continue providing products and services to customers
as a sustainable company.

Kurita Group Business Strategy

target and solve issues in each customer market. These
organizational reforms are having the intended impact, with
employees steadily adopting a new mindset of developing
optimal solutions based on issues faced by customers, notthe characteristics of our own businesses or products. In
2020 we formulated Kurita’s Value Creation Story, aroadmap to unify all employees behind our vision for the
Kurita Group – to grow sustainably with society. In 2021 wedeveloped a human resources strategy to put in place thenecessary human resources and organizational framework
to realize the objectives of the Value Creation Story.
We have made good progress in many areas, but we also
started to see some issues. We found that some of ourbusinesses did not have the right structures or systems inplace to respond to the diverse needs and urgent issues ofcustomers during the COVID-19 pandemic, leading toweaker earnings in those businesses. The issues became
particularly clear at Kurita America Inc. in the U.S. and inwater treatment facilities for general industrial customers inJapan. We moved quickly to turn round earnings at Kurita
America by merging our U.S. subsidiary and newly acquiredcompanies in 2020, but the integration process during thedepths of the pandemic revealed weaknesses in ourbusiness base that prevented us from providing the level ofservice that our customers have come to expect. Meanwhile,
the general industry water treatment facilities business,
which is moving to a service-focused model, has been slow
to create a solutions lineup for the many different customers
in each subsector, as well as related service delivery
structures, leading to a weak recovery in profitability.
However, if we rebuild our operations in both businesses tofocus on customer value, I’m confident they will become
growth drivers in the future, as the Group has numerous
customer contacts in the U.S. and Japan’s general industries– both promising growth markets.

Kurita Group Overview

Group.
With the Group’s global business base now in place, weare pushing ahead with efforts to improve profitability bothglobally and locally. Global Supply Team – an internal
project to optimize procurement and manufacturing using
the Group's networks – continued to find cost savings, andin ASEAN and China we appointed regional managers to
reinforce cooperation between local Group companies andto implement locally led measures that improve profitability.
In Japan, where the Group’s strength is its ability to offer
total solutions using its wide range of domestic businesses,
we are working to lift profitability by focusing on businessproposals that address facility-wide and even industry-wideissues. We have reorganized our domestic sales subsidiaries,
which has streamlined separate contact points for different
products and services into a single service channel andcreated an integrated framework for offering solutions
tailored to the needs of each customer. We also merged anengineering cleaning subsidiary into Kurita Water Industries,
allowing us to optimally harness management resources
across related businesses to develop total solutions. In the
Water Treatment Facilities business, we tightened cost
control in manufacturing processes. This included identifying
structural reasons for previous cases of non-compliant
products, analyzing the underlying causes and sharing theinformation across the Group, helping us find additional
cost savings.
Building a robust business base is important, butchanging the mindset within the Kurita Group is also key toachieving the goals of the MVP-22 plan. As part of this, wehave overhauled the Group’s organization, moving from ourlong-standing vertical approach along business lines (water
treatment chemicals and water treatment facilities) to amarket-specific approach, enabling us to comprehensively

15

Kurita Group Business Strategy

Financial Strategy

Interview with the President

Key Investments
In the fiscal year ended March 31, 2022, we made a number of key
investments. The Water Treatment Chemicals business invested in
new plants and the expansion and upgrade of existing facilities in
China, while the Water Treatment Facilities business invested in theconstruction and expansion of facilities for the ultrapure watersupply business, as well as the construction of new resin andmembrane processing facilities as part of our realignment ofdomestic manufacturing sites. We are also investing in the Kurita
Innovation Hub, a new R&D base opened in April 2022. In June
2022, we acquired additional shares in Pentagon Technologies
Group, Inc., a precision tool cleaning business in the U.S., making it
a consolidated subsidiary.

Shuji Shirode

Director
Executive General
Manager of Corporate
Control and Administration
Division

Kurita Group Business Strategy

Improving Capital Efficiency

Sources and Uses of Funds

Actively Investing in Growth and Diversifying Funding(Fiscal year ended March 31, 2022) (Millions of Yen)

Shareholder Returns
In the fiscal year ended March 31, 2022, we increased dividends
paid from capital surplus for the 18th consecutive year, in line with
our policy of increasing dividends as much as possible, based on adividend payout ratio target range of 30-50% over five years. We willcontinue to prioritize internal reserves for investments in growthbusinesses, but we will also consider buying back shares if surplus
cash increases, taking into account the share-price level.

Dividends per Share and Dividend Payout Ratio(Fiscal years ended March 31)
Dividend per Share (Yen)70,751Dividend Payout Ratio (%)

72.00

70,751Dividends paid

Cash on hand

M&A

62.00

66.00

Sale of property, plantand equipment
Acquisition of assets(tangible + intangible)

38.1

38.8

2020

2021

43.8

Operating cash flow

Financial Information/
Corporate Information

Debt financeSale of shares in otherlisted companies

The Platform for Value Creation

The Kurita Group has targeted funds on asset-owning businesses,
such as the ultrapure water supply business, while also investingin growth fields with prospects for high profit margins. Since 2015,
we have also actively channeled investment into overseas M&A todramatically expand the Group’s global operations. To meet thesefunding demands, we use the Group’s capital resources, as well as
external sources of funding such as bank borrowing andunsecured bonds (1st series issued December 2020, 2nd series
issued May 2022, both with five-year maturities). In the fiscal year
ended March 31, 2022, we also focused on asset sales, disposing
roughly 30% of our shares in other listed companies and ¥17.9
billion in assets, such as the former head office and otherproperty, plant and equipment.
We will continue to use debt financing where necessary, whilebalancing it with sound finances and capital efficiency. Cash andcash equivalents at the end of the fiscal year under review were at
an appropriate level, given the characteristics of the Group’sbusinesses and from the perspective of business continuity.

We believe ROE is the most important indicator of capital efficiency.
To increase ROE, we are focusing on improving profitability while
also making effective use of assets and utilizing financial leverage.
To ensure effective use of assets, we are maintaining andimproving capital efficiency by generating funds through the sale ofshares in other listed companies and the disposal of property, plantand equipment, and keeping cash and cash equivalents at
appropriate levels. With financial leverage, we are working tomanage finances efficiently by utilizing debt to invest in highly
profitable businesses. Going forward, we will continue to increase
capital efficiency by shortening the cash conversion cycle andbuilding a cash management system.

The Kurita Group’s Businesses

wide measures for human resources development toensure all Group companies are pushing in the same
direction, and cultivate human resources with crucial skills
such as specialized technical and digital expertise.
We also need to implement processes that link changes
in mindset to everyday actions, so that steady progress withtransforming employee behavior across the Group isirreversible. In April 2022 we opened the Kurita Innovation
Hub in Akishima City, Tokyo. The hub is the heart of theGroup's research and development activities, but also theplace where we gather all information, data, knowledge andexperience related to water treatment through connections
to our various sales, engineering, facility operation
management and other business sites. To ensure the hub
also functions as a key site for human resources
development, we will run programs that help Group
employees acquire the necessary know-how and skills topropose and sell solutions tailored to issues faced bycustomers. In this way, we aim to deploy superior businessmodels for customer sites worldwide.
MVP-22 is just the first step in the Kurita Group’s
fundamental transformation to lay the foundations for longterm growth. After achieving the plan’s objective of building
a solid earnings base, we will focus on creating shared value
with society so that Kurita becomes indispensable forindustry and society as a whole. I hope we can count on
your continued support as we push ahead with thetransformation of the Kurita Group.

Kurita Group Overview

manner. After that, we will deploy high-value-added
products and services such as CSV businesses and totalsolutions. To generate long-term growth in the U.S. market,
we will assess opportunities and risks in the electronics
sector while exploring the feasibility of engineering,procurement and construction (EPC) projects.
We believe digital transformation (DX) holds the key toaccelerating the pace of reform in our business models andbusiness processes. One of the Group's strengths is its
diverse points of contact with customers in a wide range ofindustries, with Kurita involved in water treatment forindustrial utility applications through to production
processes. All the expertise gleaned from these contacts,
including information about customers’ products, concernsand operational data, will help us to create new solutions. In
the final year of MVP-22, we will develop effective rules andmechanisms to gather and use information across ourvalue chain to support these solutions.
To continue creating new value in water treatment, ouremployees need to recognize the need for reforms toencourage them to think and act independently, and wewill therefore put the highest priority on personnel training
and development.
Under our new human resources strategy formulated in
the fiscal year ended March 31, 2022, we will focus first on
creating an organization and corporate culture thatfacilitates innovation by diverse human resources across theGroup. Led by the Corporate Planning and Management
Office of Kurita Water Industries, we will formulate Group-

Other
Sources of
funds

16

Kurita Water Industries Ltd. Integrated Report 2022

Uses of cash

2022

Kurita Water Industries Ltd. Integrated Report 2022

17

Kurita Group Business Strategy

Kurita’s
Value Creation Story

Damage to Social
Infrastructure Caused by
Climate Change

The Advance of
Globalization andIncreasing WealthInequality

Changing Energy Policies

Corporate Vision“A Creator of unique value to the solution of waterand environment,” contributing to the realization of a sustainable society.

The Kurita Group’s Materiality
1. Provide highly safe services and products
2. Conduct fair business activities
3. Respect human rights
4. Solve issues related to water resources
5. Realize sustainable energy use
6. Reduce waste
7. Advance industrial production technologies
Management ResourcesMVP-22 Management Targets

Identifying
True Issues(Fiscal year ending March 31, 2023)

Thanks to personnel who
address social issues in asincere manner

 ighly accurateH
predictions of andcommitment to value
ProvisionWaterknowledge

Information, data andwater treatment inexperience related toindustry and society

Human Capital umber of employees
NExpansion of training opportunities

Intellectual Capital &D expenses (investment, personnel,Rbases)
Number of patents heldSynergies generated through cross-Groupprojects
 roperty, plant and equipment
PGlobal network of bases

Natural Capital

Maximizing
Customer Value

Operation ofWide-Ranging
Businesses
Integrating water treatment
chemicals, water treatment
facilities, maintenanceservices and related
businesses

Diverse Solutions
Optimized for thecharacteristics of eachindustry and region as well
as social issues

 educed operatingR
costs at customers(Raw material costs,
utility costs, etc. +decision-making costs,
capital costs, etc.)Increase in sharedvalue with customers
and society

Diverse Business
Models3% or more

Business profit margin

15%

Return on equity (ROE)

10% or more

 olving issues related to waterS
resources (water-saving)

240 million m3*

 ealizing sustainable energy use
R(CO2 emission reduction)

10,000 t*

Reducing Waste

450,000 t*

Based on accurate
prediction of value
provision* Amount of the reduction in environmental
impact of customers – the amount of theKurita Group’s own environmental impact	Please see pages 9, 20-21 for more details.

Social and Relationship CapitalInclusion in ESG IndexesCorporate citizenship initiatives, cooperation
with external organizations
Supply chain
ISO certification

Net sales organic growth rate

Diverse Points ofContact with Sites	Please see page 8 for more details.

The Platform
Corporate Governance

Kurita Water Industries Ltd. Integrated Report 2022

Risk Management

for Value Creation
Human Resources Management

	Please see pages 46–74 for more details.

Compliance

Financial Information/
Corporate Information

Winning the trust of customers and society and building a sustainable society

18

The Platform for Value Creation

Heightened Safety
Awareness

Addressing water-related
issues faced by diverse
industries and society inan agile manner

 quity attributable to owners of parent
EInterest-bearing debt

 ater intake
WEnergy consumption

Advances in Digital
Technology andInnovation Acceleration

Technology
Development
Capability

Financial Capital

Manufactured CapitalIndustrialization and
Urbanization of
Developing Countries

High Profitability andSustainable Growth

The Kurita Group’s Businesses

Fresh Water Scarcity andUneven Water
Distribution

we will create an environment in which nature and humanity are in harmony

Kurita Group Business Strategy

Changes in Work Styles
and Lifestyles

Study the properties of water, master them, andKurita Group Overview

Major Trends Facing
the Kurita Group

Corporate Philosophy

Respect Human Rights

Kurita Water Industries Ltd. Integrated Report 2022

19

Kurita Group Business Strategy

Medium-Term Management Plan Maximize Value Proposition

Management targets

Initiatives for the fiscal year ended March 31, 2022

Achievements of the fiscal year ended March 31, 2022
 xpanded CSV business orders and lineup
E
Started using created social value in performance evaluation
Developed business in line with moves by customers to increase corporate value by improving nonfinancial indicators and with regional and market characteristics

1. Development of CSV Business

Expand earnings with highly unique technologies, products, or services that
contribute to the natural environment, industry and people’s lives.

 ontinuously review CSV businessCBuild systems to utilize social value created by CSV business in performance evaluation
Pursue new value for customers and examine model for provision

2. Enhancement of total solutions

Rapidly develop total solutions for customers that make full use of Kurita’s
technologies, products and services in water treatment chemicals, water
treatment facilities and maintenance.

Strengthen system for promoting total solutions

 bsorbed and merged Kurita Engineering, which operates an engineering cleaning service
ATransferred part of the Company’s operations to domestic sales companies, prepared a system forpromoting total solutions

3. Rebuilding of manufacturing system for water

Rebuild the manufacturing system and processes to dramatically increase
quality and speed.

 onduct implementation testing of design automation system and digital twin simulator
CStrengthen supply chain through collaboration with start-up companies
Improve quality of functional resin and membrane products and increase operation efficiency

 onducted implementation testing of piping auto-routing, design document management, andCplant simulator
Promoted DX and strengthened supply chain with a start-up company in skid fabrication
Introduced automatic packaging machine and automatic conveyor at Toyoura Plant

Return on equity (ROE) 10% or more
(Fiscal year ended March 31, 2022 7.0%)

4. Creation of new business and the promotion of

Expand and enhance existing business fields while creating new businessfields that will become major new sources of earnings.

 reate advanced business model combining water treatment technologies and AI
Ctechnologies

 eveloped tool for automating and optimizing designs that output optimal equipment compositionDand configuration for water treatment
Started demonstration testing of AI optimal operation technology for water treatment facility at
customer site

5. Strengthening the foundation and promotion of

Build a strong foundation as a technology-oriented company and promoteadvanced research and development.

 trengthen development of solutions using digital technology
SEnhance CSV business using core technologies
Integrate global products and technologies inside the Group and strengthen competitive
advantages through coordination between Group engineers in Japan and overseas

 eveloped diverse simulation and sensing technologies that contribute to increased waterDtreatment design accuracy and to energy- and cost-saving operation of ultrapure water production
and wastewater treatment
Developed technologies for reducing the volume and resource recycling of industrial wastewaterand paper diaper waste
Built a global lineup of cooling water treatment polymers

6. Establishment of the Group governance system

Improve the effectiveness of internal controls
in Group companies.

Identify issues and promote countermeasures for promoting and implementing the Kurita
Group’s Basic Policy and Business Policy
Ensure effectiveness of internal controls during the spread of the COVID-19 pandemic
Ensure the appropriateness and increase the efficiency of management operations atdomestic sales companies

 ormulated response policies and promoted improvements on issues based on affiliate companiesF
self-evaluation result of internal controls
Supported development of effective and efficient internal controls compatible with remote working
Established Kurita Corporate Service LLC to centralize administration operations of domestic sales
companies

Adoption of business segment
management using return on invested
capital (ROIC)
Improved capital efficiency in eachbusiness segment

Priority themes

treatment facilities

innovation

research and development

Contribution to the SDGs

Initiatives toward 2030

Metrics

Medium- to long-term targets forthe fiscal year ending March 31
Target year

Basic themes1) R ate of product safety evaluations for newly developed products

100%

2) R
 ate of front-line employee participation in regular safety training directly related to products
and services

100%

Rate of participation in compliance-related training among officers and employees

100%

1) R
 ate of training conducted in relation to human rights among officers and employees

100%

Maintain social trust by developing and providing services and products
reflecting considerations for safety, health, and the environment.

2. Conduct fair business activities

Maintain fair and transparent trade based on free competition. Maintain soundrelationships with politics and administration.

3. Respect human rights

Support and respect international norms related to human rights and promote
human rights initiatives by following the Guiding Principles on Business andHuman Rights established by the United Nations.

Number of people that can benefit from improvement in water resources*2

Themes for growth opportunities

CO2 emissions reduction at customers – CO2 emissions from our business activities*3

6. R educe waste

Introduce technologies for using waste as resources and technologies forcontrolling the amount of waste in order to achieve zero waste.

Waste reduction at customers – Waste generated from our business activities

7. A
 dvance industrial production
technologies

Make full use of big data on water to contribute to innovations in production
efficiency and product quality in industries.

Proportion of themes falling into “Contribution to improvement of production process”
to product development themes

Kurita Water Industries Ltd. Integrated Report 2022

Achieved

100%

100%

Achieved

100%

100%

Achieved

100%

100%

Achieved

100%

100%

100%

Achieved

240 million m3

FY2023123 million m3

113 million m3

Unlikely to beachieved*5

700 million
peopleFY2031

10,000 t

FY202327.5%

FY2031―97,000 t

91,000 t

Likely to beachieved―

11.5%

Likely to beachieved

100%

FY2051

27.5%

FY2031―

20.3%

Likely to beachieved

450,000 t

FY2023414,000 t

316,000 t

Likely to beachieved

35%

FY202338%

28%

Likely to beachieved*6*3 “CO2 emissions from our business activities” include emissions generated from the ultrapure water supply business, which comes under Category 13 of Scope 3, as well as emissions in
Scope 1 and 2 stipulated in the GHG Protocol.
*4 Single-year targets were added from the fiscal year ending March 31, 2023, so only the result for the fiscal year ended March 31, 2022 is shown.
*5 The medium-term target is unlikely to be achieved, as the volume of water savings at customers is lower than assumed at the time the target was set.
*6 The target for the fiscal year ended March 31, 2022 was not achieved, as some development themes were halted due to delays caused by the relocation of a research center at an overseas
Group company. However, medium-term targets are likely to be achieved based on results in the fiscal years ended March 31, 2019 through 2022 and targets for the fiscal year ending
March 31, 2023.

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

20

FY2023

Scope 1 and 2 emissions reduction(rate of reduction since fiscal year ended March 31, 2020)*4

Scope 3 emissions reduction(rate of reduction since fiscal year ended March 31, 2020)*4*1 Evaluations of themes 1, 2 and 3 are based on annual goals and results.
Evaluations of themes 4, 5 and 6 are based on annual results relative to medium- and long-term targets.
Medium-term target for theme 7 is set based on levels necessary for the Kurita Group to continue providing products, technologies or business models to society that drive improvements
in industrial production technology.
Consequently, evaluation of theme 7 is based on medium-term targets and results for the fiscal year under review.
*2 Number of people that can benefit from improvement in water availability, water quality, and water accessibility in highly-stressed basins. This target was added from the fiscal year ended
March 31, 2022, so single-year targets were set from the fiscal year ending March 31, 2023.

100%

The Platform for Value Creation

Supply water at the optimum quality and quantity by securing as much water
as necessary for the life of all people and the development of industry by
applying technologies for saving, purifying, and reusing water.

Optimize energy use in living and in industries, and introduce technologies forcreating energy throughout society.

100%

FY2023

Water savings at customers – Amount of water intake used in our business activities

5. Realize sustainable energy use

ResultFY20232) R ate of participation in safety training related to site operations

4. Solve issues related to water
resources

Evaluation*1

TargetThe Kurita Group’s Businesses

1. Provide highly safe services
and products

The fiscal year ended March 31, 2022

Kurita Group Business Strategy

Business profit margin 15%(Fiscal year ended March 31, 2022 11.4%)

Kurita Group Overview

Net salesorganic growth rate 3% or more

Priority measures

2022 (MVP-22) and CSR Policy

21

Kurita Group Business Strategy

CSR Initiatives
The Kurita Group has positioned CSR at the core of its management strategy in order to realize its corporate philosophy

Kurita’s Board of Directors

while aiming for sustained growth and is strengthening its CSR initiatives accordingly.

Reporting

Reporting

Kurita Group’s CSR Framework

Directors and executive officers

E&S Committee

Chairperson: Managing Director

Under its MVP-22 medium-term management plan, the Kurita Group isreorganizing the CSR initiatives it has conducted to date, while also
strengthening initiatives with CSR at the core of management. The
Group has determined that contributing to global efforts like the UN’s

Sustainable Development Goals (SDGs) and ESG (Environment, Socialand Governance) investment is indispensable to creating business
opportunities and enhancing risk response capabilities.

Integrating and promoting
individual activities ▶

Committees andResponsible Departments

Group E&S Committee

Secretariat

The Company’s
Divisions andGroup companies

Legal Department in Corporate Planning and Management
Office and CSR and Investor Relations Department in
Corporate Control and Administration Division

Reaffirmation of Corporate Philosophy

Information disclosure

Individual Activities• Quality management• Compliance consultation• Human rights awareness• Diversity promotion• Work-life balance, healthmanagement• Occupational accident prevention,
safety awareness• Environmental improvement
activities• CSR requirements for business
partners• Corporate citizenship activities• WRC promotion activities

Kurita Group Business Strategy▶

CSR Definition and Initiative Objectives

External
Organization▶

Kurita Group Overview

Managers of Individual Activities

Consideration of Priority Themes (Materiality)

CSR Policy

Initiatives Utilizing Business Characteristics
Kurita Group KPI: Customer impact reduction – Kurita Group impact

Provide solutions to issues related to water and the environment,
and fulfill responsibility for the future
Priority themes
Themes for growth opportunities

1. Provide highly safe services and products
2. Conduct fair business activities
3. Respect human rights

4. Solve issues related to water resources
5. Realize sustainable energy use
6. Reduce waste
7. Advance industrial production technologies

Individual activities

Results

Activities organization

Disclosure

Stakeholder
engagement

The Kurita Group collects and discloses data on the environmental
impact of its business activities in line with two international
standards – the GHG Protocol, TCFD, the GRI Standards, and the
SASB Standards. Based on that data, the Group sets reduction
targets and works to reduce its environmental impact. Due to thelack of international standards that can measure reduction in

Kurita Group KPI
https://www.kurita.co.jp/english/csr/csr_activity_growth/environmental_policy/index.html

Business policy

Verification andimprovement

Reduction ofenvironmental impactof customers

Our environmental
impactPromotion System
corporate citizenship. The chairperson of the Environmental & Social(E&S) Committee, who is the Company’s Managing Director, is
responsible for integrating and promoting these activities, and directors
and executive officers are assigned as managers for individual activities.

116

Water

(Million m3)

243

Waste
(1,000 t)

550

Creating business
opportunities andimprovingcompetitiveness

22

Kurita Water Industries Ltd. Integrated Report 2022

389

38

Measuring the impact on society with the formula ofCustomer impact reduction – Kurita Group impact

100

Fulfilling social
responsibilities andresponding to risks

Solving social issues and achieving business growth(Creating shared value)

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

performance indicators for each of the themes in the CSR Policy as
the CSR medium-term plan, then confirms progress on the targets
while identifying issues and making improvements. At the same time,
the committee confirms stakeholders’ expectations of the Kurita
Group and their issues, and verifies the Group’s CSR initiatives.

354

Kurita's internal
environmental improvement

275

399

E&S Committee

Environmental improvement in both aspects
Customer’s environmental
improvement (deployment
of CSV Business)

3

367

CO2

(1,000 t)

The E&S Committee oversees the Kurita Group’s CSR initiatives
and works to increase the Group’s competitive advantage byfurther enhancing business competition capabilities and risk
response capabilities.
Specifically, the committee sets the activity targets and key

F Y2021 (Results)
FY2023 (Target)

3

Kurita's environmental improvement activities

The Platform for Value Creation

The Kurita Group positions the themes stipulated in its CSR Policy asmaterial issues and engages on a Group-wide basis in individual
activities in the areas of 1) corporate governance, 2) product andservice liability, 3) fair operating practices, 4) respect for human rights,
5) appropriate labor practices, 6) environmental improvement, and 7)

environmental impact at customers through our business activities,
which is one of the features of the Kurita Group, we have devised a
proprietary KPI to show the Group’s value creation: Customer
impact reduction – Kurita Group impact, and we are compiling data
for actual reduction and impact.

The Kurita Group’s Businesses

Basic themes

23

Kurita Group Business Strategy

CSR Initiatives

Promotion of CSV Business

Solving Water Resource Issues Through Initiatives by the Water Resilience Coalition
measures of the MVP-22 plan, and we have established key
performance indicators for this, engaging in initiatives linked with theplan. Various measures are conducted to promote the CSV business,
including development from the standpoint of social issues andestablishment of an awards program.

CSV Business

Key Performance Indicators (Fiscal years ended March 31)

Products, technologies, and business models that contribute towater-saving, CO2 emissions reduction, and waste reduction more
greatly than conventional ones.

(FY2022:48 types in total)

Products, technologies or business models that meet some or all of the following
standards with regard to water-savings, CO2 emissions reduction, and waste reduction:

Required

RequiredRecommended

Significantly more effective thanprevious or competing technologies.

Contribute toaction plans
aimed atachieving theSDGs.

Contribute to
reduction of
Scope 3emissions in the
Kurita Group.

Or
New technologies or applications ofexisting technologies in new markets.

