Head Office: 26F JP Tower Nagoya, 1-1-1 Meieki, Nakamura-ku,
Nagoya, Aichi, 450-6326, Japan
Contact for inquiries about this report
Sustainability Development Department Tel: +81-522-533-3136
http://www.aica.co.jp/

AICA Kogyo Co., Ltd. AICA Report 2021

AICA Report 2021

History of AICA’s Sustainability Management
1976
1976
1976

INDEX

2013
2013
2013

2017
2017
2017

2021
2021
2021

2024
2024
2024

2027
2027
2027

Financial
Financial
Financial

AICA
’
s 10
years
Vision
AICA
’
AICA
s 10
’
years
s 10
years
VisionVisionMedium-Term
Medium-Term
Medium-Term
Medium-TermBusiness
Plan
Medium-Term
1stMedium-TermBusiness
Business
Plan
Plan
Business
Plan
Business
Business
Plan
Plan 1st1st

NEXT
JUMP
1500
NEXT
NEXT
JUMP
JUMP
1500
1500

2nd
Medium-Term
2nd
2nd
Medium-Term
Medium-TermBusiness
Plan
Business
Business
Plan
Plan

Next
Next
Next
Medium-Term
3rd3rdMedium-Term
3rd
Medium-TermBusiness
Plan
Business
Business
Plan
Plan

1976
Established
Safety1976
Established1976
Established
SafetySafetyandandand
Environment
SectionEnvironment
Environment
SectionSection2017
Organized
Corporate
Principle
Corporate
2017
Organized
2017
Organized
Corporate
Corporate
Principle
Principle
andandCorporate
andCorporate
Philosophy,
formulated
Corporate
PolicyPhilosophy,
Philosophy,
formulated
formulated
Corporate
Corporate
PolicyPolicy2021
Formulated
Sustainability
PolicyrevisedCodeof Conduct,
2021
Formulated
2021
Formulated
Sustainability
Sustainability
PolicyPolicyandandrevisedandrevised
Code
of
Code
Conduct,of Conduct,
RevisedMaterialities
Revised
RevisedMaterialities
Materialities

Corporate Principle

Corporate Policy
1. Chemistry and Design

Challenge and Creation*Japanese word kyosei stands for active engagement with
the AICA Group's stakeholders (customers, employees,
shareholders, suppliers, business partners, local
communities and local governments, etc.) andthe global environment. Kyosei represents our
Corporate Philosophy
approach to minimize the adverse effects of the
AICA Group's business activities and products,
The AICA Group creates new value
and to contribute to society through the value
we create and build better relationships withand contributes to society throughsurroundings, with aiming for a sustainable
continuous
innovation in the spirit ofexistence together with the stakeholders
mentioned above.
our philosophy of kyosei*.
Corporate Policy

Sustainability Policy

We create uniquely original products through thepower of chemistry and design, to contribute to
the achievement of a prosperous society.

2. Group Synergies
We create group synergy through collaborationin technologies and market network.

3. Leading Products
Throughout the specific domains and regionsof our business, we enhance and expand ourmarket-leading products.

4. Global Presence
We strive to achieve sustainable growth in global markets by enhancing the capabilities of ouroverseas operations and participating in thehigher growth sectors.

5. Human Resources and Organizations
1 Compliance with laws and regulations

2 Respect for human rights

Code of 3 Harmony with society 4 Fair business practice
Conduct 5 Customer’s security and trust 6 Proper information disclosure
7 Protection of company information and property 8 Environment and safety

AICA’s 10 years Vision
Medium-Term Business Plan
Company Policy (single-year policy)

AICA Report 2021

AICA’s Vision
21 AICA’s 10 Years Vision andMedium-Term Business Plan
23 Medium-Term Business Plan
31 Business Overview: Chemical
Products Business
33 Business Overview: Construction
Materials Business

Foundations of AICA
35 AICA’s Sustainability
37 Business Infrastructure
44 Human Resources
49 Environment
55 Engagement with Stakeholders

Overall Image of AICA Policies

1

03 Message from the President
07 Transformation of Value Creation
09 Genealogy of the Power ofChemistry
11 Our Businesses
13 AICA’s Value Creation Model
15 AICA’s Strengths Supporting
Value Creation
17 Risk Management

Viewing human resources as the most vital resource of our company, we nurture motivatedhuman resources and organizations throughmutual understanding and development.

6. Compliance Management
We practice fair and transparent management inaccordance to all relevant laws, regulations, andsocial order.

7. Commitment to Safety and Security
We ensure trusted quality and engage in environmentally considerate business activities byfocusing on our communication with stakeholders.

Sustainability Policy
1 We address social issues through ourbusiness activities to contribute to thecreation of a better society.