(%)

25

Reduction ofenvironmental impact
Orders
Business profit margin

9
2019

Global water resilience	Creating a world in which water can be consistently supplied to the required
place, in the required quantity, and at the required quality

Improve water availability,
quality and accessibility inbasins facing serious water
resource problems

2020

2021

2022 (FY)

Raise the global ambition ofwater resilience throughpublic and corporate
outreach

Leadership Committee members (11 companies)

Promotion Measures Going Forward

Anheuser-Busch InBev
DiageoPVH
Gap
Microsoft
Cargill electing and developing CSV businesses in line withS
the characteristics of each region/market
Using environmental value for performance evaluation

Participating
Companies

The Coca-Cola Company
Woolworths
Cummins
Levi Strauss & Co.
IHG Hotels & Resorts
DanoneColgateHEINEKEN
gsk

New Products
SelectAlliances

CSV
BusinessCO2(as of August 2022)

Launched campaign for water conservation in Colorado river basin "Impact together -Colorado River Basin Project-"https://www.kurita.co.jp/english/site/groupnews_220824.html

Waste

Environmental Improvement
at Customers

PhosAgro
DUPONTMARS
Reckitt Benckiser
Braskem
Keurig Dr Pepper
Bayer
HolcimThe Kurita Group’s Businesses

Water

Implement measures toresolve water resource
problems across the entire
value chain

Members (17 companies)

Dow
EcolabSTARBUCKS
3M
KuritaInternal Environmental
Impact Reduction

The Kurita Group
Total Solutions

SocialIssuesVisionOur Pledge

System for Promotion of CSV Business
External
evaluations andhelping solve
issuesWater Resilience Coalition​

15

14

The Kurita Group will leverage technological strengths cultivatedthrough its global water treatment operations to help achieve thetargets, while also launching activities in water-stressed basins where it
currently has no experience in order to gain new “water knowledge” tosupport the Group’s sustained growth.

Kurita Group Business Strategy

Selection Standards

CSV Business orders (ratio of net sales)

Kurita is a Leadership Committee member of the Water Resilience
Coalition (WRC), established in 2020 to lead industry efforts to achieve
global water resilience. As an initiative under the United Nations Global
Compact (UNGC), WRC is implementing a range of initiatives to attainmedium- and long-term quantitative targets related to water resources.

Kurita Group Overview

The Kurita Group has defined products, technologies, or businessmodels that contribute significantly to increased water-savings, CO2
emissions reduction, and waste reduction compared to previous levels
as the “CSV business.” Through their creation and provision tocustomers, we will promote the creation of shared value with society.
Furthermore, development of CSV Business is one of the priority

Sharedvalue

Achievements

External Evaluation (as of July 2022)

Higher Earnings

Internal/External Awards​

AwardsE&S Committee

Executive
Committee

Evaluation by ESG Rating
Organization

Inclusion in ESG Indexes

ISS-ESGInternal Environmental Improvement Activities

Evaluation of Water Risk at Internal Facilities
The Kurita Group assesses and ascertains water risk for Groupfacilities using the Aqueduct Water Risk Atlas and benchmarks forwater intake provided by the World Resources Institute, businesscharacteristics and other criteria. As of July 2022, our assessments

24

Kurita Water Industries Ltd. Integrated Report 2022

FTSE4Good
Index Series

Risk Assessment
Impact on society and theenvironment

Impact on the Group’s business

https://www.ftserussell.
com/products/indices/
ftse4good

FTSE Blossom
Japan Index

https://www.ftserussell.
com/products/indices/
blossom-japan

FTSE Blossom Japan
Sector Relative Index
https://www.ftserussell.
com/products/indices/
blossom-japan

Sompo
Sustainability Index

Evaluation by Supplier
Evaluation Organization

Each business base of the Group

Selecting premises at which initiatives should be taken preferentially andplanning measures

had identified nine facilities with particularly high risk. Based on that,
we are prioritizing efforts to reduce water risk at those facilities.

MSCI ACWI ESG Leaders Index
MSCI JapanMSCI World ESG Leaders Index ESG Select Leaders Index

The MSCI Japan
Empowering Women Index(WIN)

EcoVadisFinancial Information/
Corporate Information

The Kurita Group works to reduce water usage, energy usage andwaste, while adhering to the environmental laws and ordinances ofeach country and region that apply to the Group’s businessactivities. These activities, including the Group’s own assessments
related to compliance with environmental rules and regulations, areimplemented to achieve targets related to CSR Policy, based on the
Kurita Group Environmental Policy.

The Platform for Value Creation

KPI
Management* The inclusion of Kurita Water Industries Ltd. in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute asponsorship, endorsement or promotion of Kurita Water Industries Ltd. by MSCI or any of its affiliates.
The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

Kurita Water Industries Ltd. Integrated Report 2022

25

The Kurita Group’s Businesses

Digital Strategy DivisionMarketing

R&D
Maintenance

Sales and Orders
Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Opportunities and Risks

Risks

Rising needs from customers for solutions to reduce CO2 emissions, water usage
and waste, driving growth in social value fieldIncreased opportunities for companies to collaborate on tackling social issues
More opportunities to boost operational efficiency and offer new value tocustomers through wider adoption of online communication

greater risk. A serious security incident not only poses the risk ofdamage to data and information assets, business disruption, andransom demands, but it also undermines trust in the Kurita name,which could prevent us from providing digital services to customers
and taking part in joint projects with external partners, leading to
the loss of numerous business opportunities.
Third, we need to secure human resources with expertise indigital technology. The main bottleneck in Kurita’s DX is people. To
accelerate DX without being constrained by our existing approaches
and culture, we have to change the mindset of employees, but also
attract new people and actively draw on expertise from outside theGroup. To make this work, we need to be open enough to accept
these new people and new ways of doing things.

Kurita Group Business Strategy

 ecrease in competitiveness due to poor quality and use of information / dataD
collected and owned by Kurita
Security risks that damage data / information assets, reputation, and curtailopportunities to collaborate with customers and other companies
Decline in employee engagement and management skills due to failure to adapt toonline communication

We need to tackle three key issues to speed up the transformationof business models and processes using DX.
First, we have to reinforce the Group’s core information system.
The more data and information we have, the more effectively we
can implement DX. That means, first and foremost, the systemshould be easy to use to help the Group capture more information.
The system also needs to be clearly geared to gathering data andinformation from customer contact points. Before collecting theinformation, every internal stakeholder in our value chain has tohave shared understanding of how we plan to use the information.
Second, we need to reinforce information security. Cyber-attacks
are increasing and becoming more varied in their approach. While
digitization is making life more convenient, it also exposes us to

Kurita Group Overview

Opportunities

Issues to Address

Makoto Mizuno

Executive General Manager of Digital Strategy Division

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

26

configuration, layouts, and engineering work for water treatment
facilities. We also started testing AI-driven water treatment facility
optimization technology at customer sites.
In business process reforms, we overhauled management
processes to pivot the entire value chain towards the customer,
while also working to foster greater digital literacy across the Groupby securing and training human resources with expertise in digitaltechnology, clarifying the necessary skills and qualifications for DX,
and providing relevant training content. We also made progresswith rebuilding core information systems, such as starting the fulloperation of a new customer relationship management (CRM)
system that integrates information and data (customer contactdata) needed to support management reforms. This system andrelated processes were rebuilt so that data gathered from sales
activities, such as type of activity, timing and target customer, canalso be organized and analyzed for use in management processes
and for feedback to sales teams, helping to improve the Group’s
competitiveness. This gives us a deeper understanding of ourcustomers, allowing us to maintain positive, long-term relationships
with them by identifying potential issues.

enforce the Kurita Group Information System Management Policy
and prevent data from customers and other parties from being
leaked or accessed without authorization, the Group has installed
security software and monitors IT equipment and usage as part ofstrict security measures. We also run information security training
for personnel across the Kurita Group.
In terms of recruiting digital specialists, we are actively targetingpeople who have external expertise in cybersecurity. We havestarted training and hiring people with skills in digital technology
from within the ranks of our workforce, but we are also collaboratingwith other companies – including those outside the Group – forming
alliances with startups, hiring experienced personnel, and actively
promoting our digital initiatives outside the Group.
DX means continuous change, backed by the necessary businessprocesses, IT systems and other mechanisms to support thatchange. There is bound to be a conflict of ideas and opinions whenchange is being pushed through, particularly when businessprocesses are being transformed. Stress arising from change, or
being changed, is a side-effect of growth. To mitigate these sideeffects, we will continue to drive change while ensuring our
objectives are clear, reforms are implemented fairly across all areasof the organization and feedback is taken on board.

The Platform for Value Creation

Kurita has achieved continued growth since it was founded bydeveloping its business in the water and environmental fields.
While the increased focus on sustainability in recent years is a
tailwind for the Kurita Group due to its focus on tackling issues
faced by society, there is no guarantee our current business model
will still be viable ten years down the track. We need to takeproactive action now on transforming our business models andbusiness processes, because by the time we realize ourapproaches are outdated, it will be too late. Digital transformation(DX) is an effective tool for driving change in our business. To
flexibly and rapidly deliver solutions that create value for society
and customers across the Group's value chain, the Digital Strategy
Division is leveraging data, information assets and technologies totransform the Group’s business models and processes.
One example of how we are transforming business models
and creating data-driven businesses is the Meta-Aqua Project, acollaborative initiative launched in January 2020 with Fracta Leap
Inc. that is combining water treatment and AI technologies tocreate an innovative new business model. In the fiscal year ended
March 31, 2022, we developed a design automation andoptimization tool that generates outputs for optimal equipment

To further strengthen the Group’s core information system, we aredefining what is valuable in our data and information assets, andsetting up mechanisms to ensure appropriate record-keeping anduse of these assets. At the same time, we will develop, operate andembed a new system in the Group’s operations to manage
consolidated earnings, while also leveraging customer data, tospeed up the transformation of business models and processes
and boost our competitiveness. We will then define and experimentwith what data and information collected from customer contact
points will be of common value to all development, production,
solutions, marketing, and sales teams. In this way, we aim toestablish business processes that maximize the value we provide tocustomers by linking each function in our value chain. With theMeta-Aqua Project, we plan to add more functionality to existing
IoT-driven facility operations. We aim to convert water quality data
and design document data into accessible information and develop
dedicated data infrastructure, helping to speed up plant design andoptimize and automate facility management.
Information security is fundamental to the digitization process. It
is also a key benchmark for Kurita's capabilities in the modern era.
For that reason alone, information security has to be something we
do diligently and carefully as a matter of course. To rigorously

The Kurita Group’s Businesses

Business Environment and Initiatives

Future Initiatives

Kurita Water Industries Ltd. Integrated Report 2022

27

The Kurita Group’s Businesses

Digital Strategy Division

DX Initiatives
Building mechanisms to create diverse solutions derived from our “water knowledge”

solutions from RO membrane equipment to other water
treatment equipment.
With this approach, we are creating new solutions by giving
form to the latent technical information possessed byindividuals, integrating various technical information, andgathering data from multiple five-sense sensors for use in AI
analysis and so forth.

AI-optimized Facility Operation Reduces
Electricity Consumption
AI solution developed by Fracta Leap
In conventional operation,
electricity consumption
increases due to RO
membrane fouling

AI-optimized
operation

Electricity consumption
Before verification

Verification period

The Kurita Group’s Businesses

We continue to implement the Meta-Aqua Project as one of oursolution creation processes. With the project, we aim todramatically improve productivity in the Water Treatment
Facilities business by leveraging AI and IoT in solutions
development. Specifically, we are (1) automating and accelerating
facility design and engineering planning processes, (2) optimizing
facility management and control, and (3) developing solutions
that use IoT and other technologies to capture data.
In facility design, we have faced a long-running issue of how
to transfer the skills and know-how of experienced designers to
the next generation of designers, and to designers based
overseas. This poses risks for business continuity and is an
obstacle to securing new design personnel during periods ofbusiness expansion. We are trying to eliminate this bottleneck byusing AI algorithms to rapidly and automatically create andgenerate design blueprints of water treatment facilities, which
designers and customers can then evaluate and modify.
In facility management, we are combining AI and other digitaltechnologies with our existing portfolio of equipment and facility
operation technologies, accumulated over many years. Examples
include solutions that significantly reduce facility operating costs
and power consumption through AI-driven optimized control.
We are now in the process of expanding the application of these

Kurita Group Business Strategy

key initiatives it is implementing at business sites (plants). This
information is now being stored in a centralized way in the CRM
system, rather than by individual sales personnel or dispersed
across different internal systems. In this way, organizing
information gleaned from customer contact points across a wide
range of business processes will allow us to improve the quality
and speed of coordinated efforts by the Group to develop solutions
for customers.
Meanwhile, we continue to develop the Group’s IoT data platform
to collect and utilize online and offline operational data from water
treatment facilities that solve issues faced by customers and provide
new value.
Based on analysis of data and information gleaned from thesethree core systems, we will provide advice to customers and optimize
business processes and solution development processes. This will
help us deepen understanding of customers, continuously create
new business models, and support the ongoing transformation ofbusiness processes. Our ultimate goal is to establish a cycle where
customer feedback about new solutions is stored in core systems tofurther improve the quality of our solutions.

Kurita Group Overview

We are driving DX to create business models that improve customer
intimacy and to reform business processes. Our aim is to improve theGroup’s ability to respond to change in the operating environment.
Previously, enterprise resource planning (ERP) was our coresystem for storing information and data, but ERP is designed to
manage business resources solely from the Group’s perspective.
However, to improve customer intimacy, we have to more actively
utilize data and information collected from customer sites in ourbusiness. To move away from our company-centric approach to
information and data management to one that deepens ourunderstanding of customers, we have added customer relationshipmanagement (CRM) and an IoT data platform as core systems.
Data and information gathered from these three core systems
will be utilized to create new solutions and manage businessprocesses, and fed back to customer contact points.
Customer information can be divided into two main categories– financial information, such as data on transactions withcustomers stored in the ERP system, and information that deepens
our understanding of customers. This includes basic information
about the company, such as size, what it manufactures, and what

Meta-Aqua Project

Data and information analysis ⇒ Standardized across the Group ⇒ Water knowledge

Business process
management

ERP

CRM

Training Digital Specialists
Solution creation
process

Operational data

Customer contact points

Transforming Sales Processes

28

Kurita Water Industries Ltd. Integrated Report 2022with customers, but also with teams responsible for developing
new solutions based on customer feedback and market trends,
and with back-office organizations that support everyday sales
activities. Our goal is continually optimize all the Group’sbusiness processes from the customer's perspective.

Digital Specialists Development Flow
Target group

Objective

Initiatives

Newly
hired
graduates

Train to become“digital natives”•A cquire basic knowledge of digitaltechnology•L earn how to develop systems

All
employees

Acquire basic
knowledge toeliminate obstacles
to DX

•B
 asic DX course•L earn basic skills in digital tools•A cquire core knowledge for data utilization•E xhaustive training in digital governanceDigitalspecialists
candidates

Acquire minimum
practical methods
to realize DX•D ata management course•D ata science course

Existing
digitalspecialists

Generate outputs
using learned
methods•D efine themes related to actual workduties; hands-on training to apply concepts
to real-world situations, supported byexperts

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

In business process management, we used the CRM system toestablish a mechanism to record and store customer feedback
and information about progress with activities at customer sites,
and to share this information with internal stakeholders. This
information is shared not only with sales teams that deal directly

Digital technologies and IT offer great potential forcompanies, but the world is facing a severe shortage ofIT professionals. Kurita is no exception. All our businesssegments have shortages of personnel with the skills tosolve customer issues and develop new solutions using
data collected and accumulated from various contact
points in the field. This is leading to bottlenecks in theexecution of projects that utilize digital technologies
such as AI and IoT. To address these issues, we are
putting considerable effort into training humanresources with expertise in digital technologies – socalled digital specialists – to drive the Group’s DX.
We believe an effective training strategy is for
employees who already use a problem-solving
approach in their daily work (people with clear ideas
about what issues need to be solved) to acquire basic
digital skills and learn how to use them to realize DX
by tackling issues in their own area of responsibility.
We are therefore rolling out digital skills training for all
our employees.

The Platform for Value Creation

Customer information

IoT data
platform

29

The Kurita Group’s Businesses

Innovation DivisionMarketing

R&D
Maintenance

Sales and Orders
Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Opportunities and Risks

Risks

 rowth in Group’s CSV business spurred by rising awareness of carbon neutrality
Gand other sustainability issues
Creation of new business models as advances and wider use of digital technology in
BCP, labor-saving / automation applications put greater value on safety and reliability low response to customer needs due to delays in information sharing in value
S
chain and preference for in-house approachDecline in development capabilities due to delays in training and utilizing
researchers and developers focused on human resources diversity
Infringement of IP rights leading to reputational damage and obstacles to strategic
IP use, undermining competitiveness

Executive General Manager, Innovation Division

One step we have taken to address these challenges is thecreation of the Innovation Division in April 2022. We also opened
the Kurita Innovation Hub as a new R&D base to bring together
the wide-ranging expertise of customers, research partners andother stakeholders in Japan and overseas to accelerate thedevelopment of innovative technologies that solve issues faced bysociety and industry.

Kurita Group Business Strategy

Yoshio Yamada

Society has undergone very rapid change in the last few years, andKurita could lose competitiveness if it fails to quickly identify
emerging needs, create solutions for those needs, and provide
more value. Previously, the Group's R&D, marketing and intellectual
property departments implemented their own initiatives, but all thevarious functions in our value chain now need to work together
more dynamically to keep up with the pace of change in society.
Sales and marketing, technology and R&D, production, management
and other organizations will have to collaborate more quickly than
before, not just in Japan, but globally as well.
At the same time, we have to make better use of internal andexternal networks and the Group’s "water knowledge." Ourpreference for doing things in-house has sometimes slowed
down our ability to respond to customer needs. However, wehave to accelerate open innovation to collaborate withcustomers, companies in other industries, startups, and private
and public research bodies, including universities, and step up
cooperation with overseas R&D sites and integrate technologies
from Group companies.

Kurita Group Overview

Opportunities

Issues to Address

The Kurita Group’s Businesses

Business Environment and Initiatives
For issues that our customers are addressing on a companywide basis, such as carbon neutrality and the circular economy, we
aim to become their reliable, long-term partner by building
relationships that cover all parts of their business, from frontline
operations to the management level, and even encompassing
business strategy.

45cm x 100cm

Microbial Fuel Cell Wastewater Treatment System
We are working on a project to treat wastewater using
microbial fuel cells. In January 2022, we succeeded in scaling
up the system’s microbial power generation cells and we aim
to achieve almost zero CO2 emissions within a few years.

30

Kurita Water Industries Ltd. Integrated Report 2022

The Innovation Division integrates the functions of previously
separate marketing and R&D organizations with the goal of creating
innovative technologies from a medium- to long-term perspective,referencing social issues, customer trends and marketing strategies.
We will implement the following initiatives to achieve this objective.
First, we will leverage technologies to create businesses thatgenerate value for customers and society as a whole. Our teams
are now organized along technology and function lines, rather thanby the type of product being developed (chemicals and facilities).
Under this new structure, we are pursuing the development oftechnologies that help to solve social issues, such as hydrogen andammonia as alternatives to fossil fuels, renewable energy, anddirect air capture (DAC) technology that captures CO2 directly fromthe atmosphere.
Second, we are focusing on developing innovative technologies
that tackle two particularly important issues – carbon neutrality andthe circular economy. We have set up a specialized team to workwith customers, partner companies and research institutions tointensively tackle these themes. One example of our efforts in thisarea is a resources recycling system that efficiently separates andcollects plastics contained in used disposable diapers, currently achallenging product to recycle. Our aim is to reuse materials andreduce emissions of CO2.
Third, we will reinforce the Group’s marketing functions. To
formulate marketing strategies that help create social value andenhance value for customers over the medium and long term, we
will improve the Group’s ability to rapidly identify and understandemerging needs in the market by analyzing intellectual property (IP)data, together with conventional methods such as macroeconomic
analysis and customer intimacy surveys. In addition to implementing
defensive IP activities such as protecting and utilizing our IP, we will
step up offensive activities that have a more direct impact on driving
forward our business, such as using IP landscaping, which will
support marketing activities that lead to change in our management
and business strategies.
To implement these initiatives, we need a place where the Kurita
Group can connect with customers and research institutions inJapan and overseas, and with society in general, to bring together
diverse expertise. This is where the Kurita Innovation Hub is set toplay a key role. In addition to its position as the Group's flagship
R&D base, the Kurita Innovation Hub has many other functions –operating as a connected laboratory that links knowledge andexpertise from across the Group including an overseas R&D base,promoting open innovation, communicating Kurita’s technologicalcapabilities inside and outside the Group, creating opportunities forinteraction with customers and society, and delivering education,
training and technical programs with an emphasis on diversity. By
maximizing these capabilities, we will use the hub to create valuethat solves issues faced by industry and society.

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

5cm x 10cm

Future Initiatives

The Platform for Value Creation

Societies and industries worldwide are under growing pressure to
tackle climate change, protect biodiversity and reduce waste. The
Kurita Group has broadened the focus of business creation from
customers to society and stepped up efforts to transform its
business by referencing social issues. In particular, transitioning tocarbon neutrality and creating a circular economy are urgent
challenges that need to be tackled head-on by the whole Group.
In R&D, we have been upgrading existing technology that
produces biogas from wastewater and general waste. We are alsoutilizing open innovation to develop next-generation energy
technologies such as microbial fuel cells that generate electricity
directly from wastewater, as well as water treatment technology
needed for the production and use of ammonia and hydrogen, two
promising next-generation fuels.
In business model creation, we have developed horizontallydeployable models that help to solve social issues and lift
productivity, such as recycled water supply services and wastewater
treatment solutions that combine chemicals and sensing
technology. We have also worked to enhance the Group’s
competitiveness by building a patent network that covers bothelemental technologies and business models, clearly identifying thesources of the Group’s competitiveness from the model
development stage and earmarking them for patent protection.

31

The Kurita Group’s Businesses

Innovation Division

R&D Activities
base in Japan, we plan to further enhance collaboration by sharing
our water knowledge with overseas Group companies. These efforts
are reinforcing our range of products and technologies that canaddress global issues, while also enhancing products that meet local
needs through our development bases in Japan, Germany,
Singapore, and North America.

To grow its business and improve profitability by maximizing
intellectual property (IP) resources, the Kurita Group has formulated
a basic policy for IP activities to promote the appropriate acquisition,
protection and use of IP, and to respect the IP rights of othercompanies. In addition to our existing aim of "maintaining andimproving competitiveness by building a global patent network
based on the strategic importance of each business,” we are
overhauling the Group’s IP activities to better support management
strategy by "analyzing IP information to help create new markets
and businesses."

Kurita Group Overview

Targeting challenges that can impact our entire planet, the Kurita
Group is identifying potential issues at customers and developing a
range of products and technologies that spur innovation to solve
problems faced by society. The Kurita Group has built a global
business base, and this is also making our development activities
more international. Led by the Kurita Innovation Hub, our new R&D

Utilizing Intellectual Property

IP Strategy in Line With Management Strategy

Achievements in the Fiscal Year Ended March 31, 2022

The Kurita Group broadly categorizes its IP activities into "defensive IP" and "offensive IP," and has established the following goals and strategies.

R&D expenses

Approx. 170
Defensive IP

Offensive IP

Objectives

 aximize the use of IP acquired by the Group and protect IP toM
improve profitability
Strategically apply for patents to protect R&D outcomes and to maintaincompetitive advantages in existing businessesA nalyze patents to identify market and customer issues and needs, andto recommend which technologies to acquire and markets/customer
categories to target
Strategically protect IP and use it to increase value provided by the Group

Strategies

 entralize management of the Group's IP and build a global patentCapplication network that takes into account the strategic importance ofeach business and the value of technologies
Develop and execute patent strategies tailored to the business model ofeach business, including CSV businessesIdentify signs of future market issues and needs in patent information,and share results of the analysis with the Marketing Division andregional managers to support business creation and technology
development (value creation) and business deployment (value provision)from a global perspective

Approx. ¥5.4 billion (1.9% of net sales)

Main Results

Water Treatment
Chemicals

 o achieve stable and energy-efficient operation of membrane-based water treatment systems, we expanded our lineup of high-performanceTcleaning agents that can treat various types of membrane fouling without the need for phosphorous-based additives. We also developed amultifunctional water treatment agent that is effective against mixed fouling caused by inorganic and microorganism-derived organic matter.
We developed a steel raw material yard monitoring system for steel plants to limit stoppages on raw material conveying lines and toprevent higher fuel usage due to increased moisture in raw materials caused by rainfall during storage. The system consists of moisture
content detection technology for raw material stockpiles, an algorithm to predict moisture fluctuations in raw materials, and a highly
impermeable dust suppressant that prevents moisture from increasing due to rainfall.
We improved proprietary sensing technology for optimizing the automated operation of sludge dewatering systems in wastewater
treatment processes and developed a new dewatering treatment support system compatible with various sludge characteristics anddewatering equipment.

Water Treatment
Facilities

 e developed a high-density wastewater concentration system that accumulates tin and nickel from metal plating wastewater discharged
W
from metallic processing, electronic component manufacturing and other processes. The system helps to reduce industrial waste disposal
costs and recover valuable resources, as metal plating wastewater has typically been treated as industrial waste.
To establish recycling technology for the increasing volume of used diapers, we developed processing equipment that is compatible withvarious types of recycling methods. The equipment breaks down, crushes and sterilizes collected used diapers, and dehydrates andseparates the resulting material into waste plastic, pulp and superabsorbent polymers.
To reduce waste from semiconductor facilities, we developed technology to precisely separate and recycle high-performance ionexchange resin used to produce ultrapure water for wafer cleaning in customers' manufacturing processes. We also created technology
to evaluate the performance of the recycled resins.

harness the full potential of the Group's technological assets andhuman resources, including sharing research staff andpromoting joint development projects.
Universities& ResearchInstitutes
Customers
Leverage internal and external knowledge /expertise, open innovation

Local
Communities

Kurita Innovation Hub

Provide technicaleducation and training
to Group personnel

In April 2022, we created a framework to utilize IP in management
and business strategies by bringing the Intellectual Property
Department under the control of the Innovation Marketing (IM)Group. In the past, we created patent maps and analyzed thetechnological trends and strengths and weaknesses of Kurita and its
competitors, but this information was not used effectively tosupport business creation or marketing. Under this new framework,
we have started using IP landscaping activities to overhaul strategy
planning by matching IP and marketing.
Specifically, we aim to anticipate market trends by understanding
the issues and needs of customers, business partners, andcompetitors using information from patents, and to improve theaccuracy of scenario and growth story forecasting for medium- andlong-term strategy planning by combining IP and non-IP information.
We are also stepping up patent analysis to help target development
themes, such as exploring nascent technologies for carbon
neutrality and the circular economy. To support this expansion ofanalytical work, we plan to reinforce the analytical capabilities of theIntellectual Property Department and overhaul its organization.

Kurita’s Mechanisms for Utilizing IP Landscaping
Analysis of Kurita,
competitor and market IP
Identify indicators of
issues and needs

Scenario development

Intellectual property

Marketing

Provide information
on nascenttechnologies

Analysis of IP and non-IP
information
Ideas for new markets
and businesses
Patent strategy planning

R&D

Solutions

Creation and execution ofdevelopment themes

Business strategy planning
New business creation

Promote Kurita’s technologicalcompetitiveness, trends in new technologies

Employees
Shareholders& Investors

Kurita Water Industries Ltd. Integrated Report 2022

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

Disseminate technicalinformation and create
solutions that contribute tosociety and customer value

Group
Development
Bases

Overhauling the IP Strategy Promotion Framework

The Platform for Value Creation

In April 2022, we opened the Kurita Innovation Hub, theGroup’s new R&D base, in Akishima City, Tokyo. The base istasked with driving innovation that solves issues faced byindustry and society by bringing together various knowledge
and expertise from stakeholders such as customers andresearch institutions in Japan and overseas. Using the base asa hub for technological innovation and social change, we aim tospur innovation through interaction and collaboration between
a broad range of stakeholders.
Overseas, we opened the Kurita Europe Technology Centerin Viersen, Germany in September 2021. It houses state-of-theart R&D facilities, a training center for employees, and a visitor
center to showcase our research to customers and business
partners. Along with Kurita R&D Asia Pte. Ltd. in Singapore, thesedevelopment sites are working together on R&D activities that

The Kurita Group’s Businesses

Research Category

New R&D Base to Accelerate Innovation

32

Kurita Group Business Strategy

R&D staff

33

The Kurita Group’s Businesses

Engineering DivisionMarketing

R&D
MaintenanceTechnology and
DesignSales and Orders
Manufacturingand Engineering

Procurement andQuality Control

Opportunities and Risks

Risks

 rowth in electronics industry market spurred by rapid digitization of societyGRising need for water treatment automation and outsourcing due to labor shortages
Accelerating conversion of Group’s know-how and data to explicit knowledge
through digital technologyIncrease in new market entrants and productivity gains at competitors due toadvances in AI and use of digital technology
Rising material and component costs and logistics disruptions caused by the
pandemic, geopolitical risks and changes in social structures
Lost business opportunities due to inability to respond to strong capex in theelectronics industry

Meanwhile, we face a number of emerging issues inprocurement. We are still struggling to secure materials andcomponents, reflecting supply chain disruption caused bylockdowns during the pandemic and by the deterioration of thesituation in Ukraine, as well as factors that have pushed up the costof various raw materials and parts, such as rising demand for theGroup's key parts driven by new applications amid changes in social
structures, shortages of some materials due to extreme weather
conditions, and exchange rate fluctuations. These conditions look
likely to last for some time, and are increasing in impact and scope.
In response, we are placing early orders to secure inventories,
switching to alternative materials and parts, and actively sharing
information through our Global Supply Team network. However,with conditions potentially set to deteriorate, we need to formulate
accurate forecasts as soon as possible.

Kurita Group Business Strategy

Looking at the medium- and long-term horizon, we see three key
business opportunities for the Kurita Group – high capital
investment levels in the electronics industry, water treatment that
effectively tackles social issues, and growing needs for outsourced
operation of water treatment facilities. However, without sufficient
production capacity to meet these demands, Kurita may not be able
to tap into these opportunities, while also potentially losing
competitiveness as other companies gain ground in the market. In
fact, we have already had to turn down some projects due to lack ofresources to meet high levels of capex-led demand in theelectronics industry. One of our strengths is our integrated in-house
value chain covering all phases of the engineering process, fromdesign, production and procurement to quality control and safety
management. In addition to leveraging this capability, we will expand
collaboration with external partners to increase production capacity
and capture all available business opportunities.

Kurita Group Overview

Opportunities

Issues to Address

Katsuya Amano

Executive General Manager, Engineering Division

Future Initiatives

automation technologies for equipment configuration, layouts andother specific elements of facility design, we began applying
automated design on a test basis in actual projects from the fiscal
year ended March 31, 2022. We also reinforced our domestic
procurement network through collaboration with external partners.
Another step we took was the creation of a Global Supply Team. This
team is utilizing the Group’s networks to optimize procurement andmanufacturing, sharing know-how to reduce costs, and improving
the Group’s ability to respond to geopolitical risks in logistics. The
team is tasked with implementing ongoing cost-saving measures,but more recently it has been working to mitigate the impacts ofsupply-chain disruptions and soaring raw material prices. To lift
quality levels, we have introduced a new model to anticipate andprevent recurrence of non-compliant engineering work by drawing
on a knowledge base of previous cases. This is helping us to limit
revisions to design and engineering work and curb cost overruns.

Using Automation to Improve Efficiency in Design Processes
Gather information

Inputs: raw water
quality, treatedwater quality,
water volume, etc.

Automateddesign system
Water treatment process
flow diagram

Automated
approach34

Gather information

Kurita Water Industries Ltd. Integrated Report 2022

Present proposal
to customers

Design work for solution proposals* Use of advanced IT such as big data analysis, artificial intelligence, and cloudcomputing in various human resources activities, including recruitment,
training, and deployment.
Financial Information/
Corporate Information

Existing
approach

Design work forsolution proposals

3D plansCostestimates

The Platform for Value Creation

The Kurita Group has customer contacts in many industries, which
all face a unique set of business challenges. In the electronics
industry, where capital investment and capacity utilization are bothat high levels, customers need to rapidly start up new plants andmove to stable operations as quickly as possible. We are also seeing
strong demand from cost-sensitive customers who need to improvethe efficiency of plant operations. Meanwhile, customers aiming toincrease corporate value by creating social value want to improvethe environmental impact of their water treatment and production
processes.
The Engineering Division has been working to transform theGroup’s engineering activities in a number of ways to support thedelivery of high-quality solutions that address these diverse
customer needs in a rapid, low-cost manner. One example is how
we are working with Fracta Leap Inc. to automate the facility design
process. Building on progress so far with the development of

formulate forecasts for engineering work and components basedon orders already received by the Engineering Division, and develop
mechanisms to create more accurate forecasts for pending projects
not yet ordered (the upstream part of our business) to speed up
negotiations with partner companies and materials suppliers.
We will also continue to enhance quality and safety management.
We are lifting quality standards and minimizing cost overruns byintroducing a model that anticipates and prevents any recurrence of
non-compliant engineering work. From 2022, we expanded thescope of this model to include safety. Efforts are underway tostructure and utilize knowledge from actual safety incidents, with
operation of this new safety system starting in July this year. Our
activities to increase safety and quality are relentless, and ongoing
improvements will reduce the number of workplace accidents.
In addition to driving efficiency gains using automation andexternal resources, we also need to train people who can transform
our engineering activities and propose solutions from thestandpoint of customers. We will do this in two main ways –enhance existing HR Tech* to cultivate human resources withdiverse backgrounds and skills, and establish an organizational
culture that allows employees to generate customer-oriented value
by effectively using time freed up from operational efficiency gains.

The Kurita Group’s Businesses

Business Environment and Initiatives

To solve the above issues, the Engineering Division will build
stronger systems to support the Group’s efforts to increase value
for customers. In other words, we will help provide high-quality
products safely and rapidly to customers who can see value in theGroup's solutions.
First, we aim to transform internal systems to make them more
efficient and improve value creation. Until now, our approach has
been to enhance cooperation between different functions such as
design, procurement, quality, safety, and engineering, and between
Group companies. Going forward, we will implement initiatives thattarget the entire value chain. Specifically, we plan to expand thescope of collaboration to include automation at partner companies,
aiming to optimize all aspects of the engineering value chain fromdesign and procurement to onsite engineering work in order tospeed up engineering processes and maximize value for customers.
Also, to increase production capacity, we have to communicatesmoothly and efficiently with engineering partners. One way we aredoing this is by making greater use of 3D CAD software, which
improves design blueprint accuracy. We have already started using
3D CAD for certain projects and we plan to roll it out across ouroperations to increase design accuracy.
To address increasingly challenging issues in procurement, we
aim to stabilize procurement through better forecasting. We will

etc.

Present proposal
to customers

Kurita Water Industries Ltd. Integrated Report 2022

35

The Kurita Group’s Businesses

Engineering Division

Quality and Safety initiatives
Basic Concept
Kurita Group Product Quality Policy and the Kurita Group
Occupational Health and Safety Policy and are working to embedthem across the Group.

The Kurita Group is introducing a model to anticipate and prevent
non-compliant work issues. The model identifies structural

mechanisms behind issues in product and service provision andconverts the information into highly useful technical knowledge.

Kurita Group Overview

The Kurita Group’s initiatives to improve quality and ensure safetyat manufacturing and construction sites not only help us retain thetrust of customers and society, but they also underpin all theGroup’s engineering processes. That’s why we have formulated theModel to Anticipate and Prevent Non-compliant Work and Workplace Accidents

Cost Overrun Prevention Cycle Using Model to Anticipate and Prevent Non-Compliance Issues
Database of non-complianceissues and complaints

Promotion Framework

Database of highly usefultechnical knowledge

Quality and Safety Reporting System

Use technical knowledge

Executive General
Manager,Engineering Division

ReportDetermine design andplan specifications

Coordinate
Headquarters
Health and Safety
Committee /Quality
Management
Committee

ReportReportReportKurita’s
departments
responsible for
quality and safety

Domestic Group
companies

Overseas Group
companies

In the fiscal year ended March 31, 2022, we extended the use of
the model from Kurita Water Industries to include domestic Group
companies with engineering functions. In the future, we plan to
introduce it into upstream processes, including overseas Group
companies and development sites, creating a system that covers allstages of our value chain.

We are also starting to apply the model to safety management
to anticipate and prevent workplace accidents. In the fiscal year
ended March 31, 2022, we created a knowledge base of useful
information based on historical occupational incidents and nearmisses. From July 2022, we began using the system at engineeringsites to easily verify potential safety issues prior to starting work on
specific project phases and in line with onsite progress.

The Kurita Group’s Businesses

Deployment of Model to Anticipate and Prevent Non-Compliance Issues

also continued to monitor quality levels and address quality issues
at Group companies with engineering functions. In the fiscal year
ending March 31, 2023, we are also focusing on “change control” tohelp the Group adapt to changes in the internal and external
operating environment. This approach allows us to predict andanticipate changes that could impact quality, supporting thedevelopment of effective countermeasures.

Sales

Planning &designEngineering
designInspection

Engineering

Test operation

MaintenanceOperational
management

Model to anticipate / prevent non-compliant issues (quality)
Expand to moreareas in future

Domestic Group companies

The Platform for Value Creation

Expand to moreareas in future

Overseas Group companies
Model to anticipate /prevent workplace accidents (safety)

Cultivating Safety Culture

quality standards will be key. We launched a project in April 2022 toaddress this issue. The project team, which is composed of key
members from related departments, is working to identify likely
issues when design and engineering work is outsourced to new
business partners, and developing solutions to quickly resolve them.

Kurita’s Health and Safety Committee leads Group efforts to prevent
major accidents by implementing initiatives specific to eachbusiness. We also conduct ongoing safety culture checks at Group
companies in Japan and overseas. These checks determine the leveland balance of key components in safety culture, such as hazard
recognition, work management, and materials management. Basedon this, measures are implemented to reinforce weak points. In thefiscal year ending March 31, 2023, we will develop and roll out safetymeasures tailored to the business characteristics of each business
unit and Group company, reflecting the growing trend in accident
prevention of using targeted measures for different types ofbusiness operations.

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

Kurita Water Industries Ltd. Integrated Report 2022

Manufacturing, construction

Aggregate and manage information

Reinforcing the Group's Engineering System

36

Review design
Test and validate

Executive officer in charge of quality and safety

R&D

Production capacity is becoming an increasingly important factor for
the Group’s growth potential and competitiveness amid continued
strong capex-led demand for ultrapure water supply facilities andother infrastructure from the electronics industry. The Group is
working to use business alliances to add more production capacity,
so starting up new business relationships rapidly and maintaining

Gather information

President and Representative Director

Improving the Quality of Products and Services
The Kurita Group has established a Groupwide Quality Management
Committee to lift the quality of products and services. The Quality
Management Committee is composed of a committee that oversees
all the Group’s activities and subcommittees focused on eachbusiness. In the fiscal year ended March 31, 2022, we conducted aquality survey with an external party to improve operational quality
levels in new product and technology development and inengineering processes in the ultrapure water supply business. We

Aggregates structural knowledge of mechanisms
Kurita Group Business Strategy

Led by the executive officer responsible for quality and safety, theKurita Group is rolling out quality and safety management
initiatives across the Group and monitoring awareness andimplementation of related policies, even during the current
restructuring of business sites and offices. For workplace accidents
and products that are not compliant with quality criteria atbusiness sites in Japan and overseas, we have created an
integrated reporting procedure under the control of the executive
officer in charge of quality and safety. This mechanism allows us tocentrally collect information and communicate measuresthroughout the Group to prevent any reoccurrence.

Modelintroduced

37

The Kurita Group’s Businesses

Japan Sales Business DivisionMarketing

R&D
Maintenance

Sales and Orders
Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Opportunities and Risks

Risks

 xpansion in demand for water treatment due to a surge in capital investment andErepatriation of production in the semiconductor and electronic components industries
Increase in needs for solutions related to droughts and floods due to climatechange, as well as carbon neutrality and circular economy
Mechanization of production in Japan due to population decline and increase inneeds related to automation and labor saving due to increasing severity of humanresource shortages
 low response to customers’ production cuts and changes in production items asScustomers review business portfoliosDecrease in demand for daily consumption items due to accelerated inflation

up, and the speed with which we can respond from proposal
activities through to the provision of products and services is an
important factor. In general industries such as electric power,
petroleum, steel, and pulp and paper, there is a growing demandfor conversion to low-carbon energy sources and low-environmental
impact materials, and revising the production item portfolio has
become an important management priority. Failure to recognize
these turning points quickly and create new markets, will makesustainable growth difficult.

Business Environment and Market Issues in each Industry
Electronics industry market

General industry market

Business
Environment

 xpansion of semiconductor and electronic components demandERelated supply chains becoming a part of social infrastructureRepatriation of production driven by geopolitical concerns emand for shift to low-carbon energy sources and lowD
environmental impact materials
High costs for raw materials, parts, and energy

Market Issues

 esponse to investment conditions and environmental regulations
Rin each region
Securing water of high purity in large volumes
Rapid start-up of production facilities eview of business portfolio and change in manufacturing methodsRand processes
Decline and aging of the working population
Resource depletion and deterioration of raw material quality

Kurita Group Business Strategy

Hirohiko Ejiri

Rapid social change is giving rise to various issues for the Kurita
Group’s customers, driving them to change as well. In theelectronics industry, demand for semiconductors and electronic
components is expanding, and even the related supply chains ineach country and region are becoming a part of social
infrastructure. The same phenomena is happening in Japan. In
addition to securing stable supplies of water of high purity in large
volumes needed for the manufacture of these items, there is also arequirement for speed in terms of short lead times and rapid start-

Kurita Group Overview

Opportunities

Issues to Address

Executive General Manager of Japan Sales Business Division

The Kurita Group’s Businesses

Business Environment and Initiatives

Kurita Water Industries Ltd. Integrated Report 2022

Future Initiatives
Speed is vital for accurately recognizing social turning points andproposing solutions. Therefore, we must strengthen and make fulluse of the Kurita Group’s management resources; namely, humanresources, information, and physical items.
In terms of human resources, we will strengthen education andmanagement so as to translate an awareness of transformation into
action. On the education front, we will continue to provide digital
education targeted at the employee’s level, with the aim of rapidly
connecting customer information and onsite facility operation data
into proposal activities. On the management front, we will expand
the HR Tech that has been introduced in the Engineering Division
into the Japan Sales Business Division, aiming to form teams thatcan speed up value provision to customers and increase employee
engagement by starting with an understanding of the individual
nature of employees and the status of their initiatives.
In making use of information, we have built a platform forgathering customer information and operating data from their onsite
facilities, and we have been collecting data. However, we have not yet
made full use of it. We will accelerate initiatives to identify trends andpropose solutions from analysis of the information and dataobtained, and enable employees to make spontaneous use of casestudies of successes and failures by sharing them across theorganization. Furthermore, we will also promote the use of our inhouse application products through the AI and Meta-Aqua Projectthat we are promoting in our service business.
In making use of assets, we will use the Kurita Innovation Hub,which opened in April 2022, as a venue for collaborating withcustomers to find solutions to their issues. We will also install
multiple demonstration machines needed for developing solutions,and actively expand a new type of asset-owning service businessthat will enable us to differentiate from other companies. In 2021,
the Company merged with Kurita Engineering, and we have started
examining expansion of the business domains for the engineeringcleaning business, as well as overseas expansion.
We will continue aiming to maximize the value provided tocustomers as we work to create value across the entire Kurita
Group by collaborating across countries, regions, and markets.

Rapid provision of solutions in response to social changes

Management Resources
Human resources
Digital education for
utilizing data insolutionsOptimal educationand deployment, andincreased situation
recognition andengagement throughthe introduction of HR
TechInformation and data
Trend identificationand solutions
proposal throughdata analysis
Cross-organizational
sharing of success andfailure case studies
Development ofservices such as useof data in AI andin-house application
products

AssetsCo-creation ofsolutions withcustomers at Kurita
Innovation HubInstallation ofdemonstrationequipment forverifying solutions
and expansion ofasset-owning service

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

38

Under this structure, we are working to maximize the value
provided to customers in each business domain. We areresponding to customers’ increasing awareness of ESG and climatechange response by developing the CSV business, which
contributes to water savings, CO2 emissions reduction and waste
reduction. We also expanded solutions for customer needs relating
to business continuity planning (BCP) to ensure stable operation of
production sites during droughts and floods, as well as automationand labor saving.
As a countermeasure for COVID-19, we continued to avoid
visiting customer sites in some markets, and we were unable toconduct face-to-face proposal activities and onsite trial testing. As aresult of such factors, our deployment of solutions has been slower
than we would like in some areas; however, we have steadily built
up a record of providing value to customers, and we have raised
employees’ awareness of our business model transformation
through initiatives to promote solutions that straddle the boundary
between our conventional water treatment chemicals and water
treatment facilities businesses.

The Platform for Value Creation

Amid a contraction trend in the domestic water treatment market
caused by customers consolidating production sites and relocatingthem overseas following the global financial crisis of 2008, socialchanges are showing unprecedented speed and diversity, including
the impact of COVID-19 and growing concern over the issue ofclimate change, as well as accelerating global inflation. In thissituation, the Kurita Group has pivoted from its previous cost-based
business model of selling physical products to a service businessmodel of providing value to customers.
First, in order to emphasize the customer’s perspective, we set
up a structure that would enable us to recognize the issues in eachmarket and rapidly deploy solutions for them. All of the Company’s
domestic sales functions were merged into the Japan Sales Business
Division, and we merged the Company’s maintenance functions into
the domestic sales companies, which were previously focused
mainly on the water treatment chemicals business. In conjunction
with this, we relocated and integrated our sales offices to create astructure based on markets and regions, and incorporated oursolution promotion functions into the Japan Sales Business Division.

39

The Kurita Group’s Businesses

Global Business DivisionMarketing

R&D
Maintenance

Sales and Orders
Manufacturingand Engineering

Technology and
DesignProcurement andQuality Control

Opportunities and Risks

Risks

 sing the business base and distinctive technologies acquired through M&A toUgrow the businessNew solutions created through the power of diversityDeploying the best solutions for customers in each country and region using global
and local functions
 lobal pandemicGSupply chain malfunctions due to accelerated inflation and geopolitical tensions, orinability to cope with rapid exchange rate fluctuations

Ratio of sales by region and business structure
EMEA

Japan

Asia

North & South America

Number of companies: 14
Number of employees: Approx. 500

Number of companies: 20
Number of employees: Approx. 1,600

15%Number of companies: 31
Number of employees: Approx. 3,800

Number of companies: 11
Number of employees: Approx. 1,800

3% 1%

8%
81%

16%

FY ended
March 31, 2014
Net sales

FY ended
March 31, 2022
Net sales¥178.1 billion¥288.2 billion
20%

Kurita Group Business Strategy

Yasuo Suzuki

The MVP-22 plan has enabled the Group to gain a global businessbase. Our future task going forward will be to use this base to growour market share in each country and region with a view to
becoming a top global company. We face a host of business risks
such as the COVID-19 pandemic, shortages and soaring prices ofraw materials and parts, currency fluctuations, and the worsening
situation in Ukraine. To manage these risks and grow sustainably,
we need to build a system that positions each Group company not
only to become a strong local organization, but also to take amultifaceted approach to solving customer problems.
In the near term, an urgent task will be to develop Kurita
America’s infrastructure in North America. In the midst of integration
process, the revenue base continues to be unstable. There has
been a delay in demand recovery due to the COVID-19 pandemic.
There have also been logistics disruptions caused by the rapid
economic recovery that followed the pandemic. This has left us
having to complete the integration in a short timeframe.

Kurita Group Overview

Opportunities

Issues to Address

55%* Number of companies and employees as of March 31, 2022
* The number of companies includes affiliates as well as consolidated subsidiaries.

Executive General Manager of Global Business Division

Future Initiatives

resources toward businesses that focus on delivering value tocustomers. In China, we have appointed regional supervisors toaccelerate the development of integrated solutions for water
treatment chemicals, water treatment facilities, and maintenance.
In June 2022, Pentagon Technologies Group, Inc., which operates aprecision tool cleaning business mainly in the U.S., became a wholly
owned subsidiary. We have begun full-scale efforts to createsynergies between Pentagon Technologies and our Japan-based
subsidiary Kuritec Services with the aim of becoming a global
leader in the precision tool cleaning business.
Although the COVID-19 pandemic hampered the growth of theGroup, due to restrictions on movement between countries andregions. However, we have made progress in measures to achieve
the Group's business objectives. A variety of locally generated
solutions, such as DX diagnostic services, have emerged. The
resulting reverse imports have had a positive impact in Japan, which
has helped to change the mindset of local employees and boost
their motivation.

we will develop, as a head office function of the Group, global
strategies for development and marketing, and provide local
support for technology and engineering. We will strengthen ourbusiness management system with a focus on local subsidiaries.
Local subsidiaries will improve their work quality, management andpractical capabilities by exchanging human resources within theregion, sharing education and training, and developing talent
including at the management level.
Although we have eased off on large-scale M&A projects aimed
at acquiring business foundations, we will continue to acquirecompanies that have distinctive businesses and technologies that
could create synergies with our group. We will also continue toconsider M&A projects that will further strengthen the Group'sbusiness base.
We will continue further increasing our global business presence
so that we can drive change from the overseas business to the
Kurita Group as a whole.

Initiatives to Improve Profitability at Kurita America and Expand the Business Base
FY endingMarch 31, 2024

FY ending March 31, 2023

* Europe, Middle East and Africa

FY endingMarch 31, 2025

Integrating productstandards
Restructuring the supply chain

Financial Information/
Corporate Information

Achievingprofitability
in the Water
Treatment
Chemicals
business

Reviewing sales prices to reflect raw material prices
Deploying CSV business

Expandingthe business
base

40

Kurita Water Industries Ltd. Integrated Report 2022

The Platform for Value Creation

Since its establishment, the Group has operated mainly in Japan. As
the domestic market shrinks and price competition intensifies, wehave found a path to business growth overseas. We have invested
about 120 billion yen so far, starting with an M&A in 2015 in thewater treatment chemicals business in Europe. As a result, theGroup has built a business structure across four regions: Japan,
Asia, EMEA,* and North & South America. In addition, we have madeimprovements to profitability by reviewing the business portfolios ofgroup companies based in Europe and Asia, and reducing the sizeof our low-profit businesses, while also expanding our CSV businessto suit the characteristics of each region and market.
We also promote projects that focus on the technology acquiredin M&A and on local subsidiaries. Project Acorn, which is led by the
CEO of Avista Technologies, is expanding the company's highly
competitive RO membrane-related solutions globally. In addition,
the One ASEAN Project, which identifies multiple group companies
in the Southeast Asia region as one company, was able to achieve
the profitability goals of the region's MVP-22 plan ahead ofschedule. This was done by moving away from traditional sales
activities that target transaction volume, instead channeling

We are working to bring Kurita America to profitability at an earlydate. We will review the business portfolio by setting up a systemthat can quickly supply products to meet demand by optimizing
production and inventory. We will also shift resources to areas thatare less susceptible to the external environment, such as the foodmarket. We will strengthen our profitability by developing highvalue-added businesses such as CSV businesses and totalsolutions, while maintaining a well-developed base. In the future,
we will consider the feasibility of opportunities outside of precision
tool cleaning, such as developing the water treatment facilities
business, with the aim of further capturing business in the North
American electronics industry.
In addition, we will work globally and locally to build a system forsolving customers' problems around the world. First, we will build amechanism that will allow us to gather and use information for
deploying horizontally. We will do this by integrating and developinga customer information portal for use globally. In terms of structure,

The Kurita Group’s Businesses

Business Environment and Initiatives

Deploying total solutions
Considering business development ofwater treatment facilities for the electronics industry

Expanding business opportunities
in the electronics industry

Kurita Water Industries Ltd. Integrated Report 2022

41

The Kurita Group’s Businesses

Review of Operations by Segment

Water Treatment Chemicals

OrdersNet
Sales¥118,401

Year-on-Year Change＋ 14.3%

million¥117,672

Year-on-Year Change

million＋ 14.0%Principal Products and Services

Business
ProfitOperating
Profit¥13,589

Year-on-Year Change＋ 10.6%

million¥14,560

Year-on-Year Change＋ 23.2%

millionNet Sales

Business Profit

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

13,589113,777

103,5792021

113,632

2022

2020

117,672

11,667

12,287

Boilers are widely used for production processes
in plants and air conditioning in office buildings.
Boiler water treatment chemicals are used toprevent faults that may arise in boilers andensure stable, efficient operation. They also help
to save energy by preventing loss of heatefficiency in the boiler.

Cooling water treatment chemicals are used totreat cooling water used in plants and officebuildings. By preventing problems in pipes andheat exchangers and inhibiting the growth ofharmful Legionella bacteria in cooling towers,
these chemicals help to save resources andenergy and contribute to safer workplaces.

Wastewater treatment chemicals are used totreat the many forms of industrial wastewater
discharged by plants and domestic sewage toprevent any negative impact on the local
environment. Proper treatment of wastewater
contributes to the reduction of environmental
impact.

Process Treatment
Chemicals

Reverse Osmosis (RO)Membrane Treatment Chemicals

Treatment Chemicals for
Automobile Painting Booths

Process treatment chemicals are used in
manufacturing processes in the oil refining,
petrochemical, steel, and pulp and paperindustries, where they help to maintain andimprove production efficiency and productquality.

RO membrane treatment chemicals remove
deposits that can reduce the filtering
performance of RO membranes used inwastewater reclamation and seawater
desalination facilities. By preventing clogging of
the membranes, the chemicals contribute tostable, efficient operation of the facilities.

Water treatment chemicals that separate residual
paint contained in water in automobile painting
booths ensure that circulating water is ofappropriate quality, helping to improve
productivity and reduce environmental impact.

Treatment Chemicals for
Incinerators

Treatment Chemicals for Civil
Engineering

Chemical Dosing and Injection
Equipment

Treatment chemicals for incinerators enableconsistent treatment of hazardous substances,such as heavy metals contained in fly ash, andcontrol emissions of acidic gas, thereby helping to
reduce environmental impact.

In civil engineering projects, the Group uses
chemicals to develop greenspaces, treats
construction sludge appropriately and reduces
sprayed concrete dust, among other applications.

The Kurita Group provides water treatment-related
equipment for a wide range of applications, suchas automatic water quality management systems
that use chemical dosing and injection equipment
and sensing technologies. By enabling stable
operation of customers’ facilities, this equipment
contributes to labor saving and reduced
environmental impact.

14,56011,816103,231

2021

Wastewater Treatment
Chemicals

10,127

2022

2020

2021

2022

2020

2021

2022

Fiscal years ended March 31

The Kurita Group’s Businesses

2020

118,401

Cooling Water Treatment
Chemicals

Kurita Group Business Strategy

OrdersBoiler Water Treatment
Chemicals

Kurita Group Overview

Results in the Fiscal Year Ended March 31, 2022

Overview of the Fiscal Year Ended March 31, 2022
Business Profit and Operating Profit

Despite signs of a recovery in production activity in the
manufacturing industry, orders and net sales in Japan rose only
slightly year on year, reflecting a drop in capacity utilization in somesubsectors due to the COVID-19 pandemic and shortages ofsemiconductors. Overseas, orders and net sales both increased,
supported by a recovery in demand from the previous fiscal year,
when the COVID-19 pandemic weighed on economic activity, and by
the consolidation of results from Kurita AquaChemie Ltd. in the
Middle East and Keytech Water Management in Canada. The slide in
the yen also lifted earnings at overseas subsidiaries on a yen basis.

Costs increased as sales activities returned to normal levels, andraw material and logistics costs rose, but business profits grew year
on year on the back of higher sales. As part of an overhaul of water
treatment chemicals manufacturing in China, the business booked
impairment losses on property, plant and equipment following adecision to shut down a plant operated by Kurita Water Industries(Jiangyin) Co., Ltd. However, operating profit increased year on year,
supported by the sale of real estate at the former head office andOsaka branch office sites, and by foreign exchange translation gains
at overseas subsidiaries.

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

Kurita Water Industries Ltd. Integrated Report 2022

The Platform for Value Creation

42

Orders and Net Sales

43

The Kurita Group’s Businesses

Review of Operations by Segment

Water Treatment Facilities

OrdersNet
Sales¥196,839

Year-on-Year Change＋ 24.0%

million¥170,534

Year-on-Year Change

million＋ 3.7%

Principal Products and Services

Business
ProfitOperating
Profit¥19,391

Year-on-Year Change

million¥21,169＋ 13.2%Year-on-Year Change

million＋ 7.8%Net Sales

Business Profit

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

196,839
145,768

164,518

170,5342021

Ultrapure water production systems remove ions,microscopic particles and bacteria from water toproduce water that is as close as possible totheoretically pure H2O—an essential ingredient in
the production of semiconductors and FPDs.

Ultrapure water production systems remove ions,microscopic particles and bacteria from water toproduce water that is as close as possible totheoretically pure H2O—an essential ingredient in
the production of semiconductors and FPDs.

Kurita provides systems for reclaiming andrecycling wastewater. Moreover, by reclaiming
valuable substances included in the wastewater,
the systems help to conserve resources andreduce costs.

Methane Fermentation System
for Biogas Power Generation

Maintenance Services andSystems Management

Ultrapure Water Supply
Business

The system recovers biogas by generating
methane from the fermentation of industrial
waste, food leftovers and other waste collectedfrom the local area, helping to reduce waste
emissions.

Kurita provides maintenance services to prevent
deterioration in performance and problems
arising in water treatment facilities and to meetcustomer needs for lower environmental impact
and greater productivity. Kurita also manages
systems and facilities for customers.

Kurita installs and owns proprietary water
treatment systems at customers’ plants, handles
the operation and maintenance of those systems,
and charges customers for the supply ofultrapure water. This service reduces the level ofinvestment required and the burden of system
operation management for customers.

Precision Tool Cleaning

Soil Remediation

Engineering Cleaning

Using Group facilities, Kurita cleans and removes
any deposits that adhere to tools and jigs used bycustomers in the manufacture of semiconductors
and FPDs. The provision of precision tool cleaning
services helps customers to maintain andimprove productivity.

Kurita conducts pollution assessments andremediation of soil and groundwater polluted byharmful substances. Using various
decontamination methods, Kurita helps
customers to hedge against the risk of soil
pollution. Other services include support for theeffective use or sale of restored land.

Kurita provides engineering cleaning services
using chemicals, high-pressure water and othermethods to clean accumulated deposits fromboilers, heat exchangers and pipes, ensuring thatlarge-scale plants such as industrial complexes
and electric power plants continue to operatesafely and efficiently.

21,16917,39017,129158,762

19,634

19,391

Wastewater Reclamation
Systems

15,061

2022

2020

2021

2022

2020

2021

2022

2020

2021

2022

The Kurita Group’s Businesses

2020

151,174

Ultrapure Water Production
Systems

Kurita Group Business Strategy

OrdersUltrapure Water Production
Systems

Kurita Group Overview

Results in the Fiscal Year Ended March 31, 2022

Fiscal years ended March 31

Overview of the Fiscal Year Ended March 31, 2022

Business profit increased, mainly driven by higher sales and an
improvement in the cost of sales ratio, which reflected a better
product mix due to an increase in the sales contribution fromservices. Despite the absence of a gain booked in the ultrapure
water supply business in the previous year related to contract
termination settlements with a certain customer, operating profit
increased due to the sale of real estate at the former head officeand Osaka branch.

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

Business Profit and Operating Profit

In Japan, net sales increased significantly as orders for water
treatment facilities from the electronics industry increased
significantly due to a number of orders for large projects. There wasalso an increase in orders and net sales for maintenance services
from the same industry, reflecting growth in maintenance work suchas facility upgrades and replacement of consumables amid high rates
of capacity utilization at customers. Orders for water treatment
facilities from general industry contracted sharply year on year due tocancellations of large projects, leading to lower sales. Orders formaintenance services from the same industry declined, but net salesrose on the back of higher demand amid a recovery in capacity
utilization rates at customers. Orders and net sales for water
treatment facilities from the electric power industry declined. Soil
remediation orders increased, but sales fell. Overseas, orders and net
sales both increased year on year, supported by major orders andthe booking of sales for water treatment facilities in the electronics
industry in East Asia, and by growth in the precision tool cleaning
business. Combined domestic and overseas sales in the ultrapure
water supply business increased year on year, reflecting sales
contributions from contracts started in the previous fiscal year, andby new water supply projects activated in the fiscal year under review.

The Platform for Value Creation

44

Orders and Net Sales

Kurita Water Industries Ltd. Integrated Report 2022

45

The Platform for Value Creation

Directors, Members of the Audit & Supervisory Board,and Executive Officers (As of June 29, 2022)
Directors
Kurita Group Overview

Kenichiro Kamai

Masahiro Miyazaki

Michiya Kadota

2016 President and Representative Director(to present)2014 Director
Executive General Manager of
Administrative Division2013 Executive Officer
1983 Joined Kurita Water Industries Ltd.

Executive Senior Managing Director andRepresentative Director

Managing Director

2018 Head and Representative Director ofGifu Shimbun Co., Ltd. (to present)2017 External Director of Kurita Water
Industries Ltd. (to present)2015 External Director of UACJ Corporation(to present)2010 External Director and Audit andSupervisory Committee Member of
LECIP Holdings Corporation(to present)
Professor at the Faculty of Social andEnvironmental Studies of Fuji Tokoha
University (current Tokoha University)
2007 Director of Sugiyama & Kurihara
Environmental Consultants, Inc.
(to present)
1996 Established Sugiyama & Kurihara
Environmental Consultants, Inc.,
Representative Director

2022 Corporate Vice President of Nissan
Financial Services Co., Ltd. (to present)
2020 Outside expert of Sustainability
Committee of NH Foods Ltd.
(to present)
2019 External Director of Kurita Water
Industries Ltd. (to present)2018 Vice President of Nissan Financial
Services Co., Ltd.
2014 Ambassador Extraordinary andPlenipotentiary of Japan to Uruguay
2013 Acted as Vice President of
JATCO Ltd.
1984 Joined NISSAN MOTOR CO., LTD.

2021 External Director of Kurita Water
Industries Ltd. (to present)
Advisor of TOKAI ELECTRONICS CO.,LTD. (to present)
2019 Executive Advisor of ADVICS CO., LTD.
2015 Director and Executive Vice Presidentof ADVICS CO., LTD.
2014 Executive Senior Managing Director of
ADVICS CO., LTD.
2012 Managing Executive Officer of DENSOCORPORATION in charge ofDevelopment Division2009 Executive Senior Managing Director of
SOKEN, INC.
1978 Joined NIPPONDENSO CO., LTD.
(current DENSO CORPORATION)

2022 External Director of Kurita Water
Industries Ltd. (to present)
2021 Advisor of Hitachi High-Tech
Corporation (to present)2015 Representative Executive Officer,
President and Chief Executive Officer
and Director of Hitachi HighTechnologies Corporation2014 Senior Vice President and Executive
Officer, General Manager of Corporate
Strategy Division of Hitachi HighTechnologies Corporation2010 President & CEO, Hitachi HighTechnologies America, Inc. (current
Hitachi High-Tech America, Inc.)
2007 Executive Officer, General Manager,
Regional Branch Office for West Japan
Area and Kansai Branch Office ofHitachi High-Technologies Corporation(current Hitachi High-Tech Corporation)
1977 Joined Nissei Sangyo Co., Ltd. (current
Hitachi High-Tech Corporation)

Yoshio Yamada

Hirohiko Ejiri

2022 Executive General Manager of Japan Sales
Business Division and Chief Business
Officer for Chemical Operation (to present)
2021 Executive Senior Managing Director andRepresentative Director (to present)
2020 Executive General Manager of Engineering
Division and Chief Business Officer for
Facilities Business2019 Managing Director
2016 Director
2014 Executive Officer
1985 Joined Kurita Water Industries Ltd.

2022 Executive General Manager of Innovation
Division (to present)
2019 Executive General Manager of Japan Sales
Business Division and Chief Business
Officer for Chemicals Business2018 Managing Director (to present)2014 Director
2011 Executive Officer
1982 Joined Kurita Water Industries Ltd.

The Kurita Group’s Businesses

External Director

Keiko Tanaka

Kurita Group Business Strategy

External Director

Ryoko Sugiyama
President and Representative Director

External Director

External Director

Members of the Audit & Supervisory Board

Director

Shuji Shirode

Katsuya Amano

2020 Managing Director (to present)
Executive General Manager of Global
Business Division and Chief Business
Officer for Global Business (to present)2018 Director
2014 Executive Officer
1997 Joined Kurita Water Industries Ltd.

2021 Director (to present)
Executive General Manager of Corporate
Control and Administration Division(to present)2018 Executive Officer
2016 Joined Kurita Water Industries Ltd.

2022 Director (to present)
Executive General Manager of Engineering
Division and Chief Business Officer for
Facility Operation (to present)
2021 Executive Officer
1992 Joined Kurita Water Industries Ltd.

Yasuo Suzuki

Director

External Member of the Audit &Supervisory Board

Member of the Audit &Supervisory Board

External Member of the Audit &Supervisory Board (Part time)2016 External Member of the Audit &Supervisory Board of Kurita Water
Industries Ltd. (to present)2010 Representative Director and Executive
Vice President of Japan Industrial
Solutions Co., Ltd.
1977 Joined Japan Development Bank
(current Development
Bank of Japan Inc.)

2019 Member of the Audit & Supervisory
Board (to present)2018 Director
2016 Executive Officer
1991 Joined Kurita Water Industries Ltd.

2020 External Member of the Audit &Supervisory Board of Kurita Water
Industries Ltd. (part time) (to present)2012 Audit & Supervisory Board Member,
ITOCHU Techno-Solutions Corporation(to present)
2005 Partner, HIBIYA SOGO LAW OFFICES (topresent)
1996 Joined HIBIYA SOGO LAW OFFICES
1996 Registered as an attorney

Kenjiro Kobayashi

Yukihiko Mutou

Toshiaki Tada

Hisashi Tanabe

Norikazu Kachi

Makoto Mizuno

Takehiro Nozue

Seiji Ueda

Kunihiro Kuse

Shingo Yamaga

Jiro Tanaka

Masaya Kawai

Executive General Manager ofCorporate Planning andManagement Office

Deputy Executive General
Manager of Corporate Control
and Administration Division

Executive General Manager of
Digital Strategy Division

Senior General Manager ofMarketing Group,
Innovation Division

Deputy Executive General
Manager of Engineering Division

Senior General Manager ofEngineering Group I,Engineering Division

Senior General Manager of
EMEA and Americas Operation
Group, Global Business Division

Senior General Manager ofIndustrial Infrastructure Group,Japan Sales Business Division

Senior General Manager of
Solution Business Group, Japan
Sales Business Division

Kurita Water Industries Ltd. Integrated Report 2022

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

Executive officers

46

The Platform for Value Creation

Managing Director

47

The Platform for Value Creation

Corporate Governance
Basic Concept

General Meeting
Election &Dismissal

Election &Dismissal

Accounting Auditor
Grant Thornton Taiyo LLC

Cooperation

Members of the Audit& Supervisory Board
3 (Of which, external
members: 2)

Internal Auditing
Department
Audit Report

Consultation
Advisory

Nomination &Remuneration
Advisory Council

ReportSuccessor Planning
Committee

Audit

Resolution
Election &Supervision

Discussion& Report❶ Executive Committee

Various Committees

Instruction

Discussion& Report❷ Executive Officers

 stablished liability limitation contractE
provisions for external directors and external
members of the Audit & Supervisory Board2016 stablished Nomination & Remuneration
E
Advisory Council
Started evaluating the effectiveness of theBoard of Directors

Formulated Corporate Governance Policies

Established the Successor Planning Committee

2022

Kurita Water Industries Ltd. Integrated Report 2022

 evised the remuneration system for executive
R
officers

To enhance and strengthen the screening of investments andfinancing of the Kurita Group, the Company established theInvestment Committee in April 2017. The role of the Investment
Committee is to pre-screen investment and financing projects
to be discussed by the Board of Directors or the Executive
Committee and report the pre-screening results and major
discussion points to the Board of Directors and the Executive
Committee. The Investment Committee has helped enhance
the quality of discussions and the speed of investment decisionmaking by the Board of Directors and the Executive Committeeby organizing major discussion points prior to meetings.
In accordance with the policy of striving to maintain returnon equity (ROE) at levels above the cost of shareholders’ equity,when making an investment decision, the Kurita Group sets a
hurdle rate in consideration of risks for each investment projectagainst the cost of capital.

 re-screening of investment projects to be discussed by the Board of Directors or the Executive CommitteePReport the pre-screening results and major discussion points to the Board of Directors or the Executive Committee
Chairperson: Deputy executive general manager of the Corporate Planning and Control Division
Members:
Deputy executive general manager of Corporate Planning and Management Office, general manager of the Corporate
Planning Department, general manager of the Legal Department, general manager of the Corporate Accounting
Department, general manager of the Corporate Finance Department, and general managers of business management
departments in charge of sales and production

Number ofmeetings held
Results in the fiscal year
ended March 31, 2022

(Reference)
Investment Standard

Number of
projects
pre-screened

16

Equity investment and M&A projects: 2
Capital investment projects: 6
Financing and fund procurement projects: 6

Total: 16

Company establishments, relocations, reorganizations: 2

Hurdle rate calculated as “cost of capital + risk premium for each project”

Financial Information/
Corporate Information

2019❸ Investment Committee

The Platform for Value Creation

Constituent members

 ppointed an independent external director
A
Reduced the term of office for directors fromtwo years to one

2018❸ Investment Committee

Operating Divisions

Other

2014

 ppointed a female external directorA
Established the Investment Committee

Report

The Company introduced an executive officer system in June
2005 to strengthen business execution capabilities. As of June29, 2022, there were nine executive officers. Executive officers
are employed based on appointment contracts.

Roles and Results of the Investment Committee (The fiscal year ended March 31, 2022)

 bolished the retirement benefit system forA
directors

2017

Business Execution

E&S Committee

RolesIncreased the proportion of remuneration
linked to consolidated results performanceand introduced a performance-linked stockcompensation program

ReportPresident

 ormulated Basic Policies for Constructing an
FInternal Control System

2009

Activities of eachorganization⇒ P.52❷ Executive Officers

The Kurita Group’s Businesses

Internal Audit

Introduced the executive officer system

2007

48

10 (Of which, external
directors: 4)
Term of office: 1 year

The Executive Committee reviews matters to be resolved at
Board of Directors meetings when necessary to expedite andfacilitate the decision-making process. The Executive Committee
consists of the president and representative director, directors
at the level of managing director and above, and directors andexecutive officers designated by the president.

Kurita Group Business Strategy

Cooperation

Cooperation

Audit

Timeline of Corporate Governance Improvements (The fiscal years ended March 31)

2006

Board of Directors

Audit
ReportAccounting Audit & Internal Control Audit

Remuneration system❶ Executive Committee

Election &Dismissal

Audit & Supervisory
Board

As a company with an Audit & Supervisory Board, Kurita’s Board of
Directors is responsible for decision-making and supervision ofbusiness execution. The Board sets the Group’s strategic direction andsupervises management in general to support sustained growth. It also
makes decisions on business execution related to importantinvestment and financing projects, the transfer of business, and otherkey matters. For other matters, business execution is decided by the
Executive Committee, which is composed of management executives,or by management executives who have been given authority underthe Internal Decision Approval and Review Rules.

Business Execution Structure

Advisory Bodies

Corporate Governance Structure

Corporate governance structureof Shareholders

Kurita Group Overview

The Kurita Group aims to contribute broadly to society throughcorporate activities in the fields of water and the environment inaccordance with the Kurita corporate philosophy, “Study the propertiesof water, master them, and we will create an environment in which
nature and humanity are in harmony.” The Kurita Group will work topromote sustainable growth and enhance its corporate value in themedium and long term, deferring to the rights and position of various
stakeholders such as customers, business partners, employees,
shareholders, and local communities while striving to meet their
expectations. To this end, the Kurita Group is striving to establish
corporate governance, with the aim of realizing transparent, fair,
prompt, and decisive decision-making measures and highly effective
management supervision.

 rialed reflecting non-financial indicators inTperformance evaluation standards

Kurita Water Industries Ltd. Integrated Report 2022

49

The Platform for Value Creation

Corporate Governance

Composition of the Board of Directors

Skills Matrix of Directors and Members of the Audit & Supervisory Board
Corporate governance and management

Composition of the Board of Directors(As of June 30)
External directors
Internal directors
Percentage of external directors (%)

Name

Female directors

10

38%

9
27%

6

8

33%

5

10 40%
6
Directors

3

2

3

2

2

2019

2020

2021

2022

Reason for appointment

—

—

—

—

●

●

●

Shuji Shirode—

Katsuya Amano

Masahiro Miyazaki (external)
Members of
Audit &
Supervisory
Board

Kenjiro Kobayashi (external)
Yukihiko Mutou
Toshiaki Tada (external)

●

●

●

●

●

●

—

●

—

●

●

—

—

—

—

—

—

—

—
—
—

●

●

—

●

—

●

—

—

—

—

—

●

●

●

●

●

●

●

●

—

●

—

●

●

—

●

●

●

—

Environment

—

—

●

●

—

—

●

●

●

—

●

●

●

—

—

—

—

—

—

—

—

—

—

—

—

—

●

—
—

●

●

—

●

—
—

—

—

—

—

—

—

—

—

—

—

—

—

Among the knowledge and experience of each director/member of the Audit & Supervisory Board, those with ● are fields where they have strength while ● indicates anarea where they are especially promising.

Independent External Directors

Human rights

GlobalAs it develops its business globally, the Kurita Group is working to establish and reinforce a global platform built on the four pivotal regions ofJapan, Asia, EMEA, and the Americas. The skills item “global” stands for understanding of regions and countries, etc., where the Group isdeveloping its business, and for international experience. It is an essential element for cultivating the “diverse points of contact with sites” thatare a source of the Group’s competitive advantage. This skill category has been selected because the Group considers a deep knowledge ofglobal markets to be essential for developing business globally and increasing corporate value.

Understanding
and solving
issues on-site

The Group provides solutions to issues caused by water at the sites of various customers around the world. At “diverse points of contact withsites,” the Group engages seriously with customers’ issues, utilizing its “water knowledge” in the form of accumulated information and data tocreate solutions that only the Kurita Group can provide. This is the source of shared value creation with customers and society. This skill
category was selected because the Group considers it important to have a deep understanding of points of contact with customer sites, whichis the source of value creation, and a deep experience of solving issues at such points of contact.

R&D,
technology,
andengineering

The Group merges technology and expertise acquired in various business domains to create new products, services, and technologies.
Furthermore, amid the significant external environmental changes of recent times, the Group has revised its methods of providing products,
services, and technology with an emphasis on providing value in customers’ business continuity, and is taking steps to improve costcompetitiveness and production capacity by reviewing its procurement and production structures. This skill category was selected as theGroup considers the strengthening of development, technology, and production to be the foundation for creating and providing solutions.

DX

The Group aims to achieve DX by using digital technology to change its business processes and transform its business model. This skill
category was selected because the Group considers DX to be a priority task for making use of digital tools, AI, and IoT, and utilizing informationand data collected from diverse customer sites as “water knowledge,” to create innovative shared value with customers and society.
In its CSR policies, the Group has identified “solve issues related to water resources,“ “realize sustainable energy use,” and “reduce waste” asmaterial issues for realizing a sustainable society, and as priority themes for it to address. Moreover, it has defined products, technologies orbusiness models that make significant contributions to water-savings, CO2 emissions reduction and waste reduction compared with previous
levels as “CSV businesses,” and is working to create shared value with society through their development and provision to customers. The
Group has selected this as a skill category because it views reducing environmental load through its business as its mission.

Kurita Water Industries Ltd. Integrated Report 2022

The Company’s external directors are appointed for a term of one
year and may concurrently hold positions at up to three listedcompanies including the Company. The external directors use theirknowledge and specialist insight accumulated through management
experience to evaluate business management and provide opinionsfrom the perspectives of the Kurita Group’s sustainable growth andincreasing corporate value over the medium to long term, helping toenhance the rationality and transparency of decision-making by the
Board of Directors.
The activities of the independent external directors include making

proactive statements and proposals in Board of Directors meetings, aswell as attending as observers in internal committees such as the E&S
Committee, the Solutions Business Committee, and the Health and
Safety Committee. They also make on-site visits to gain a deeper
understanding of operations for evaluating management.
As members of the Nomination & Remuneration Advisory Council
and the Successor Planning Committee, external directors also help toenhance the suitability and transparency of discussions in both bodies
and work to ensure appropriate evaluations of executive candidates
through individual interviews with candidates.

Status of External Directors (As of June 29, 2022)

Post

Name

Number of meetingsof the Board of
Directors attended(Fiscal year ended
March 31, 2022)

Reasons for election as a director

Ryoko
Sugiyama

Board ofDirectors’
meetings:
12/12

Ms. Ryoko Sugiyama is an expert on the environment and waste and has held important positions such as an external
director of listed companies. The Company judged that she is capable of providing opinions from an outside
perspective, different from those within the Company, and increasing its rationality and transparency. In addition, Ms.
Sugiyama was judged to be capable of supervising the execution of duties by directors, based on her high expertise andwealth of experience in the environment field.

Keiko
TanakaBoard ofDirectors’
meetings:
12/12

Ms. Keiko Tanaka has experience in business fields that differ from those of the Kurita Group and a great deal ofknowledge about public relations and marketing, as well as international experience. The Company judged that she iscapable of using these skills to express opinions from an outside perspective to increase the rationality andtransparency of the Company’s management, and to supervise the execution of duties by directors.

Kenichiro
Kamai

Board ofDirectors’
meetings:
9/9

Mr. Kenichiro Kamai has a wealth of experience, including overseas, in business fields that differ from those of the Kurita
Group, and he has considerable insight in DX and development. The Company judged that he is capable of expressing
opinions from an outside perspective to increase the rationality and transparency of the Company’s management andto supervise the execution of duties by Directors, based on his experience of management at multiple companies andhis expertise in the fields of DX and development.

Masahiro
Miyazaki―

Mr. Masahiro Miyazaki has experience of holding important positions such as a representative executive officer at
corporate groups with global operations, both in Japan and overseas. The Company judged that he is capable of using
these skills to express opinions from an outside perspective to increase the rationality and transparency of theCompany’s management, and to supervise the execution of duties by directors.

Directors

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

50

—

—

DX

These skill categories have been selected because they are considered to be skills, knowledge, and experience that provide a foundation for
decision making and supervision of business execution.

In developing its business globally, the Kurita Group encounters diverse working environments, business customs, and trading practices, andthere is a need to engage in business while respecting stakeholders’ human rights. The Group has therefore established “respect humanrights” as one of its materiality themes, and is promoting human rights respect initiatives for stakeholders such as employees in countries andregions where it conducts business. The Group also views the diversity of human resources as a foundation for generating innovation and asource for creating value that will lead to sustainable growth, and therefore considers it important to utilize diversity. Accordingly, the Group
has selected human rights as a skill category because it is a priority issue for management.

Environment

—

—

R&D,
Understanding
technology,
and solving
andissues on-siteengineering

The Platform for Value Creation

Creating social value●●

GlobalThe Kurita Group’s Businesses

Making full use ofwater knowledge—

Kenichiro Kamai (external)

1

Legal and HR
management

Leveraging diversity●

Legal and HR
Human rights
management

Kurita Group Business Strategy

2

Corporate
management

Finance andaccounting●

Keiko Tanaka (external)

Skills and reason for selection

Corporateplanning●

Yasuo Suzuki

17%

2018

Corporate governanceand management●

Ryoko Sugiyama (external)

3

Skills●Yoshio Yamada

4High-level concepts

Finance andaccounting

Hirohiko Ejiri

11
8

2

Corporate
management
Corporateplanning

Michiya Kadota

12

Leveraging diversity ▶ Making full use of water knowledge ▶ Creating social value

Kurita Group Overview

To fulfill the highly effective supervisory function over operational
execution towards realizing the corporate philosophy, the Board of
Directors will consist of personnel with the necessary knowledge,
experience and competence, taking into consideration gender anddiversity. With regard to this knowledge, experience and competence,
the Company will identify skills regarding corporate management,
management planning and other aspects of corporate governance andmanagement, skills required to realize the direction sought by the
Kurita Group of leveraging diversity to deepen water knowledge andusing water knowledge to create social value, and necessary skills, etc.,
for realizing the Corporate Philosophy. The Board of Directors as awhole will be organized in a way that complements the above. Basedon this policy, the nine items of the skills matrix and reasons forselection are as shown in the following table.

51

The Platform for Value Creation

Corporate Governance

Advisory Councils for the Board of Directors

Fulfilling the Function of the Audit & Supervisory Board Members

The Company has in place a Nomination & Remuneration Advisory
Council, a voluntary committee to increase transparency in thedecision-making process regarding remuneration for directors andnomination of directors and members of the Audit & Supervisory
Board. In the fiscal year ended March 31, 2022, the Council met six
times. The Council is chaired by an external director, Ryoko Sugiyama,
with the main members being the external directors and the external
members of the Audit & Supervisory Board.

The chairperson of the Board of Directors consults with theNomination & Remuneration Advisory Council beforehand when
proposals are made to the Board of Directors regarding candidates for
director or member of the Audit & Supervisory Board or remuneration
for directors. The Council reports on the suitability or unsuitability of
the candidates to the Board of Directors, which makes decisions basedon the reports.

Profile of Nomination & Remuneration Advisory Council (Fiscal year ended March 31, 2022)
Results in the fiscal year ended March 31, 2022

Candidates for directors
Candidates for representative directors
Candidates for executive directors

 hree external directors
TPresident
One full-time external member of the Audit &Supervisory BoardD iscussion of determining the appropriateness of all candidates
for directorE xamination of skills matrix

Candidates for members of the Audit &Supervisory Board ne full-time external member of the Audit &O
Supervisory Board
President
Part-time external members of the Audit &Supervisory Board― hree external directors
TPresident
One full-time external member of the Audit &Supervisory Board erformance evaluation of directors and executive officers
PDiscussion of the appropriateness of incentive remuneration
Discussion of the appropriateness of fixed remuneration
Discussion of performance evaluation by non-financial
indicators

Nomination

Remuneration

The Company has in place the Successor Planning Committee, mainlycomprising external officers, as an organization for selecting
successor candidates for the president, directors, and executive
officers and deciding on measures for their development. The Council
is chaired by external director Ryoko Sugiyama. The committee

references objective information such as external organizationassessment results for the successor candidates and selects
successor candidates for the president, directors, and the executive
officers, as well as setting the development measures for the
successor candidate for president and directors, and reports these to
the Board of Directors.

Selection of successor candidate

Selection

Experience, Capability, and Knowledge of the Audit & Supervisory Board Members

Confirmation

Name

Review result

Interview
assessment

Interview

Select points forstrengthening

Set measures

President

President

Externalorganization
Executive senior
managing director
or above

Directors

External member ofthe Audit &Supervisory Board
Independent officer

President
Board ofDirectors

Experience, Capability, and Knowledge

Executive senior
managing director
or above

Successor
Planning
Committee

Board ofAudit & Supervisory
Directors’ meetings
Board meetings

Confirmation

Successor for president

Successor
Planning
Committee

Attendance(Fiscal year ended March 31, 2022)

Successor candidate development

Kenjiro Kobayashi

Externalorganization

Full-time members of the Audit & Supervisory Board attend meetingsof the Board of Directors, Executive Committee, the E&S Committee
and other important meetings, and audit business execution by the
directors and oversight duties of the Board of Directors. In addition,
they conduct audits of key management departments and carry out
field audits of business sites and Group companies to verify the asset
position of the entire Kurita Group and the development and operationof the internal control system by directors at Group companies. Fulltime members of the Audit & Supervisory Board share informationfrom meetings of the Executive Committee and other key meetings andthe details and results of audits and field audits with the part-timemember of the Board on a timely basis. In addition, the part-timemember of the Audit & Supervisory Board proactively provides
opinions during meetings of the Board of Directors and during regularmeetings with the president, drawing on their legal expertise andbackground.
Onsite audits of overseas affiliated companies scheduled for thestart of the fiscal year were cancelled due to the COVID-19 pandemic.
However, as an alternative, appropriate audits of the sites wereconducted through online meetings and other methods. Business
reports, financial documents and other materials were also
appropriately audited through wider use of online meetings andelectronic files.

Board ofDirectors

Yukihiko Mutou

Toshiaki Tada

Director successors

External member ofthe Audit &Supervisory Board
Independent officer

Mr. Kenjiro Kobayashi has been active in different fields to those of the Kurita
Group’s businesses and has high expertise in the areas of finance,
management planning, new business development, M&As, etc., along with awealth of international experience.

12

Mr. Yukihiko Mutou has held important positions in the Administrative
Division. He possesses a wealth of knowledge and experience in the areas offinance, accounting, and management.

12

Mr. Toshiaki Tada has special knowledge as well as a wealth of experienceand deep insight into corporate legal affairs as an attorney who has worked
in Japan and overseas.

12

The Platform for Value Creation

Assessment

Candidaterecommendation

In regular meetings between the president and all members of the
Audit & Supervisory Board, the president provides details about theCompany’s management policy, growth strategies, business issues andother topics, while members of the Audit & Supervisory Board provide
recommendations based on audit activities. The members of the Audit& Supervisory Board also hold regular meetings with the Accounting
Auditor to confirm the independence of the Accounting Auditor, verify
the performance of their duties and discuss and exchange opinions
about accounting audits. Regular meetings are also held with external
directors to exchange opinions about the Company’s business
management in general.
The Audit & Supervisory Board discusses internal audit plans with
the Internal Auditing Department in charge of internal audits of theCompany and exchanges opinions with them about audit results andevaluations of internal control over financial reporting, risk

Participation in Key Meetings and Inspections ofGroup Companies

The Kurita Group’s Businesses

Successor Planning Committee

Cooperation with the Accounting Auditor, the Internal
Auditing Department and External Directors

management, etc. The Internal Auditing Department conducts internal
audits of the Company and Group companies to identify any issues
related to business execution or other problems and submits reports
to the president about areas that require improvement.

Kurita Group Business Strategy

Constituent members

In the fiscal year ended March 31, 2022, the Audit & Supervisory Board
held 11 meetings, which were attended by all members of the board.
Key matters considered and discussed by Audit & Supervisory Board
members included the formulation of audit policies and plans, thepreparation of audit reports, selection of the Accounting Auditor,
remuneration for the Accounting Auditor and details of proposals to bepresented to the Annual General Meeting of Shareholders. The Board
developed and implemented audit plans targeting priority areas, suchas the internal control system (including internal control over financial
reporting), the development and implementation of the risk
management system and audits of progress regarding priority
measures in business plans.

Kurita Group Overview

Nomination & Remuneration Advisory Council

11
12

11
11

12

11
11

12

11

Feedback to candidate, assignment, appointment, etc.

Matter for discussion

Members

Selection of president’s successor candidate

Three external directors
One full-time external member of the Audit & Supervisory Board

Setting of development measures for successor candidates for president, etc.

In addition to the above four, the president

Selection of directors’ successor candidates
Selection of executive officers’ successor candidates
Setting of development measures for successor candidates for directors, etc.

In addition to the above five, executive senior managing directors

Financial Information/
Corporate Information

Successor Planning Committee members(Fiscal year ended March 31, 2022)

52

Kurita Water Industries Ltd. Integrated Report 2022

Kurita Water Industries Ltd. Integrated Report 2022

53

The Platform for Value Creation

Corporate GovernanceEvaluation of the Effectiveness of the Board of Directors

Evaluation Method

The evaluation is carried out via a written survey with each of the
respondents identified. Following a discussion using the aggregatedresults, the Board of Directors evaluates its effectiveness, identifies
problems, designates issues to be addressed and establishes
measures. These matters are then adopted by a resolution of theBoard. The survey is revised each fiscal year based on the results of theprevious year’s survey.

Evaluation
periodJanuary to December 2021

Evaluation Results

Through the following measures, the Company has improved thenature and quality of its constructive dialogues with shareholders andinvestors.
(1) Personnel assigned to handle dialogue with shareholders andinvestors shall be selected from a wide range of personnel based on
their areas of expertise and the businesses under their supervision.
The Company will enhance systems for sharing the results of these
dialogues with all constituent members of the Board of directors,
which shall have stronger involvement in IR and SR activities.
(2) The constituent members of the Board of Directors shall identify
issues having accurately comprehended the requests andexpectations of shareholders and investors regarding the Company
and the status of the Company, and make their own proposals todeepen discussion at the Board of Directors.
(3) The Board of Directors shall request special committees to provide
reports on important themes that should be considered by the
Board of Directors, then discuss these themes based on the
expectations of shareholders and investors regarding the Group, tomake policies on them.

Status of Initiatives to Tackle Issues Raised in Previous
Evaluation Results

The Company took the following measures regarding the issue raisedin the previous fiscal year’s evaluation result: “To accelerate businessmodel transformation and business process reforms using DX, theBoard of Directors needs to increase its involvement.”(1) The DX Committee oversees DX promotion for the entire Group,
appropriately confirming the progress and results of customer value
creation projects and the Meta-Aqua Project, etc., as well as building
a structure for mutual coordination between the Digital Strategy
Division and the CDO Office.
(2) T he Board of Directors receives regular reports from the DX
Committee and supervises the status of DX initiatives in general.
Furthermore, the external directors participate as observers in the
DX Committee to comprehend the status of activities. As an initiative
to support the supervisory function, regular study sessions on DX
are held for all of the constituent members of the Board of Directors
to cultivate their deeper understanding of DX.

Remuneration System for Directors and Members of the Audit & Supervisory Board
Payment Ratio of Base Remuneration and Incentive Remuneration (Average)
Base remuneration

50%-90%

Performance-linked remuneration

Of which, payment toshareholding scheme

Short-term incentive remuneration

Long-term incentive remuneration

10%-20%0%-30%

10%-20%Total

The Platform for Value Creation

According to the evaluation results for January to December 2021, theaverage self-evaluation of all directors and members of the Audit &Supervisory Board was generally good in all six areas, indicating thatthe Board of Directors is operating effectively. By category, "operationof the Board of Directors” was most highly evaluated as in the previous
year. This was followed by "contributions of individual directors andmembers of the Audit & Supervisory Board." However, in the “roles andresponsibilities of the Board of Directors” category, items related to thebuilding and monitoring of the DX promotion structure and "dialogue
with shareholders" received relatively low valuations compared withother items.
In addition, in the discussions in the Board of Directors meetings,
external directors pointed out that the discussion in the E&S
Committee, the DX Committee, and other committees was understood
to be meaningful in execution; however, the issue was raised that moreideas are needed regarding how to utilize the discussion in thecommittees in supervision of management by the Board of Directors.

Measuresconsolidated operating profit target. For remuneration linked to theresults of operations overseen by each director, the applied
performance indicators are the differences between actual results andplan targets for consolidated return on equity (ROE) and forconsolidated business profit margin. For remuneration related to othercontributions, the applied performance indicators include theimplementation of large investment projects and other developments
not reflected in performance for the relevant fiscal year, such asenhancing the quality of the corporate structure and M&A deals.
Furthermore, with the aims of accelerating business operations
designed to provide social value and increasing corporate value
through the realization of social value, the Company has newly clarified
the evaluation perspective of “degree of achievement of planned
customer water saving amount, customer CO2 emissions reduction
amount, and customer waste reduction amount associated with CSV
business.“ For the long-term incentive remuneration, the Company has
introduced a performance-linked stock compensation program underwhich points are awarded according to business performance and job
title during the term of office, and shares of the Company are granted
at the time of retirement in an amount corresponding to the numberof accumulated points. Profit attributable to owners of parent is usedas the performance indicator for long-term incentive remuneration.
The system and level of remuneration and the performance evaluationof directors are adopted by resolution of the Board of Directors after
consulting in advance with the Nomination & Remuneration Advisory
Council. Based on reports provided by the Nomination & Remuneration
Advisory Council, the Board of Directors decides the allocation of
remuneration of the directors within the total amount determined by the
Annual General Meeting of Shareholders. The allocation of remunerationfor each member of the Audit & Supervisory Board is adopted byresolution of the Audit & Supervisory Board.

Remuneration for directors and members of the Audit & Supervisory
Board of the Company is determined in accordance with the following
basic policy.
1. The remuneration paid to Directors and members of the Audit &Supervisory Board is designed to attract and retain talented people
with diverse skills, experience, etc., to help realize the corporate
philosophy.
2. The Company intends that remuneration be linked to businessperformance and medium- to long-term corporate value in order tofunction as a sound incentive for sustainable growth.
3. The Company ensures the objectivity of decisions on remunerationand the remuneration decision-making process be highly transparent.
The Company’s remuneration system for directors excluding
external directors is composed of fixed remuneration as baseremuneration, and incentive remuneration linked to business results.
External directors and members of the Audit & Supervisory Board, who
perform oversight functions, receive only fixed remuneration.
Amounts of fixed remuneration are decided for each job title in thecase of directors and for each work arrangement in the case of
members of the Audit & Supervisory Board. A portion of the
remuneration is appropriated for the directors’ and Audit & Supervisory
Board members’ Shareholding Scheme to purchase the Company’s
shares so that directors and members of the Audit & Supervisory
Board share the risk of stock price fluctuation with shareholders.
To provide an incentive to directors (excluding external directors) tocontinuously increase corporate value, the Company provides shortterm and long-term incentive remuneration. Short-term incentive
remuneration consists of remuneration linked to consolidated
performance, remuneration linked to the results of operations
overseen by each director, and remuneration related to othercontributions. The performance indicator for remuneration linked toconsolidated performance uses the level of attainment of the

The Kurita Group’s Businesses

Evaluation
items

The following six themes were evaluated1) Roles and responsibilities of the Board of Directors2) Fulfilling the function of external directors3) Composition of the Board of Directors4) Operation of the Board of Directors5) Contributions of individual directors and members of the
Audit & Supervisory Board
6) Dialogue with shareholders

To increase the quality of dialogue with shareholders and investors
with a view to increasing corporate value, it is necessary for theconstituent members of the Board of Directors to be even more
conscious of external viewpoints as they execute their duties.

Kurita Group Business Strategy

Evaluation
Method• Self-Evaluation• This evaluation was conducted via a written survey, witheach of the respondents identified. Following a discussion
using the aggregated results, the Board of Directors
evaluated its effectiveness, clarified issues and adopted
measures for the future.

Issue

Kurita Group Overview

The Board of Directors analyzes and evaluates its effectiveness every
year in order to fulfill its expected roles and functions more effectively.

Remuneration for Directors and Members of the Audit & Supervisory Board

100%

Remuneration for Directors and Members of the Audit & Supervisory Board
Total amount of remuneration, etc., for each officer classification, total amount by type of remuneration, etc.,
and number of eligible officers (Fiscal year ended March 31, 2022)
Total amount of remuneration by type (millions of yen)

Kurita Water Industries Ltd. Integrated Report 2022

Amount ofnonmonetary
remuneration, etc., inperformance-linked
remuneration

Number of eligible
payees for baseremuneration

388

208

179

43

7

34

34

―

―

1

89

89

―

―

6

Total amount of
remuneration, etc.
(millions of yen)

Directors (excluding external directors)
Members of the Audit & Supervisory
Board (excluding external members)
External officers

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

54

Base remuneration

Performance-linked
remuneration

Officer classification

55

The Platform for Value Creation

Corporate Governance

Messages from External Directors

Dialogue with Shareholders and Investors
Increasing Corporate Value by Promoting Sustainability
held after the Ordinary General Meeting of Shareholders, it increased
the number of dialogue opportunities using phone meetings and web
conferencing, conducting around 250 dialogues in total. The Company
also held an ESG Briefing again this year, after holding one last year.

IR Activities in the Fiscal Year Ended March 31, 2022
Dialogue events

IR Activities

Institutional
investors(including
shareholders)

Individual
investors(including
shareholders)

Financial results briefings

4 times

Small group meeting

1 timeIndividual meeting

Total approx.
250 times

ESG briefing

1 timeParticipation in conferences held bysecurities companies

3 times

Letter to Shareholders

1 timeCommunication with People Responsible for Exercising Voting Rights

External Director

Preparing a More Flexible Organization and Embedding Diversity
Diversity continues to be an important theme. As theCompany advances globally, I believe that nonJapanese directors will also be needed, and withregard to the ratio of women in the Board of
Directors, while there are two including myself, rather
than being satisfied that the ratio is increasing, I think
the Company should look to develop internal female
personnel as executive officers and then as directors.

Strengthening the Role of Head Office as a Global Headquarters

Record of sales

56

Frequency

Once a year or as necessaryStandard

 otal of operating profit and dividends received is less than expected return for five consecutive years
TAn improper incident occurs, etc.

Fiscal year ended
March 31, 2021

4 of 26 stocks (includes partial sales of 2 stocks)

Fiscal year ended
March 31, 2022

4 of 24 stocks (includes partial sales of 2 stocks)

Kurita Water Industries Ltd. Integrated Report 2022

Meanwhile, as the Company’s globalization continues,
I have felt that there is a lingering issue with theCompany organizing the affiliated companies as a
global headquarters, and there is a need to make
improvements by using other companies asbenchmarks. As an external Director, I will focus on
this issue, providing hard opinions when necessary inorder to assist management.

External Director

Making Forward Strides with the Courage to Make Changes, and to
Change Ourselves
I have been newly appointed as an external director.
In this era, we are experiencing a large number of
unexpected events, with new challenges emerging
one after another, requiring companies to adapt tochange more and more. In this situation, to ensurethat the Company will continue to play a necessaryrole in society in the future, it must respond flexibly
to changes in society and contribute solutions to
issues faced by customers and society even fasterthan ever before. By demonstrating the ability torespond to society and sharing knowledge andproviding mutual assistance between divisions with
an open mind, we will strive to swiftly meet thechallenges of the times.
By exercising the courage to make changes andto change ourselves, we aim to realize further
progress together.

Financial Information/
Corporate Information

Review of shareholdingsIn some cases, the Company holds shares of other listed companies to strengthen business relationships, etc.
When holding such shares, the Company makes efforts to minimize the risk of holding the shares. The rationale for holding each stock isreviewed on a regular or timely basis by the Board of Directors. Based on the results of the examination, the Company works to reduce theholding of shares of other listed companies.
The Company exercises voting rights for each proposal based on whether it will contribute to an increase in shareholder value.
If a shareholder indicates its intention to sell the Company’s shares, the Company will not prevent the shareholder from making such sale,etc.

Kenichiro Kamai

I have been observing the Company as an external
director for one year now, and I have the impressionthat the Company is very seriously engaged instrengthening its corporate governance. Moreover, atthe E&S Committee and DX Committee, we exchange
opinions directly without regard for seniority, and thewonderful result of these rich discussions is that theentire Group is aligned along the same vector.

The Platform for Value Creation

Policyour transaction histories with them. Based on the results of thisexamination, the Board of Directors reviews the appropriateness ofholdings periodically and at other times as necessary, and reduces thenumber of shares held. Funds gained from the sale of the shares areallocated to capital investment and M&As.

Keiko Tanaka
External Director

corporate governance. The opinions and requests of institutional
investors were swiftly relayed back to management.
Furthermore, the Company strives to increase convenience inexercising voting rights by providing English translations of convocation
notices and corporate governance reports and advance disclosure of
convocation notices prior to sending them out, among other measures.

Shareholdings of Other Listed Companies
The Company holds shares of other listed companies to strengthenbusiness relationships. We verify the economic rationale for mutualshareholdings by comparing expected gains based on capital cost andgains from holding the shares. We also examine the relationships withcompanies whose shares the Company holds by carefully examining

In my previous positions I have seen numerous
business breakthroughs due to diversity that would
have been unthinkable before that, giving me afirsthand experience of how effective diversity is. I
would like to speak up proactively with proposals andopinions as an external director so that many people
at the Company can have the same experience that I
have had.

The Kurita Group’s Businesses

The Company is working to increase opportunities for dialogue withinstitutional investors responsible for exercising voting rights to listen
to their opinions and use them to improve management. In the fiscal
year ended March 31, 2022, personnel responsible for SR, IR, and CSR
activities had meetings with major investors in Japan and overseas 17
times to hear the voting policies of institutional investors and to
exchange opinions on improving the Group’s management andRyoko Sugiyama

with previous levels as “CSV businesses,” and has
included the achievement rate of customers’
environmental impact reduction plans as an aspectfor evaluating directors’ compensation. I expect
these kinds of progressive initiatives to bestrengthened, and as an external director, I will
deepen the discussion around sustainability in the
Board of Directors and contribute to increasing
corporate value.

Kurita Group Business Strategy

The Group strives to secure opportunities for dialogue with institutional
investors in Japan and overseas and individual investors in Japanthrough various presentations and individual meetings. The president
and the executive general manager of the Corporate Control and
Administration Division are the main speakers at the financial results
briefings. The executive general manager of the Corporate Control and
Administration Division is responsible for routine dialogue and works
with personnel responsible for IR and CSR activities. In the fiscal year
ended March 31, 2022, following the pandemic, although the Company
avoided holding overseas IR roadshows and briefings for shareholders

Number of
eventsAmid growing demands for companies to engage ins us t ai nab i l i t y , t he C omp any has m ad e C S R
management a core priority, setting water, CO2 andwaste as materiality issues in its CSR Policy, andestablishing quantitative medium-term targets. To
achieve these, the Company has defined products,
technologies or business models that makesignificant contributions to water-savings, CO 2
emissions reduction and waste reduction compared

Kurita Group Overview

The Kurita Group respects the interests of shareholders inmanagement and strives to listen to its shareholders and investors andpromote constructive dialogue with them in order to contribute toincreasing medium- to long-term corporate value. In communicating
information, the Company emphasizes fairness and transparency. The
materials and summary of the Q&A sessions of the Company’spresentation meetings are posted on Kurita’s investor relations website
to ensure fair information disclosure.

Masahiro Miyazaki
External Director

Kurita Water Industries Ltd. Integrated Report 2022

57

The Platform for Value Creation

Risk Management
Basic Concept

Identifying Risks and Formulating Response Measuresclarifying risks that should be taken for the sake of sustainable growthand enhancing corporate value while implementing appropriate
measures to reduce losses.

Risk Management System

Approval

ReportHeadquarters Health and
Safety Committee

Compliance andclimate change risks

Cooperate

Cooperate

Interview with the PresidentThe Kurita Group’s Businesses
Climate Change

P.10-16
P.26-45
P.70-71

Country risk

 isk of loss of business opportunities and inability to recover investments due to changes inRregulatory frameworks and abrupt political and economic changes in Kurita’s markets
Human losses and loss of business opportunities due to conflict, terrorism, violence, andheinous crime

The Kurita Group’s Businesses

P.26-45

Disaster risk

 uman losses and loss of business opportunities caused by pandemics
HHuman losses and loss of business opportunities caused by natural disasters including thosecaused by climate change

 CM
BClimate Change

P.60-61
P.70-71

Strategic risk

 ailure to attain goals in medium-term management plan due to delays with organizational
Freforms, business restructuringSlow pace of business expansion caused by delays with launching new businesses, executing
growth strategy
Delays with developing businesses matched to customer needs and characteristics of eachcountry/region
Failure to remain competitive in water treatment market due to delays with introducing IT andbuilding digital businessesInterview with the President
P.10-16
Medium-Term Management Plan P.20-21
The Kurita Group’s Businesses
P.26-45

Business risk

 ailure to provide competitive products, services or solution models in a timely mannerFClaims for damages and additional costs due to defects or deficiencies in products or services
Loss of competitiveness due to outflow of technical expertiseSlowdown or lack of progress with improving the profitability of overseas businesses driving the
Kurita Group’s growth
Accidents/injuries in the Group’s businesses he Kurita Group’s Businesses
T
P.26-45
Information Security Management P.61

Health and Safety
Committees of businesssites and divisions

Business sites andGroup companies

Financial risk

 oss of public trust caused by inadequate internal controls related to financial reportingLDeterioration in profitability or cash flow due to poor management of Group companies
Write-down of goodwill caused by weak earnings at acquired companies

Financial Strategy
P.17
 asic Policies for Constructing an Internal
B
Control System
—

Health, safety andwork-related accidents

Risks directly related todaily business activities ealth issues caused by long working hours
HDecline in ability to adapt to changes in operating environment due to insufficient diversity initiatives

Human Resources Management P.62-67

Monitoring implementation status andimprovement status oss of public trust due to legal or compliance violations and information breaches
LInfringement of intellectual property rights

 ompliance
C
P.72-73
Utilization of Intellectual Property
P.33

Internal Auditing Department

Labor risk
Legal andcompliance risk

• The above table is not an exhaustive list of the Kurita Group’s risks.
• Please click on the link below for more details about risk factors related to the Group’s business conditions, financial accounts and other items in the Annual Securities
Report that could have a material impact on investor decisions.

Financial Information/
Corporate Information

Operatingenvironment risk

 ontraction in existing markets due to customers reducing factory operating rates and reining inCcapital investment
Decline in prices for products and services due to intensifying competitionDecline in profitability and slowdown in business growth due to spikes in prices for raw materials
and energy costs as well as supply chain disruptions
Decline in yen translation amounts due to changes in exchange rates and other factors
Decline in profits following the introduction and increase of carbon tax on CO2 emitted by the
Kurita Group’s facilities and products, etc.

Departments in charge
Risks related to quality,
the natural environment,
traffic accidents, information security,
export controls, etc.

Report section/information
related to response measures

Main risks

ReportDivisionsCheck

The Platform for Value Creation

E&S Committee,
Group E&S Committee

Instruct• Review Group-wide risk map• Determine Group-widematerial risks for the next
fiscal year

Risk category

Executive general manager of the Corporate Planning andManagement Office (officer in charge of risk management)
Report• Monitor progress with risk
response measures inorganizational goals andbusiness plans• Rapidly identify and respondto emerging risksGroupwide Risk Map

Board of Directors

Proposes person
responsible and system

Do

Action• Monitor risk response efforts• Identify deteriorating or
emerging risks

Risk Management System

President and Representative DirectorPlan• Prioritize risks and formulate
response measures• Incorporate into
organizational goals andbusiness plans

The Kurita Group’s Businesseschange, while the chairperson of the Headquarters Health and Safety
Committee is responsible for material risks related to health, safety andwork-related accidents. The executive general manager of each division
is responsible for responding to risks directly associated with day-today business operations, and each division identifies and evaluatesrisks related to the operations and Group companies it is in charge of.
Also, responding to risks relating to quality, the natural environment,
traffic accidents, information security, export controls, and so on are
handled by the respective departments responsible. The executive
general manager of the Corporate Planning and Management Office,the chairperson of each committee and the executive general managerof each division report periodically to the Board of Directors on thestatus of risk management implementation, and report as necessary to
the Board of Directors on the occurrence and impact of material risks.
Furthermore, the Internal Auditing Department monitors the execution
status and improvement status of risk management measures.

Risk Management PDCA Cycle

Kurita Group Business Strategy

The executive general manager of the Corporate Planning andManagement Office is responsible for monitoring risks andimplementing risk management in the Kurita Group. The executive
general manager regularly analyzes and evaluates the Group’s risks
and conducts ongoing monitoring based on the Group-wide risk map,
as well as takes steps to prevent risks from occurring. In the event of arisk that could have a serious impact on Kurita’s business, the executive
general manager formulates systems with those responsible forresponding to the risk, obtains approval from the president and therepresentative director, and immediately issues instructions. Those
responsible for responding to the risk promptly take action and reportto the president and the representative director and the executive
general manager of the Corporate Planning and Management Officeregarding the impact of the risk, progress with mitigation and measures
to prevent reoccurrence. The chairperson of the E&S Committee is
responsible for tackling material risks related to compliance and climate

The Kurita Group uses a Group-wide risk map to identify potential risks
in its business activities and assess risks against monitoring
benchmarks. The Kurita Group also determines material risks for theGroup based on the expected impact of those risks and the likelihoodof them occurring. Material risks are mapped for each division, anddivisions devise response measures, incorporate them into businessplans and manage progress, including at Group companies. Progress isregularly reported to the Board of Directors, which discusses andformulates material risk and response measures for the next fiscal
year, including responses to emerging risks caused by changes in theoperating environment. In the fiscal year ending March 2023, among
high-impact risks with a strong chance of materializing, country risk,
including the impact of U.S.-China trade friction and conflict, anddisaster risks, including the COVID-19 pandemic, which shows no signof subsiding yet, are being classified as risks requiring close monitoring,
and we are planning to strengthen our response to them.

Kurita Group Overview

The Kurita Group defines risk as any event that makes its sustainablegrowth and enhancement of the Group’s corporate value uncertain.
Because the Group’s decision-making tends toward risk avoidance, we
are working to prevent missed opportunities for business growth by

Business Risks and Other Risk Factors https://ir.kurita.co.jp/en/corporate_governance/risk_factors/index.html

58

Kurita Water Industries Ltd. Integrated Report 2022

Kurita Water Industries Ltd. Integrated Report 2022

59

The Platform for Value Creation

Risk Management

Business Continuity Management (BCM)

Initiatives to Strengthen BCM Activities

The Kurita Group is taking steps to prepare for sudden unexpected
events such as a major earthquake, natural disaster, or pandemic fromthe perspective of both “ensuring employee safety” and “business
continuity.” We have established an order of priority for business andstandards for decision making and action when an event occurs, as well
as response policies, procedures, systems, and so forth. In addition,
during normal times we engage in management activities, such as
formulating, maintaining, and updating plans in preparation for statesof emergency, securing budgets and resources, implementing
countermeasures, and conducting education and training, as well as
inspections and so forth.

The Kurita Group’s Policy on BCM was formulated in 2018 and setsout a basic policy which stipulates that the first priority if an event
occurs is ensuring the safety of employees’ lives, and having ensured
their safety, the Company is to work to quickly recover business
operations and support local communities. To guide officers andemployees to take appropriate decisions and actions if an event occurs,
the Company has also prepared a system of documentation comprising
the Kurita Group’s Policy on BCM, the BCM Group Guidelines, which
complements the policy, and BCM Documents based on the frameworkof the international standard for BCM, ISO 22301. The Company started
implementing the system in the fiscal year ending March 31, 2023.

Highest Priority on Ensuring
the Safety of Humans

Early Recovery of BusinessCommunity Support

We will place highest priority on ensuring thepeace of mind and safety of the officers andemployees as well as their family members.

We will endeavor to quickly restore operations
at the company’s own facilities, completed
properties and properties under construction,etc. In this way, we will make efforts to supply
products and services in a stable manner andto support customers’ recovery efforts.

While making efforts to prevent secondary
disasters at its own sites, we will support thereconstruction of the local community.

Response to the COVID-19 Pandemic
The Group aims to respond as a Group to risks arising from people
voluntarily staying at home and office attendance being restricted dueto the spread of COVID-19; for example, reduced operating efficiency,
delays in business model development, and stagnation in businessactivities (order reception, manufacturing and supply). The Group has
built backup systems for the case in which an executive involved inbusiness execution or a manager responsible for a business divisioncontracts COVID-19, and we have also established reporting channels
for Group companies through which we work to quickly gather accurate
information. In addition, we have defined work processes in eachorganization that ensure business continuity for customers and theGroup, or that meet societal requirements, as operations essential forcontinuity and implemented backup systems for the case in which
employees of the Group or partner companies involved in theseprocesses contract COVID-19. We are working to reduce the risk forpharmaceutical manufacturing and the ultrapure water supply businessby adopting a team structure for operations. Moreover, we created
COVID-19 Guidelines that contain transmission prevention measuresand response flows for all employees if someone is feeling unwell andraised awareness of them at all Group companies. We have also
formulated the Future Workstyle Policy, aimed at establishing newworkstyles that leverage the respective characteristics of physicalattendance and remote working, and we aim to promote this internallyfor all employees.

The Kurita Group’s Businesses

BCM Document System

Kurita Group Business Strategy

BCM Basic Policy

To ensure the safety of the Company’s employees and strengthen its
initial response capabilities, we aimed to increase each employee’s
knowledge and awareness of disaster readiness by conducting online
visual disaster readiness training for all employees to prepare for adisaster occurring while they are working at home. We also conduct
regular safety reporting training based on the scenario of a major
earthquake, or storm and flood damage, and took steps to establish
rapid initial response activities.
In the fiscal year ended March 31, 2023, we will work to establish
the operations of the BCM Documents and increase their effectivenessby promoting internal awareness of the BCM Documents andconducting education and training by position and job type. We will
also define the scope of deployment for the event response model foreach customer and expand our initiatives. Furthermore, to improvebusiness continuity functions throughout the supply chain, we will
strengthen initiatives for rapid recovery of our own manufacturing
sites and links with partner companies.
Overseas, we will share BCM Documents formulated in Japan with
our Group companies and formulate BCM Documents to address theinherent risks and business characteristics of each country and region
by conducting local surveys. We will also work to establish a global
reporting system to use when an event occurs.

Kurita Group Overview

Approach and System for BCM Activities

The Group’s BCM activities to date have mainly focused on initiatives
for ensuring employee safety and disaster countermeasures atmanufacturing sites. From the fiscal year ended March 31, 2021, we
have established a new approach to the order of priority and items to
be implemented for business continuity based on the international
standard ISO 22301 framework, and we have been working to rebuild
and strengthen our BCM functions.
In the fiscal year ended March 31, 2022, we took steps to increase
the quality and speed of communications in our initial response to an
incident by redefining the information on the disaster status that needs
to be gathered for determining the establishment of a Disaster
Response Headquarters and the reporting structure. From aperspective of business continuity, we surveyed customers involved
with social infrastructure and customers to whom we supply ultrapure
water regarding their level of expectation for the Group’s restoration ofoperations after an event, and developed an “event response model”
for each customer, specifying a vertically integrated response
procedure for sales, engineering, Group companies, and partnercompanies and the necessary resources.

The Platform for Value Creation

Kurita Group’s
Policy on BCM

Information Security Management
BCM Group
Guidelines

Information security incidents are increasing recently, and security
management in business activities is becoming increasingly important.
The Group has documented information security management in its“Kurita Group Information System Management Policy.” Group
companies immediately report to headquarters in the event of any
system faults that could impact business activities or incidents such as

information leaks. The IT-related division regularly evaluate IT risks (suchas information leaks, tampering, and service stoppage due tocyberattacks) and put in place countermeasures such as installing
software and restricting internet access to protect the data provided bycustomers. We also conduct regular information security education andtraining on targeted email attacks for all Group employees.

BCM Documents

60

Kurita Water Industries Ltd. Integrated Report 2022

• Policy• Emergency Response Plan

• Crisis Management Plan

• Business Continuity Plan

• Business Recovery Plan

• Operation and Management Plan

Financial Information/
Corporate Information

Documents based on the international standard ISO 22301

Kurita Water Industries Ltd. Integrated Report 2022

61

The Platform for Value Creation

Human Resources Management
Basic Concept

A group of professionals in a range of fields who obtain joy from their contributions to customers, society andthe global environment through their work at the Kurita Group with their commitment to creating new value.

Corporate Vision“A Creator of unique value to the solution ofwater and environment,” contributing to therealization of a sustainable society.

D&I Vision
The corporate group that continues to create
unique value through interaction among diverse
people who care about water and the environment
and who accept each other’s differences.

Now

Changes in the internal environment
Global business expansion through M&As

Sympathy
with our
corporatephilosophy

Creation ofunique value

Direction of the organization
Organizational culture

Virtuous cycle
as a result of
shared value

Harmonizationof individuality

Arousal of employee
engagement owing to
identification with thecorporate philosophy
and permeation ofshared values

 ransformation into a group withT
a high level of engagement withpermeation of D&I

2014

2022

Approx. 20%

Approx. 45%

Ratio of overseas employees Approx. 20%

Approx. 50%

Overseas sales weighting

The Kurita Group’s Businesses

Increase indifferences(1) Personnel that use worksite data to identify issues and deliver solutions andbusiness models through numerous contacts within and outside the Group.
(2) Personnel that strengthen business with the following thoughts and actions:• The accumulation of data and information related to water, as well as
customer information, to create explicit knowledge that can be harnessedto create and provide value• The utilization of digital tools and other new technologies• The highly accurate and rapid forecasting and quantification of Kurita’s value(3) Personnel that possess an administrator’s point of view and have thecapacity to think logically.

 hanging attitude in Japan towards the seniority systemCand the concept of life-time employment
Diversification of working styles
Advancements in digital technology and growing demandfor digital specialists

Trust from
customer andsociety

Virtuous cycle
as a result of
increase indifferences(1) Organizations that generate new value by utilizing various technologies
from within and outside the Group as well as innovation from the
combination and integration of businesses without being shackled by theprinciple of self-sufficiency and differences between organizational units.
Organizations that welcome challenges undertaken with an agile approach,offer a sense of security in tolerating failures despite diligent efforts, andvalue the idea of learning from past mistakes.
(2) Organizations that identify with the corporate philosophy, take pride inwork that contributes to society, and work earnestly to solve issues faced bycustomers, society, and the global environment.

The kind of personnel we seek for bringing our value
creation story to life

Changes in the external environment

Schematic flywheel representation of D&I Vision

Diverse humanresources andexperience

The kind of organizations we seek for bringing our value
creation story to life

Kurita Group Business Strategy

Our D&I Vision in terms of the state of personnel and organizations
when realizing our corporate vision is to be a “corporate group that
continues to create unique value through interaction among diverse
people who care about water and the environment and who accept
each other’s differences.”

Human Resources Policy

Valuecreation
story

Kurita Group Overview

D&I Vision

State of personnel and organizations
when realizing the corporate vision

We consider human resources to be the very source of the Kurita
Group’s sustainable growth, which is why we continue to implement
organizational and personnel-related initiatives in line with our Diversity& Inclusion (D&I) Vision and Human Resources (HR) strategy. These twopolicies are linked to our business strategy and guided by our value
creation story.

Penetration of D&I owing
to acceptance andutilization of greater
diversity

HR Strategy

Corporate Philosophy

Direction of human resources utilization

Organizational structure

 he Group headquarters overseesTdevelopment, technology, and otherfunctions to improve the level ofoperations
Active participation of locally recruitedemployees overseas

Utilizing and securing humanresources ontinuous strengthening of active
C
participation of human resources intechnological fields that support KuritaC reation of new value by digitalspecialists driving digital transformation

Personnel system evelopment of a personnelDsystem providing the Group with
two strengths: cooperation among
human resources and active
participation of individuals who
possess a high level of expertise

The Platform for Value Creation

Permeationof shared
valuesFramework
A workplace endowed with D&I and employee
engagement can evenly harmonize increases indifferences, thus enabling personnel andorganizations to create unique value

HR Strategy

Board of Directors
story—which is the basis of our value creation story—andrepresents our basic policy on the values, thoughts, and actions
required of Kurita Group employees. To this we add the changes in
the Group’s internal and external environments, while our approach
to initiatives is organized into a course of action for bothorganizations and human resources utilization.

ReportExecutive General Manager
of Corporate Planning andManagement Office

Kurita Water Industries Ltd. Integrated Report 2022

Overall supervision of HR strategy initiatives
Instruct
Overall promotion andmanagement of HR strategy
initiatives

ReportCooperate

Human Resources
Development Committee/
DX Committee

Instruct
Development of engineers anddigital specialists

Cooperate

Divisions and Group
companies

62

implemented in cooperation with each division and Group company
and measures for nurturing and utilizing human resources are
deployed in collaboration with the Human Resources Development
Committee and the DX Committee.

Financial Information/
Corporate Information

Through the realization of our D&I Vision, we are formulating an HR
strategy with which our organizations and personnel can give shape to
our value creation story.
The HR strategy comprises a human resources policy and anunderlying course of action. The former is arranged around thekinds of organizations and personnel described in our strategic

HR strategy initiatives are carried out under the supervision of theBoard of Directors, while overall management of the initiatives is the
responsibility of the general manager of the Corporate Planning andManagement Office. Measures aimed at fostering corporate culture are

Initiatives on fostering
corporate culture

Kurita Water Industries Ltd. Integrated Report 2022

63

The Platform for Value Creation

Human Resources Management

Fostering Corporate Culture

Ensuring Diversity

 eld by 212 departments
H
Discussing the relationship between D&I and innovationin the workplace and gauging the D&I situation in eachdivision* T he relationships between employees and company/organizations, andbetween employees and their work. It is thought that when these relationships
are strong and healthy, employees tend to voluntarily go about their work withenthusiasm and ambition, which gives rise to a virtuous cycle that contributes
to the company and its organizations.

Engagement scores(percentage of people strongly engaged)
0%

Japan

China

Broadcasting of D&I video messages from division GMs

U.S.
Group
bulletin

KuritaCompanyA
Company
B

20%

40%

60%

80%

100%

32%

61%
51%

Company
C

Country’s
Country
top 25th
percentile
average(all industries) (all industries)

28%

39%

74%

86%

90%

64%

75%

Interact with all kinds ofpeople without falling victim
to differences of opinion

Praise the achievements ofcolleagues and appreciate
their efforts

Be unafraid to take risks andembrace challenges agilely

As we set our sights on enhancing corporate value through the creationof social value, in the fiscal year ended March 31, 2022, weincorporated, on a trial basis, the non-financial indicators of watersavings, CO2 emission reductions, and waste reductions at customer
sites by way of our CSV business into the performance evaluation of
officers and employees in our business divisions so that employees cantake greater pride in working for the Kurita Group by realizing that what
they do is making a difference in society. From the fiscal year ending
March 31, 2023, the adoption of these non-financial metrics inperformance evaluations will be expanded to all Company directors
and executive officers that receive performance-linked remuneration,
as well the representatives of some Group companies.

I think the participants of this meeting will not only benefit from thetips given by the speakers, but they can potentially become mutual
supporters in the workplace that come together to talk and offer
advice about balancing work, home duties, and childcare.

There is a growing awareness that the number of women in
career-track positions is rising and more of them are returning towork after taking childcare leave, not to mention the fact that men
are helping out a lot more with child rearing, so I did get a sensethat the Company is changing little by little.

C onnecting to, and talking with, other participants whom I
wouldn’t ordinarily talk with was really pleasing. I was able tocome away with a more positive frame of mind.

Online meeting participants

Assigning Globally Minded Managers

So that we can incorporate thinking from different countries andregions into the Group’s management, we are currently developing aframework that will enable us to operate the Group more globally. We
are bolstering collaboration with overseas Group companies byappointing globally minded personnel*, including foreigners, tomanager-equivalent positions at our head office, and we are also
continuing to promote locally hired employees to executive positions atoverseas Group companies. As of the end of September 2021, the ratioof locally hired employees either in a representative position or with an
officer title at overseas Group companies had reached 70%—a suresign that personnel hailing from different countries and regions holdpositions of management throughout the Group.
*Foreign nationals, employees with at least three years of experience working
overseas or at an overseas posting, or employees possessing business-level English.

Elevating Mid-Career Hires to Management Positions

Every year we recruit between 10 and 20 mid-career hires—equivalent
to 10%–30% of all new hires over a 12-month period—based on theirpotential to be immediately effective in line with our businessexpansion. As of the end of September 2021, 85 (roughly 10% of theworkforce) mid-career hires held a manager-equivalent position. We
have plans to raise the weighting of mid-career hires as a percentage of
all employees to around 30% by the fiscal year ending March 31, 2031,
and we will continue to proactively recruit and promote them tomanagerial postings in the future.

Female manager targets and past results
2019
Ratio of female managers
Kurita Water
Industries

Reference:
Kurita Group

Ratio of women
hired for careertrack positions

New graduates
New graduates &mid-career

2020

2021

2022

1.1%

2.1%

2.4%

2.7%

21%

19%

33%

31%

15%

20%

33%

28%

Ratio of female managers

9%

10%

12%

13%

Ratio of female employees (vs. entire
workforce)

24%

24%

25%

25%

April 2022

April 2023
(target)2028 (target)

4.0%

5% or
higherAround 10%

30%

―

―

Around30%–40%2031 (target)

Target and current weighting of mid-career hires
Kurita Water
Industries
Understand the vision

64

Enhance one’s sense of
self-affirmation

Kurita Water Industries Ltd. Integrated Report 2022

Weighting of mid-career hires as apercentage of all employees

10.2%

Around 30%

Share your D&I
accomplishments

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

Learn, take action,and grow autonomously

Create a psychologicallysafe workplace

With the aim of empowering women in the workplace, we haveestablished the following targets.
• As of April 2023: Female manager ratio of at least 5% and a 30% ratioof new female graduates hired for career-track positions• FYE March 31, 2028: Female manager ratio of around 10% and a
30%–40% ratio of women hired (new graduates/mid-career) for
career-track positions
So that female employees with aspirations of becoming a manager
can dispel concerns and doubts about balancing childcare duties witha promotion or managerial appointment, in the fiscal year ended March
31, 2022 we organized online meetings to hear senior female
employees share their own personal experiences. A total of 93 people
participated across four sessions. In the fiscal year ending March 31,
2023 we intend to implement initiatives targeting the line managers offemale employees and female employees waiting to be promoted to a
management position or transferred to a specialist skills program.

The Platform for Value Creation

Reinforcing Connections to the Group’s Vision

Be aware of unconscious
bias and pay attention todiversity

Appointing Female Managers

Comments from Participants* Blue = The Kurita Group’s percentage is higher.
Red = The Kurita Group’s percentage is lower.

Nine recommended actions

We seek to have employees of all walks of life, irrespective of gender,
nationality, age, disability, employment history, working style (contract
type and terms of employment), or experience, make full use of eachother’s experience, knowledge, and skills to spark innovation with aview to realizing our corporate philosophy. Managers and employees inleadership roles are also actively working to ensure diversity in the
Company.

The Kurita Group’s Businesses

Workplacediscussion

 ttended by 256 managers
AUnderstanding D&I and unconscious bias, and driving
the creation of conditions more conducive tocooperation by breaking down barriers between
organizations through dialogue among managers as away of putting behavioral changes into practice

We previously used a so-called “happiness and well-being survey” to get
an idea of employee engagement*, but in the fiscal year ended March
31, 2022 we switched to using an engagement survey because it more
readily detects improvement measures. The first iteration of this survey
was conducted at Kurita and three overseas Group companies. We are
currently rolling out measures aimed at improving engagement in lightof the characteristics of each company and organization based on thesurvey answers and a total of 2,706 comments received from 96% of
survey participants.

Kurita Group Business Strategy

Training andworkshop for
managers

Employee Engagement Survey

Kurita Group Overview

In the fiscal year ended March 31, 2022 we endeavored to instill anawareness and understanding of D&I among all employees in order for
the Kurita Group to transition to a highly engaged group in which D&I iswell entrenched. By providing opportunities for employees to think
about and discuss D&I and innovation in their own organization, we not
only gained an understanding of the state of D&I in each organization,
but it let us commence the construction of a platform under which
diversity can be accepted and fully utilized. We also took steps tofurther D&I understanding among employees by broadcasting
messages from the general manager of each division about thesignificance of addressing D&I in the Group’s bulletin, along withinformation about our D&I Vision and HR strategy. In the fiscal year
ending March 31, 2023, we decided on a list of nine recommended
actions for putting the D&I Vision into practice. These actions are
currently being used to promote the D&I Vision at domestic andoverseas Group companies.

65

The Platform for Value Creation

Human Resources Management

Developing a Comfortable Working Environment for a
Diverse Workforce

Message from Officer in charge of HR

Kurita Group Overview

The Kurita Group is making every effort to create a workplaceenvironment where each and every employee can work with peace ofmind. We have in place systems that help employees balance theirwork with childcare, nursing care, and other life events, flexible working
style arrangements for those wishing to work from home or remotely,and schemes that also take into account the situations of minorities

within the context of their SOGIE*, for example, by extending benefits
and welfare to employees in a de facto or same-sex relationship. Not
only are we encouraging officers and employees to know about, andutilize, these systems, we are working to create an environment inwhich all kinds of people can work at ease by running online training
sessions and regular awareness campaigns.
*Sexual orientation, gender identity, and gender expression

Hisashi Tanabe

Executive Officer
Executive General Manager of Corporate
Planning and Management Office

Utilizing and Securing Human Resources

Engineers in Technological Fields

Digital Specialists

The technologies that underpin the Group can be broadly divided into four
categories: chemical technology, facility technology, basic technology, anddesign & engineering technology. These groups can also be subdivided intoaround 30 smaller classifications. By mapping the human resources
engaged in these fields, we can visualize where we lack, or have enough,personnel in each technology category. We also intend to beef up our
workforce over the longer term and push ahead with the planned nurturingof successors by way of rank-based training through the Kurita-Technical
Education Program. Giving full play to the skills, knowledge, and experienceof engineers throughout the Group will serve to further deepen anddevelop our water treatment technologies. As of August 2022, the Company
had around 300 engineers, plus about 310 successor candidates.

Digital specialists with the skills to devise and deploy DX-driven strategies,
develop business models, build infrastructure, and provide IT services areindispensable to the promotion of DX. We are therefore hiring andtraining digitally proficient personnel who can create projects that fuse
together digital technology with various worksites. At the same time, weare taking steps to improve the IT literacy of all other employees. In thefiscal year ended March 31, 2022 we started providing technical training
to employees selected from the results of an assessment that measuresa person’s “digital aptitude.” Our activities also extend beyond theconfines of the Group—we are partnering with start-ups and hiring
people with experience from outside the Company. As of April 2022, theGroup had approximately 180 digital specialists on its books and we aim
to expand this number to about 400 over a three-year period.

Technologies that underpin the Kurita Group
Chemicaltechnology

Facilitytechnology

Basictechnology

Design & engineering
technology

Planning andpromoting DXdriven strategies

Developing
business models

About 30 technology sub-categories

Kurita-Technical Education ProgramGroup-wide utilization of skills,
knowledge, and experience

Further deepening and development of water
treatment technology

Harnessing digital technology

Creation of digital businesses

Accumulation of “water knowledge,”
creation of explicit knowledge, andthe utilization thereof

Promotion of DX

Creating original solutions and business models unique to Kurita

External Evaluation

66

Kurita Water Industries Ltd. Integrated Report 2022

KuruminFinancial Information/
Corporate Information

We have drafted and implemented an action plan based on Japan’s Act
on the Promotion of Female Participation and Career Advancement in
the Workplace and the Act on Advancement of Measures to Support
Raising Next-Generation Children. In recognition of this initiative, wehave been accredited by the Ministry of Health, Labour and Welfare
with the “Kurumin” and “Eruboshi” (3 stars) certifications for our efforts
as a corporation to offer support to employees raising children and topromote the empowerment of women in the workplace.

keen to focus my efforts on strengthening the Company’s HR
systems. Like many other Japanese corporations, we make use of HR
systems that emphasize fairness on the assumption of employee
proficiency honed over the years as part of the collective hiring of
new graduates with the promise of life-long employment until
retirement. In the past, raising the proficiency level of employees
uniformly and maintaining and improving the sum of experience andproficiency across the organization is how Japanese corporations
gained a competitive edge as the economy continued to growsteadily and changes in business conditions were only evermoderate. Now, however, companies must respond flexibly tosudden and cataclysmic changes in an unpredictable operating
environment, so it is inevitable that the old ways will be
unsustainable going forward. Instead of simply offering prospective
employees a choice between job-based or life-long employment, I
think we must direct our attention to further enhancing our ability tosolve the problems that have emerged as a result of bringing people
together—which is one of our strengths—and our ability to conceiveand solve potential issues by leveraging the considerable expertiseof every person in the Company. In this way, we can strengthen ourhuman resources by adopting systems that are more down-to-earthand better suited to the Company’s actual situation.
The Kurita Group has a history of more than 70 years and has
also evolved in recent years through M&As. As a result, we currently
possess various technologies, products, and services in the fields ofwater and the environment, diverse points of contact with customer
sites in many industries worldwide, and a diverse workforce ofpeople from different backgrounds. So that we can harness thisdiversity, cope with changes in an increasingly unpredictable
operating environment in each country, region, and industry where
we have a presence, enable our diverse workforce to create value
for customers, society, and the environment, and continue toprovide solutions under various business models for every worksite,
we intend to transform ourselves into a resilient corporate groupwith our corporate philosophy at the center of our approach bypressing forward with key measures designed to change how weutilize human resources over the medium term.

The Platform for Value Creation

Longer-term personnel reinforcement
and planned nurturing of successors

Collaboration

Building
infrastructure andproviding IT
services

The Kurita Group could be described as an assembly of people
that identify with the Group’s corporate philosophy: “Study theproperties of water, master them, and we will create anenvironment in which nature and humanity are in harmony.” Every
individual that identifies with this corporate philosophy, by creating
value for customers, society, and the environment through theirbusiness activities, will perceive meaning in what they do anddevelop a greater sense of self-affirmation. This will foster evenstronger identification with the philosophy, leading to an evengreater commitment to value creation. This upward spiral in the
personal ambitions of our employees is the driving force behindvalue creation, which is why human resources are a critical part of
the Group’s management platform.
Over the last few years, we had rolled out a number of HR
measures, but these had yet to develop into a systematic form inconnection with our management strategy. In the final year of the
MVP-22 plan and with a view to the next medium-term
management plan, the management team came together aroundthe renewed consensus that we need to attach the meaning of HR
initiatives to the management strategy and take an integrative
approach to the initiatives so that the efforts of every employee canbe mobilized as the driving force behind the Group’s sustainablegrowth. The management team also considered how best to utilize
human resources over the medium term. The framework thatemerged from these discussions was the Company’s D&I Vision,
which was formulated in April 2021. In order to give shape to theGroup’s value creation story, the vision embodies key measuresfrom two angles: the areas the Group as a whole must strengthen
and the areas that need improving in line with the characteristics ofeach Group company. The former includes the fostering of acorporate culture to boost engagement (a component of the D&I
Vision) and training and utilization for improving the expertise ofengineers and other employees. The latter includes thedevelopment of organizational structures for strengthening
business drivers in each country and region, along with HR systems.
Work has already started on some of these measures, but as it
will take time for results from HR and organizational initiatives toemerge, we will roll them out over multiple years. I am particularly

The Kurita Group’s Businesses

believe these human resources are indispensable to the accumulationand exploitation of “water knowledge” and the creation of original
solutions.

Kurita Group Business Strategy

We continue to utilize and secure engineers that boast a profoundknowledge of water treatment technology, as well as digital-savvy
employees with the capacity to drive our digital transformation (DX). We

Eruboshi (3 stars)

Kurita Water Industries Ltd. Integrated Report 2022

67

The Platform for Value Creation

Environmental Improvement Activities
Basic Concept

Reduction of Environmental Impact at Customers (Fiscal years ended March 31)
Water intake reduction (million m3)
use products and services related to water and the environment that
the Kurita Group has developed over many years.

Japan

CO2 emissions reduction (1,000 t)

OverseasJapan

Waste reduction (1,000 t)

Overseas

Japan

Overseas

Kurita Group Overview

The Kurita Group’s Environmental Improvement Activities include
initiatives to reduce internal water and energy use and waste. They also
include activities to reduce environmental impact at customers who

11699

Please click on the link below for more information.

51

55

Kurita Group Environmental Policy https://www.kurita.co.jp/english/csr/management/policy/environment/index.html

367
64

279

294

39

66

222 13

9
240

53

48

46

354

108

258

228

274

308

251

209

45

23

Click on the links below for more information about Kurita’s Environmental Improvement Activities.

Solve Issues Related to Water Resources https://www.kurita.co.jp/english/csr/csr_activity_growth/water_savings/water.html
Realize Sustainable Energy Use https://www.kurita.co.jp/english/csr/csr_activity_growth/climate_change/co2.html
Reduce Waste https://www.kurita.co.jp/english/csr/csr_activity_growth/waste_reduction/waste.html

2020

2022

2021

2020

2022

2021

2020

2022

2021

CO2 emissions (1,000 t)*

Water intake amount (million m3)
Japan

How Environmental Improvement Activities Are Embedded in Management Strategy*For more details about CSV business, see page 24 and page 71.

2.792) Initiatives to solve international issues related to thesustainability of water and the environment through businessactivities
3) D isclosure of information related to 1) and 2), andengagement with customers, business partners, employees,
shareholders and investors and local communities about theactivities

2020

2021

Kurita Water Industries Ltd. Integrated Report 2022

70

260

2

58

68

1
38

57

36

0.86
2022

2020

2021

2022

2020

2

2022

2021

Water savings at customers –Amount of water intake usedin our business activities (million m3)

CO2 emissions reduction atcustomers – CO2 emissions
from our business activities (1,000 t)*

Waste reduction at customers –Waste generated
from our business activities (1,000 t)

113
316

91
215

2021

2022

43

45

2020

2021

152

2022

2020

2022

2021

* “CO2 emissions from our business activities” include emissions generated from the ultrapure water supply business, which comes under Category 13 of Scope 3, as wellas emissions in Scope 1 and 2 stipulated in GHG (Greenhouse Gas) protocol.

E&S Committee

ISO 14001 Certified Companies
Company

Group E&S
Committee
Persons responsible
for promotion

OfficeCompany

OfficeKurita Water Industries Ltd.

Shizuoka, Yamaguchi, Toyoura andTsuruga plants; Sakai sub-branches

Kurita Europe GmbH

Head office and two otherbusiness sites

Kurita Chemical Manufacturing Ltd.

Head office, Ako plant

Kurita France S.A.S.

Head office and plant

Kurita Buil-Tech Co., Ltd.

Head office

Kurita Turkey Kimya A.S.

Head office and Bandirma plant

Kuritaz Co., Ltd.

Head office, West Japan branch officeand nine other business sites

Kurita do Brasil LTDA.

Head office and three otherbusiness sites

Kuritec Service Co. Ltd.

Head office, East Japan, Iga, Mie, Harimaand Oita plants

Hansu Technical Service Ltd.

Head office

Kurita-GK Chemical Co., Ltd.

Head office and Rayong branch

Kurita (Singapore) Pte. Ltd.

Head office and plant

Kurita (Taiwan) Co., Ltd.

Head office and two other business sites

Kurita Water (Malaysia) Sdn. Bhd.

Head office, plant and threeother business sites

Kurita Water Industries (Dalian) Co., Ltd.

Head office and plant

P.T. Kurita Indonesia

Head office

Kurita Water Industries (Jiangyin) Co., Ltd.

Head officeHansu Co., Ltd.

Head office and two other business sites

Kurita America, Inc.

Midwest Office andManufacturing Plant

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

68

16

Kurita Group KPI: Customer Impact Reduction – Kurita Group Impact (Fiscal years ended March 31)

2020

Kurita’s Board of Directors

Persons responsible
for promotion

275

236

224

52

Promotion System

12Overseas

The Platform for Value Creation

The Kurita Group has established the E&S Committee, which is chairedby a Managing Director of the Company, and the Group E&S
Committee, chaired by the same director and composed ofrepresentatives of Group companies. These committees oversee
Environmental Improvement Activities in the Kurita Group. The E&S
Committee formulates unified medium- to long-term targets for the
Kurita Group’s Environmental Improvement Activities and action plansfor each fiscal year. Personnel responsible for promoting the initiatives(committee members or personnel designated by representatives ofeach company) are tasked with driving efforts to achieve Environmental
Improvement Activities targets at their assigned company ororganization. They report the status and results of the activities to the
E&S Committee.
The E&S Committee ascertains stakeholder expectations andconcerns and reports them to the Board of Directors along withoutcomes from the Kurita Group’s CSR activities once a year.

249

1.98

0.62

97

Environmental Initiative Promotion System

Japan

236 111.82

0.62

Waste amount (1,000 t)

Overseas

2.84

2.43
2.17

Definition of the Kurita Group’s Environmental
Improvement Activities
1) Activities to comply with the environment-related laws andregulations of each country and region that apply to theGroup’s business activitiesJapan

The Kurita Group’s Businesses

In recent years, initiatives to address environmental issues are
becoming an increasingly important factor in corporate management
amid growing calls from shareholders and investors for ESG
management. The Kurita Group promotes business models that help
reduce water usage and CO2 emissions. The Group therefore sees
these trends as an opportunity to grow its business. By expanding ourCSV business*, we aim both to create value for society while also
driving the Group’s growth. In parallel, to fulfill our corporate
responsibility, we will reduce the environmental impact of the Group’sbusiness activities by addressing the issue of climate change based on
the TCFD Recommendations, disclose environmental information inline with international standards, and conduct initiatives to achieve our
medium- to long-term targets.

Overseas

Kurita Group Business Strategy

Internal Promotion of Environmental Improvements (Fiscal years ended March 31)

69

The Platform for Value Creation

Environmental Improvement Activities

Initiatives to Address Climate Change
Basic Concept

Metrics, Targets, and Results

For more details, click on the link below.

Initiatives to Address Climate Change https://www.kurita.co.jp/english/csr/csr_activity_growth/climate_change/pdf/issues_E.pdf

Promotion System
Board of Directors

Metrics

Overall supervision of initiatives to address climate change
Instruct

ReportInstruct

Scope 1+2

E&S Committee
Overall management of initiatives to address
climate change, consideration of new measures

Divisions, Group companies, committees
Cooperate

Continuous

Information improvement of
disclosure disclosure by referring

Implementation of measures
Consideration of new measures
Confirmation of progress of measures

to TCFD, GRI, SASB, etc.

Scope 3Emissions
Reduction rate
Emissions
Reduction rate

2020, mainly due to promotion of energy saving activities including
improved efficiency of facility utilization and discontinuation of
manufacturing for certain items at Group companies overseas, despite
the impact of an increase in energy usage due to a recovery in demand
from the COVID-19 pandemic. In addition, Scope 3 emissions
decreased by 20.3% compared to the base year due to a decrease inprocurement of pumps, which were the main source of emissions.
* An initiative encouraging companies to set emissions reduction targets that
conform with scientific knowledge with the goal of keeping the increase inglobal average temperature due to climate change well below 2°C compared topre-industrial levels.

Fiscal year ended
March 31, 2020(base year)*

Fiscal year ended
March 31, 2021*

Fiscal year ended
March 31, 2022

35,000 t

30,000 t

31,000 t

—

12.7%

11.5%

2,569,000 t

2,436,000 t

2,048,000 t

—

5.2%

20.3%

Kurita Group Business Strategy

The Kurita Group has established the E&S
Committee, which is chaired by a Managing
Director of the Company and manages theGroup’s initiatives for climate change. The
Board of Directors generally supervises
initiatives for climate change issues andreceives reports from the E&S Committee
twice a year, in principle, and decides on thenecessary measures.

The Kurita Group has determined seven material themes to engage
with in the Group’s common CSR Policy in order to promote CSRrelated initiatives. Theme 5 comprises initiatives for climate change,
where we are working on initiatives in accordance with the Paris
Agreement by setting long-term targets based on the methods
presented by SBTi* for “Well-below 2°C level” with the fiscal year ended
March 31, 2020, as the base year, and taking steps to reduce Scope 1,
2, and 3 emissions.
In the fiscal year ended March 31, 2022, Scope 1 and 2 emissions
decreased by 11.5% compared to the fiscal year ended March 31,

Kurita Group Overview

business activities and contribute to reducing GHG emissions for ourcustomers through our business activities.

The Kurita Group views climate change as an urgent issue that needs
to be addressed globally, and based on the TCFD Recommendations,
the Kurita Group will continuously reduce GHG generated by ourLong-term targets (reduction rate)
Fiscal year ending
March 31, 2031

Fiscal year ending
March 31, 2051

27.5%

100%

27.5%

—

* The Company found an error in the calculation method for Scopes 1 to 3, and has revised its performance figures for the fiscal years ended March 31, 2020 and March
31, 2021
The Kurita Group’s Businesses

Stakeholders

Measures and Schedule for Achieving the Targets
Measures Based on Opportunities and Risks*1 Scenarios predicted by the Intergovernmental Panel on Climate Change (IPCC):
the scenario of a 1.5°C temperature increase from pre-industrial levels andthe scenario with the highest temperature increase.
*2 We set the time frames as short term (1-3 years), medium term (3-5 years),and long term (5-20 years).

Risks & Opportunities: Evaluation and Measures
Type
Policy and Legal
Technology

MarketResource
Efficiency
Energy Sources
Products &Services
Resilience

70

●●
●
●
●

●
●

Details of risks & opportunities

Kurita Group measures

Introduction or increase of carbon tax
Regulations for products and services with high GHG emissions​
Dissemination of supportive policy incentives to the conversion to energy with low GHG emissions

 ow-carbon products and services
Lby utilizing digital technology andreviewing designs, etc. ​Substitution of existing products and services with lower emissions options
Decreasing demand from fossil fuel-related sectors ​Increasing demand in electronics industry due to the acceleration of DX
Soaring costs of raw materials and energy
Increasing factory shutdowns and construction delays due to extreme weather events such as
cyclones and floods ​Increasing operating rate of cooling equipment●●

Dissemination of efficient production and distribution processes ​Reduction of water usage●●

Increasing demand for products and services with low GHG emissions ​Increasing diverse technical needs for reducing GHG emissions

●
●

●●

● Opportunities

Dissemination of energy with low GHG emissions ​Conversion to distributed energy resources ​ eduction of Scope 1 and 2
Remissions by switching to alternative
fuels and renewable energies ​ evelopment and expansion ofD
renewable energy-related businesses
such as biomass power generation
 ontinuous strengthening ofCbusiness continuity in preparation
for natural disasters such as flood
control

Scope 1

Scope 2​

Scope 3

0.4%​
1.0%​
98.7%​

Scope 1, 2
27.5% reduction(Target for FY2031)

Scope 1, 2
100% reduction(Target for FY2051)

Selection Process for Measures
Sort risks based on scenario analysis

Gradual replacement of gasoline-powered vehicles withelectric vehicles and the like

Level ofimpactReplacement of fuel with renewable energy

Formulate and promote Group strategies

Use of renewable energy for power
used at business locations
Measures to reduce Scope 2 not derived from power
Reduction of Scope 3 through promotion of CSV business / Transformation of
products and services provided and businesses
Change in external environment (customers’ shift to renewable energy)

Scope 3
27.5% reduction(Target for FY2031)

Probabilityofoccurrence

Scope 3 Breakdown
Category
13
9%

Other
1%

Categories
1, 4, 924%
Category 11
66%(FY2020)

Reduction of Scope 3
through CSV business
Water treatment
systems withlow
environmental
impactMethanefermentation
system forbiogas power
generation

 tilization of digital technology andUdevelopment of low-power
technology ​ evelopment and expansion ofD
renewable energy-related businesses
such as biomass power generation

Focusing efforts also on avoided emission (customers'
environmental improvement), which does not fall into Scope 1 to 3.

Establish a competitive
advantage

Financial Information/
Corporate Information

Physical Risks●●●● Risks

Percentage ofemissions
FY2020Of Scope 3, approximately 70% of the Group’s emissions are
category 11 “Use of sold products (mainly motors such as pumps used
for pumping water),” and the Group is promoting a shift to providing
low-carbon solutions to customers using the CSV business system.

The Platform for Value Creation

Based on the two scenarios (1.5°C and 4°C)*1 outlined in IPCC SR1.5
and IPCC RCP8.5, the Kurita Group assessed short-, medium-, and longterm*2 risks, and opportunities and business impact, using the twoaxes of “likelihood of occurrence” and “impact.” Measures were thenformulated for the Kurita Group.

For Scopes 1 and 2, the majority of emissions are Scope 2 emissions
derived from electricity. Therefore, the Group will gradually switch toelectricity from renewable energy sources and switching from gasolinepowered vehicles to electric vehicles.

Substitution and diversification of fuel and water resources

Kurita Water Industries Ltd. Integrated Report 2022

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71

The Platform for Value Creation

Compliance
Basic Concept

Main Initiatives

Stakeholder
Society / global
environment

languages to raise awareness across the Group. To improve theeffectiveness of compliance activities, each Company division andGroup company formulates and updates their own complianceguidelines to pinpoint specific areas of behavior in the Code of Conductthat are especially relevant to their organization.

Compliance areas

Shareholders /investors

Appropriate record-keeping and information
disclosure, prevention of insider trading

Customers / business
partners

Safe products and services, fair andappropriate trading, prevention ofcorruption, etc.

Employees

Health and safety, rigorous management ofsensitive data and personal information,
prevention of conflicts of interest, etc.

CONTENTSThe Kurita Group ensures that fair business practices are promoted
throughout the entire Group. We have formulated the Kurita Group
Anti-Bribery Policy and the Kurita Group Antitrust Policy to complement
the Kurita Group Code of Conduct. We have also formulated the Group
Guideline on Anti-Bribery and the Group Guideline on Antitrust, which
set out specific rules for relationships with public officials andrepresentatives of competitor companies as these can lead to illegal
actions. In the fiscal year ended March 31, 2022, we conducted training
on observing competition laws for all officers and employees of theCompany. In the fiscal year ending March 31, 2023, this training will beheld for all officers and employees at the Group’s overseas companies.

1. Introduction・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・・P1
2. Relationship with society
and the global environment・・・・・・・・・・ P2

Achievements in the Fiscal Year Ended March 31, 2022

3. Relationship with shareholders
and investors・・・・・・・・・・・・・・・・・・・・・・・・・・・・・ P3

Kurita Group Code of Conduct

4. Relationship with customers
and business partners・・・・・・・・・・・・・・・・・ P4
5. Relationship with employees・・・・・・・・ P5

Antitrustcompliance

6. Whistleblowing・・・・・・・・・・・・・・・・・・・・・・・・・・・ P6

 ntitrust compliance training was held for officersAand employees of the Company and its Group
companies in Japan who may come into contact
with competitors (100% participation rate)

All-Employee Survey

Kurita Group Code of Conduct
https://www.kurita.co.jp/english/philosophy_vision/pdf/philosophy_vision_01.pdf

Preventive Compliance Measures

The Kurita Group develops compliance improvement targets andmeasures to prevent issues with compliance before they occur.
Specifically, based on a Non-Compliance Risk Map, which is a list ofroughly 60 legal infringement risks, the Company divisions and Group
companies set priority measures tailored to their respective
characteristics, referencing the results of the Compliance Behavior
Survey conducted in the previous fiscal year. In the fiscal year ended
March 31, 2022, we focused on preventing inappropriate accounting.

Promotion System
Promotion System
Board of Directors
President
Executive Committee

E&S Committee

Group E&S Committee

Subcommittees

Subcommittees

Promoting Equitable Relationships with Business Partners
The Company and its domestic Group companies conduct annual
business transaction compliance surveys of small and medium-size
suppliers as part of efforts to promote equitable business relationships.
If necessary, Kurita instructs the relevant department to investigate thesituation or make improvements, which are confirmed later throughfollow-up contact.
Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2022

Total number ofquestionnaire surveys

1,286

1,562

Number of
respondent companies

884

1,085

Scope of survey

Business partners of the Company and its
domestic Group companies

Survey method

Written and electronic responses

The Platform for Value Creation

The Kurita Group has established the E&S Committee and the Group
E&S Committee as organizations to oversee compliance activities. Bothcommittees are chaired by a managing director of the Company, and
the Group E&S Committee’s members are representatives of Group
companies. The committees are tasked with deciding policies and key
measures related to compliance activities, which are conveyed to all
employees through subcommittees in each Company division andGroup company.

To ensure everybody who works in the Kurita Group feels comfortablein the workplace, the Kurita Group has established a consultation deskin the Group and at outside organizations to provide advice about
questions or concerns related to the Kurita Group Code of Conductand other internal regulations and to handle reports about behavior
that infringes the Code, laws and regulations or the Group’s internal
rules. The consultation desk is also available for Kurita Group business
partners to receive advice or report legal violations or misconduct by
the Kurita Group. Anybody using the consultation desk to receive
advice or report a violation is protected from unfavorable treatment.
Kurita uses the consultation desk to rapidly identify and rectify
misconduct.
In the fiscal year ended March 31, 2022, the third-party consultation
desk was partially revised. The new consultation desk is operated by aqualified counselor and started operation in June 2021 with a view toincreasing the ease of consultation. The new consultation window wasused for 56 consultations in the fiscal year ended March 31, 2022, of
which three were treated as consultation and whistleblowing cases.
There were 31 consultation and whistleblowing cases at the Group’s
internal and third-party consultation desks in the fiscal year ended
March 31, 2022. In the fiscal year ending March 31, 2023, we areconducting education for officers and employees of the Company anddomestic Group companies regarding how to use the consultation andwhistleblowing desks, and we will continue working to promoteknowledge of them internally.

The Kurita Group’s Businesses

The Kurita Group conducts an annual Compliance Behavior Survey of
all Group employees and dispatch staff to evaluate the outcomes ofcompliance activities and identify any potential compliance risks. The
results of the survey are used by the Company divisions and Group
companies to plan and improve compliance activities. In the fiscal year
ended March 31, 2022, 7,531 employees and temporary staff took thesurvey, equating to a response rate of 98.1%.

Whistle-Blowing and Consultation Desk

Kurita Group Business Strategy

Human rights, the environment, social
contribution, repudiation of all links with
antisocial forces, etc.

Promoting Fair Business Practices

Kurita Group Overview

The Kurita Group conducts compliance activities that go beyond simply
adhering to legal regulations, aiming to be a corporate group trusted
by society and held in high esteem by all people who work in theGroup. The Kurita Group Code of Conduct underpins all complianceactivities. The code sets out how everyone who works in the Groupshould conduct themselves and has been translated into multiple

Financial Information/
Corporate Information

72

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73

The Platform for Value Creation

Respect Human Rights

Financial Information/Corporate Information

Basic Concept
formulated the Kurita Group Human Rights Policy to fulfill its
responsibility to stakeholders on human rights and to contribute to thesustainable development of society.

Kurita Group Overview

The Kurita Group’s businesses are dependent on relationships withmany stakeholders, making respect for human rights an importantfactor in business management. As a member of society, Kurita has

Formulation and Operation of Personnel Management Guidelines
Group manages personnel in accordance with the guidelines,
integrating them with the unique personnel management strategies ofeach company based on its individual circumstances, such as country,
region, culture, and company culture.

Kurita Group Business Strategy

The Kurita Group has put in place the Kurita Group Personnel
Management Guidelines with the aim of managing personnel based on
a common approach throughout the Group. The guidelines set out
basic approaches to personnel management such as management
development, sincere employment, and respect for diversity. The

Human Rights Awareness Training
Furthermore, training is also held for the management of the Company
and Group companies in Japan to increase awareness among
management regarding themes of increasing importance in corporate
management and to promote initiatives in unison with employees.

Contents

Initiatives for Human Rights throughout the Value Chaininterviews with over 70 managers and others working in every country,
region, and business domain. The Group identified the potential
human rights risks in the value chain by reflecting advice from external
human rights organizations on the results of these interviews and thediscussion in the E&S Committee. In the fiscal year ending March 31,
2023, the Group will ascertain and evaluate the status of the identified
potential human rights risks and use this information to create
initiatives to suppress and mitigate the negative impacts going forward.

Financial Information
Management Indicators 

76

Segment Information 

77

Consolidated Statement of Financial Position 

78

Consolidated Statement of Profit or Loss 

80Consolidated Statement of Comprehensive Income 81Consolidated Statement of Changes in Equity 

82

Consolidated Statement of Cash Flows 

84

The Platform for Value Creation

The Kurita Group works with its suppliers to promote respect forhuman rights throughout the value chain by encouraging them torespect human rights through the prohibition of forced labor and childlabor and the elimination of discrimination. The Group also confirms
the status of compliance through regular monitoring surveys.
Furthermore, the Group conducts due diligence on employees,
suppliers, and local communities. In the fiscal year ended March 31,
2022, the Group identified potential human rights risks among people
related to its business activities. In the process, we conducted

The Kurita Group’s Businesses

Kurita Water Industries provides ongoing “Human Rights Training
Programs” to raise employees’ awareness of human rights. In the fiscal
year ended March 31, 2022, training on the theme of diversity andinclusion was held for employees of the Company and Group
companies in Japan, with 100% attendance by eligible personnel.

Human Rights Due Diligence Process
Incorporate responsible corporate activities into company policy and management systems (completed)

Corporate Information

2

Identify potential human rights risks in the Company’s business, supply chain, and business relationships (completed)

Stock Information 

85

3

Ascertain and evaluate the status of potential human rights risks

Corporate Data 86

4Stop, prevent, and mitigate negative impacts

5

Conduct follow-up surveys of implementation status and results

6

Communicate how impacts have been handled

7

Where appropriate, conduct corrective measures, or cooperate on correction.

Kurita Water Industries Ltd. Integrated Report 2022

Financial Information/
Corporate Information

74

1

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75

Financial Information/
Corporate Information

Financial Information

Financial Information

Management Indicators

Financial Information(Millions of Yen)

(Millions of Yen)
For the years ended March 31

2020

2021

2022

Orders259,545

262,341

315,240

OrdersWater treatment chemicals

113,777

103,579

118,401

Net Sales

264,807267,749

288,207

Water treatment facilities

145,768

158,762

196,839

Business Profit

26,65429,47032,944

Total

259,545

262,341

315,240

10.1

11.0

11.4

Water treatment chemicals

113,632

103,231

117,672

18,287

19,08818,471

Water treatment facilities

151,174

164,518

170,534

6.9

7.1

6.4

Total

264,807267,749

288,207387,749

424,928

469,981

Water treatment chemicals

11,667

12,287

13,589

0.71

0.66

0.64

Water treatment facilities

15,061

17,12919,391

(74)

52

(36)

Total

26,65429,47032,944

Water treatment chemicals

10,127

11,816

14,56017,39019,634

21,169

(38)

78

4

Total

27,47931,52935,734

Assets Employed Water treatment chemicals(At Fiscal Year-End)
Water treatment facilities

119,960

123,476

148,267

209,015

233,530

274,119

Adjustment

58,77467,92147,595

Total

387,749

424,928

469,981

Water treatment chemicals

6,853

8,719

11,454

Water treatment facilities

26,42825,84857,016

Total

33,281

34,56868,471

Water treatment chemicals

5,496

4,986

5,935

Water treatment facilities

13,20415,752

17,477

Total

18,70020,73923,412

Water treatment chemicals

2,002

1,722

1,531

Water treatment facilities

3,691

3,594

3,855

Total

5,693

5,317

5,386

Business Profit Margin (%)
Profit Attributable to Owners of Parent
Return on Sales (%) Note 1
Total Assets (At Fiscal Year-End)Total Assets Turnover (Times) Note 2
Equity Attributable to Owners of Parent(At Fiscal Year-End) Note 3

Net Sales

Business Profit

Adjustment
242,442

253,089

271,914

Equity Ratio (%) Note 4

62.5

59.6

57.9

Return on Assets (%) Note 5

4.9

4.7

4.1

Water treatment facilities

Return on Equity (%) Note 6

7.6

7.7

7.0

Adjustment

Capital Expenditures(Property, Plant and Equipment and Right-of-Use Assets)

31,72932,64766,422

Depreciation(Property, Plant and Equipment and Right-of-Use Assets)

15,804

17,90020,079R&D Expenses

5,693

5,317

5,386

Operating Profit(Yen)

162.86169.94164.38Equity per Share Note 82,158.96

2,252.86

2,419.58

Dividends per Share

62.00

66.00

72.00

Dividend Payout Ratio (%)

38.1

38.8

43.8

Number of Employees (At Fiscal Year-End)

6,737

7,465

7,661

Basic Earnings per Share Note 7

Depreciation andAmortization

R&D Expenses

Corporate Information

財 務 情 報Financial Information/

Notes:
1. Return on sales = Profit attributable to owners of parent ÷ Net sales × 100
2. Total assets turnover = Net sales ÷ Total assets (Average)
3. Equity attributable to owners of parent = Total equity less Non-controlling interests
4. Equity ratio = Equity attributable to owners of parent ÷ Total assets × 100
5. Return on assets = Profit attributable to owners of parent ÷ Total assets (Average) × 100
6. Return on equity = Profit attributable to owners of parent ÷ Equity attributable to owners of parent (Average) × 100
7. Calculation of Basic earnings per share is based on average number of shares outstanding (excluding treasury stock).
8. Calculation of Equity per share is based on the number of shares at fiscal year-end (excluding treasury stock).

CapitalExpenditures

The Platform for Value Creation

2022

The Kurita Group’s Businesses

2021

Kurita Group Business Strategy

2020

Kurita Group Overview

For the years ended March 31

76

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Financial Information/
Corporate Information

Financial Information

Consolidated Statement of Financial Position(Millions of Yen)
As of March 31

2021

2022

As of March 31

2021

2022

Liabilities and equity

Current assets

Liabilities

Cash and cash equivalents

62,22845,730Trade and other receivables

97,745

108,892

Trade and other payables

46,50657,967

Other financial assets

2,817

3,075

Bonds and borrowings

445

8,180

Inventories

9,911

13,132

Lease liabilities

4,373

4,683

Other current assets

3,780

7,564

Other financial liabilities－

19,613

Total current assets

176,482

178,396

Income taxes payable

8,135

8,663

Provisions

1,847

1,529

Current liabilities

Property, plant and equipment

117,603

161,034

Other current liabilities

13,644

13,289Right-of-use assets

19,40519,042

Total current liabilities

74,952

113,927

Goodwill

55,59662,992Intangible assets

17,32018,092

Bonds and borrowings

31,20730,953

Investments accounted for using equity method

1,578

1,191

Lease liabilities

15,327

14,862Other financial assets

33,56323,011Other financial liabilities

13,703

1,757

Deferred tax assets

3,199

6,071

Retirement benefit liability

18,027

18,144

Other non-current assets

177

150

Provisions

1,160

2,335

Total non-current assets

248,445

291,585

Deferred tax liabilities

2,368

2,646

424,928

469,981

Other non-current liabilities

10,343

7,491

Total non-current liabilities

92,137

78,191167,090

192,119

Share capital

13,45013,450Capital surplus(2,212)(3,076)

Treasury shares(10,787)(10,694)

8,500

12,161Retained earnings

244,138

260,073

Equity attributable to owners of parent

253,089

271,914

4,748

5,948

257,837

277,862

424,928

469,981

Kurita Group Business Strategy

Non-current assets

Non-current liabilities

The Platform for Value Creation

Total liabilities

The Kurita Group’s Businesses

Total assets

Kurita Group Overview

Assets(Millions of Yen)

EquityOther components of equity

Total liabilities and equity

78

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Kurita Water Industries Ltd. Integrated Report 2022

Corporate Information

Total equity

財 務 情 報Financial Information/

Non-controlling interests

79

Financial Information/
Corporate Information

Financial Information

Financial Information

Consolidated Statement of Profit or Loss

Consolidated Statement of Comprehensive Income(Millions of Yen)

(Millions of Yen)

2021

2022

For the years ended March 31

2021

2022

Net sales

267,749

288,207

Profit19,824

19,624(173,073)(183,928)

Other comprehensive income

94,676104,278(65,206)(71,334)

Other income

5,929

6,119

Net change in fair value of financial assets measured at fair value throughother comprehensive income

5,202

520

Other expenses(3,870)(3,329)Remeasurements of defined benefit plans

(234)

417

31,52935,734

4,968

938

Finance income

545

601

Finance costs(1,923)(6,176)

Exchange differences on translation of foreign operations

4,851

8,692

(999)

(80)

Cash flow hedges

(594)

131

29,15030,07924

121(9,326)(10,454)

4,280

8,944

19,824

19,624

9,249

9,883

29,07329,507

Cost of sales
Gross profit
Selling, general and administrative expenses

Share of profit (loss) of investments accounted for using equity method
Profit before tax
Income tax expense
ProfitItems that will not be reclassified to profit or loss

Total of items that will not be reclassified to profit or loss

Kurita Group Business Strategy

Operating profit

Kurita Group Overview

For the years ended March 31

Items that may be reclassified to profit or loss

Share of other comprehensive income of investments accounted for using
equity method
Total of items that may be reclassified to profit or loss
Total other comprehensive income

The Kurita Group’s Businesses

Comprehensive income
Profit attributable to
Owners of parent
Non-controlling interests
ProfitComprehensive income attributable to19,08818,471735

1,153

Owners of parent

28,021

27,501

19,824

19,624Non-controlling interests

1,052

2,005

29,07329,507

Comprehensive income
Earnings per share

Diluted earnings per share (Yen)

169.94164.38――The Platform for Value Creation

Basic earnings per share (Yen)Corporate Information

財 務 情 報Financial Information/

80

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81

Financial Information/
Corporate Information

Financial Information

Consolidated Statement of Changes in Equity
For the year ended March 31, 2021

Balance as ofApril 1, 2020

13,450(Millions of Yen)

Equity attributable to owners of parent

Equity attributable to owners of parent

Other components of equity

Other components of equity

TreasurysharesExchangedifferencesontranslationof foreign
operations

Cash flow
hedges8,212 (10,893)(9,033)

503

8,747

―

216

Capitalsurplus

For the year ended March 31, 2022

Financial assets
measured at Remeasurements offair value
through otherdefinedbenefitcomprehensive
plansincomeRetainedearnings

Total

Noncontrollinginterests

Total

231,456 242,442

Total

1,666 244,108

Balance as ofApril 1, 2021

SharecapitalCapitalsurplusTreasurysharesExchangedifferencesontranslationof foreign
operations

13,450(2,212) (10,787)(4,469)(91)

13,060Cash flow
hedgesFinancial assets
measured at Remeasurements offair value
through otherdefinedbenefitcomprehensive
plansincomeNoncontrollinginterests

Kurita Group Overview

Sharecapital(Millions of Yen)

Total

Retainedearnings―

8,500

244,138 253,089

4,748 257,837

Total

Total

―

―

―

―

―

19,08819,088735

19,824

Profit

―

―

―

―

―

―

―

―

18,471

18,471

1,153

19,624Other
comprehensive
income

―

―

―

4,560

(594)

5,202

(235)

8,932

―

8,932

316

9,249

Other
comprehensive
income

―

―

―

7,962

131

520

415

9,030

―

9,030

852

9,883

―

―

―

4,560

(594)

5,202

(235)

8,932

19,08828,021

1,052

29,073

―

―

―

7,962

131

520

415

9,030

18,471

27,501

2,005

29,507Purchase oftreasury shares

―

―

(4)

―

―

―

―

―

―

(4)

―

(4)

Purchase oftreasury shares

―

―

(5)

―

―

―

―

―

―

(5)

―

(5)

Dividends

―

―

―

―

―

―

―

―

(7,076)(7,076) (1,013)(8,090)

Dividends

―

―

―

―

―

―

―

―

(7,865)(7,865)(943)(8,809)

Share-based
remunerationtransactions

―

9

111

―

―

―

―

―

―

120

(9)

111

Share-based
remunerationtransactions

―

57

98

―

―

―

―

―

―

155

23

179

Changes inownership interestin subsidiaries

―

(991)

―

4

―

―

―

4

―

(986)

(208)

(1,194)

Changes inownership interestin subsidiaries―(1,115)

―

―

―

―

―

―

―

(1,115)(268)(1,384)

Increase (decrease)by businesscombination

―

―

―

―

―

―

―

―

―

―

3,260

3,260

Increase (decrease)by businesscombination

―

―

―

―

―

―

―

―

―

―

357

357

Liabilities pertaining toforward contracts
concluded with noncontrolling shareholders― (10,578)

―

―

―

―

―

―

― (10,578)― (10,578)

Liabilities pertaining toforward contracts
concluded with noncontrolling shareholders

―

―

―

―

―

―

―

―

―

―

―

―

Transfer from othercomponents ofequity to retained
earnings

―

―

―

―

―

(888)

235

(653)

653

―

―

―

Transfer from othercomponents ofequity to retained
earnings

―

―

―

―

―

(4,954)(415) (5,369)

5,369

―

―

―

Other

―

1,135

―

―

―

―

―

―

16

1,152

―

1,152

Other

―

193

―

―

―

―

―

(41)

152

26

179

― (10,424)

106

4

―

(888)

235

(648)

(6,406) (17,373)

2,029 (15,344)

―

(864)

93

―

―

(4,954)(415) (5,369)(2,536)(8,677)(805)(9,483)(2,212) (10,787)(4,469)(91)

13,060―8,500

244,138 253,089

4,748 257,837(3,076) (10,694)

3,493

40

8,627

― 12,161

Comprehensive
incomeTotal transactions
with owners

Balance as ofMarch 31, 2021

13,450Comprehensive
incomeTotal transactions
with owners

Balance as ofMarch 31, 2022

13,450―260,073 271,914

財 務 情 報Financial Information/―

The Platform for Value Creation―

The Kurita Group’s Businesses―

Kurita Group Business Strategy

Profit5,948 277,862

Corporate Information

82

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83

Financial Information/
Corporate Information

Financial Information

Corporate Information

Consolidated Statement of Cash Flows

Stock Information (As of March 31, 2022)(Millions of Yen)

2021

2022

Profit before tax

29,15030,079Depreciation and amortization

20,73923,412

999

80

Loss (gain) on sale of fixed assets(1,333)(4,073)

Decrease (increase) in inventories

254(1,918)Decrease (increase) in trade and other receivables

746(6,713)

Increase (decrease) in trade and other payables(2,904)

1,459

Other

(3,410)(828)

Subtotal

44,242

41,497

Interest received

153

177

Dividends received

360

601

For the years ended March 31

Net cash provided by operating activities

(213)

(232)

(4,541)(13,308)

40,002

28,737

Number of Shares Per Lot:

100

Number of Shareholders:

21,980Independent Accounting Auditor: Grant Thornton Taiyo LLC
Akasaka K-tower 22F, 1-2-7, Motoakasaka, Minato-ku, Tokyo 107-0051, Japan
Transfer Agent:

Sumitomo Mitsui Trust Bank, Ltd.
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

Major Shareholders

Distribution of Shares by Shareholder TypeTreasury Stock

Number ofshares held

Share (%)

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

16,627,600

14.30

Custody Bank of Japan, Ltd. (Trust Account)

6,196,557

5.33

Nippon Life Insurance Company

5,979,883

5.14

Kurita Water Industries Ltd.

3,575,201

3.07

CACEIS BANK, LUXEMBOURG BRANCH/
UCITS CLIENTS ASSETS

2,334,781

2.00(1,856)(2,348)MUFG Bank, Ltd.

2,056,131

1.76

Proceeds from withdrawal of time deposits

1,588

2,175

Purchase of property, plant and equipment(14,055)(55,096)

STATE STREET BANK WEST CLIENT - TREATY
505234

1,812,829

1.56

Proceeds from sale of property, plant and equipment

8,401

8,743

Purchase of intangible assets(1,909)(2,038)Proceeds from sale of investment securities

2,533

9,197

Payments for acquisition of subsidiaries (after deduction of cash andcash equivalents included in acquired assets)(4,599)(2,401)

(874)

1,839

(10,771)(39,929)

Other
Net cash used in investing activities
Net increase (decrease) in short-term borrowings and commercial papers(35,001)

Proceeds from issuance of bonds

29,882

7,577―

Repayments of lease liabilities(5,033)(5,005)

Dividends paid

(8,083)(8,797)―(1,440)29

224(18,852)(7,927)

Effect of exchange rate changes on cash and cash equivalents

1,634

2,622

Net increase (decrease) in cash and cash equivalents

12,013(16,497)

Cash and cash equivalents at beginning of period

50,21562,228Cash and cash equivalents at end of period

62,22845,730Net cash used in financing activities

Kurita Water Industries Ltd. Integrated Report 2022

STATE STREET BANK AND TRUST COMPANY
505025

1,667,233

1.43

JP MORGAN CHASE BANK 385781

1,434,789

1.23

Other
Domestic Firms

Number ofshares held

Distributionof Share (%)

Financial Institutions

38,036,837

32.8

Securities Firms

2,587,164

2.2

Other Domestic Firms

3,733,150

3.2

Foreigners

58,238,895

50.1

Individuals

10,029,447

8.6

Treasury Stock3,575,201

3.1

116,200,694

100.0

Total

Stock price

Trading volume

Stock price (Yen)

Trading volume (Thousands of shares)

6,000

60,0005,000

50,0004,000

40,0003,000

30,0002,000

20,0001,000

10,0000Jan. � 20

Jan. � 21

Jan. � 22

Corporate Information

(485)

Other

1.48

Foreigners

財 務 情 報 ／ 企 Financial
業 情 報 Information/(645)

Purchase of shares of subsidiaries not resulting in change inscope of consolidation

1,725,400

Securities
Firms

Stock Price Range and Trading Volume

Cash flows from financing activities

Repayments of long-term borrowings

BNP PARIBAS SECURITIES SERVICESLUXEMBOURG/JASDEC/FIM/LUXEMBOURG
FUNDS/UCITS ASSETS

Individuals

The Platform for Value Creation

Payments into time deposits

Financial Institutions

The Kurita Group’s Businesses

Cash flows from investing activities

84

531,000,000

Kurita Group Business Strategy

Income taxes paid

Number of Authorized Shares:

Kurita Group Overview

Interest paid

Prime Market of the Tokyo Stock Exchange (As of April 4, 2022)

Number of Shares Outstanding: 116,200,694 (Including 3,575,201 shares of treasury stock)

Cash flows from operating activities

Share of loss (profit) of investments accounted for using equity method

Stock Exchange Listing:0

Kurita Water Industries Ltd. Integrated Report 2022

85

Financial Information/
Corporate Information

Corporate Information

Corporate Data
Kurita Water Industries Ltd.

Address

10-1, Nakano 4-chome, Nakano-ku,
Tokyo 164-0001, Japan

Date of Establishment

July 13, 1949

Paid-in Capital¥13,450,751,434

Number of Employees

7,661 (on a consolidated basis);
1,673 (parent company)(As of March 31, 2022)

Kurita Innovation Hub
3993-15, Haijimacho, Akishima-shi, Tokyo
196-0002, Japan
Tel: 81 (42) 503-6008

RegionYear ofestablishment

Paid-in capital(Millions)

Equityownership(%)

Kurita Water Industries (Dalian) Co., Ltd.

1995

¥550

90.1

Other Offices:
Shizuoka Plant, Tohoku Office, Nagoya Office,Hiroshima Office, etc.

Kuritec (Shanghai) Co., Ltd.

2001

¥30

100.0

Kurita Water Industries (Suzhou) Ltd.

2004

¥530

100.0

Kurita Water Industries (Jiangyin) Co., Ltd.

2015

US$16

100.0

Hansu Co., Ltd.

1974

W2,500100.0

Hansu Technical Service Ltd.

1988

W26,400

100.0

Kurita (Taiwan) Co., Ltd.

1987

NT$70

100.0

Kurita (Singapore) Pte. Ltd.

1978

S$11

100.0

Kurita Water (Malaysia) Sdn. Bhd.

1994

RM$0.6100.0

Kurita-GK Chemical Co., Ltd.

1989

BAHT204

85.0

Kurita-GK Vietnam Co., Ltd.

2016

US$0.5

85.0

P.T. Kurita Indonesia

1986

US$2

92.5

Kurita R&D Asia Pte. Ltd.

2017

S$3

100.0

Kurita Europe GmbH

1989

EUR50

100.0

Asia

Main Domestic Consolidated Group Companies (As of March 31, 2022)
Precision Tool cleaning

Kurita Buil-Tech Co., Ltd.

Kuritec Service Co., Ltd.

Kurita BMS Co., Ltd.

San-ei Industries Co., Ltd.

Kurita Tokai Ltd.

Nippon Fine Co., Ltd.

Kurita Hokuriku Ltd.

Aoi Industries Co., Ltd.

Kurita UK Ltd.

2019

0.000065GBP

100.0

Operation and maintenance of water treatment facilities

Kurita France S.A.S.

2015

EUR5

100.0

Kuritaz Co., Ltd.

Kurita Ibérica SL

2015

EUR1

100.0

Kurita Turkey Kimya A.S.

2015

TRY5.7100.0

Kurita Sverige AB

2015

SEK0.1

100.0

Kurita Polska SP.z.o.o.

2016

EUR3.27

100.0

Kurita Sanyo Ltd.
Sale of water treatment chemicals and provision ofmaintenance services for water treatment facilities
Kurita Hokkaido Ltd.
Kurita Kitakantou Co., Ltd.

Engineering cleaning
Miyoshi Industries Co., Ltd.

EMEA

Kurita Creation Co., Ltd.

Kurita Italia S.r.l.

2021

EUR1

100.0

Manufacture of water treatment

Soil and groundwater remediation
Land Solution Inc.

Kurita AquaChemie Limited

2020

0.1AED

51.0

Kurita Chemical Manufacturing Ltd.

Kurita America, Inc.

1975

US$0.00001

100.0

Keytech Water Management

1981

2.1CAD

100.0

Pentagon Technologies Group, Inc.

1998

US$0.002

100.0

Avista Technologies, Inc.

1999

US$0.003719

100.0

Fracta2015

US$0.89

95.5

Kurita do Brasil LTDA.

1975

R$6.9

100.0

Water quality and environmental analysis
Kurita Analysis Service Co. Ltd.
Sale and maintenance services of water treatment facilities
Kurita Meiki Ltd.

Kurita Water Industries Ltd. Integrated Report 2022

Land Management Inc.
Other businesses
Kurita Sogo Service Co., Ltd.
With Kurita Ltd.
Kurita Corporate Service LLC

North &South
America

Kurita Water Industries Ltd. Integrated Report 2022

Corporate Information

Kurita Kyusyu Ltd.

Others企 業 情 報Financial Information/

Kurita Kansai Ltd.

Manufacture and sale of water treatment equipment
and products for general households

Kurita Kanto Ltd.

Water
Water
Treatment Treatment
Chemicals Facilities

The Platform for Value Creation

Sale of water treatment chemicals

Business segment

The Kurita Group’s Businesses

Engineering Center:
8-7-2, Shimorenjaku, Mitaka-shi,
Tokyo 181-0013, Japan
Tel: 81 (422) 35-6392

Osaka Office:Hommachi Sankei Building 16F, 3-9, Hommachi
4-chome, Chuo-ku, Osaka-shi, Osaka 541-0053,
Japan
Tel: 81 (6) 7638-1226

86

Overseas consolidated subsidiaries andaffiliated companies

Kurita Group Business Strategy

Major Domestic Offices Head Office:Nakano Central Park East (General Reception
on 10F), 10-1, Nakano 4-chome, Nakano-ku,
Tokyo 164-0001, Japan
Tel: 81 (3) 6743-5000

Main Overseas Group Companies (As of July 1, 2022)

Kurita Group Overview

Company Name

87