2 We have established “Compliance withlaws and regulations,” “Respect for human rights,” “Harmony with society,”“Fair business practice,” “Customer’ssecurity and trust,” “Proper information disclosure,” “Protection of company information and property,” and“Environment and safety” as the basic
principles of the Code of Conduct, andwe base our actions on these principles as shared values for all employees.

3 We emphasize dialogue with stakeholders, including customers, employees, shareholders, suppliers, business
partners, local communities, and local
governments, and respond promptly
to social needs and changes.

4 We identify material issues from theperspectives of both corporate management and stakeholders, address
those issues alongside our businessactivities, and disclose our progress inaddressing them.

Data
59 11-Year Financial Summary
61 Non-Financial Data
64 Third-Party Assurance
65 AICA Group Network

Editorial Policy
This report has been prepared with theintention of communicating the AICA
Group’s Sustainability-related activities toour stakeholders (customers, employees,
shareholders, suppliers, business partners,
local communities, and local governments)
in easily understood ways, using graphs,
photographs, and other means.
Reference Guidelines
ISO26000
Ministry of the Environment
Environmental Reporting Guidelines(2018 Edition)GRI Standards
IIRC International Integrated Reporting
Framework
Target Period/Scope
This report is a summary of the activitiesof the AICA Group in FY2020 (from April 1,2020 to March 31, 2021). It also includes
information about some activities fromFY2021. The target scopes can be foundin the content of the report.
AICA Website [CSR Activities]
Supplementary information and PDF dataof the AICA CSR Report
http://www.aica.co.jp/company/environ/

AICA Report 2021

2

About AICA

Non-financial
Non-financial
Non-financial

QEO(Quality,
Environment,
QEO(Quality,
QEO(Quality,
Environment,
Environment,
andandandOccupational
HealthSafety)Occupational
Occupational
HealthHealthandandSafety)and
Safety)Trinity
Activity
Trinity
Activity
Trinity
Activity
2014
2018
2014
2014
2018
2018
FormulatedMaterialities
RevisedMaterialities
Formulated
FormulatedMaterialities
Materialities Revised
RevisedMaterialities
Materialities
1998
Formulated
Environmental
1998
Formulated
1998
Formulated
Environmental
Environmental
Philosophy
Environmental
PolicyPhilosophy
Philosophy
andandEnvironmental
andEnvironmental
PolicyPolicyCurrent
Current
Current

About AICA

About AICA

Message from the President
Looking Back on the year of COVID-19
Pandemic

it was also the first decrease in operating profit and ordinary
profit in the last 12 years, and the second consecutive year oflower net profit. Both domestic and overseas sales remainedsluggish until the second quarter under the severe market environment caused by COVID-19 pandemic. From the third quar-

like to show our gratitude for the healthcare staff and those whoter, the demand in Japanese market recovered from the third
quarter onwards, mainly on the back of our “AS (Aica Solution)

are making efforts to prevent the spread of infections.

About AICAFirstly, I would like to extend our heartfelt sympathies to all
the people affected by the COVID-19. Secondly, we would also

product range” that aims to resolve social problems whereas
Measures and Initiatives to Combat the Impact of COVID-19

overseas’ performance recovered in AICA Asia Pacific Holding

PandemicGroup (AAPH Group), and Evermore Chemical Industries Group

Most importantly, we had put a great deal of thought to the(EMC Group), as well as the companies of Wilsonart that joined

safety of our employees and its families as well as customers.

the AICA Group in December 2019. Activities implemented

We had applied various measures at each business site; workfrom home (WFH) and staggered working hours (SWH), limit

throughout the entire AICA Group aimed at enhancing busi-

business trips, prohibit business dinners, make the most of on-

costs have also been successful, and we achieved the best
operating profit and ordinary profit we have ever recorded forline meetings and events, dispersed seating arrangements, andencourage commuting by private vehicles. Moreover, in orderness, improving production efficiency, and cutting back various

the second half of the year. We also successfully achieved two

to secure maximum profits even in the drop in sales and lower

M&As, which would build a strong foothold for further expand-capacity utilization, we considered and implemented all kinds ofing our business performance from the next fiscal year onward.

profit improvement measures, including the reduction of SG&A
(selling, general and administrative) expenses, and focusedon more aggressive cost reduction activities. We also focusedon expanding sales of products that support new lifestyles;

10 Years Vision and New Medium-TermBusiness Plan “Change & Grow 2400”

known as the antiviral building material “Virutect” series, andUV-curable resin for electronic materials that grew in volumes
following increased demand among those staying at home.

In April 2017, we drew up “AICA’s 10 Years Vision” that setsout our goal by FY2026, the 90th anniversary of our company.
The first step to achieve this goal, the medium-term business

The Impact of the COVID-19 Pandemic and Awarenessan end. In April 2021, we have set the new medium-term busi-

sluggish due to the impact of the COVID-19 pandemic. To

ness plan “Change & Grow 2400” (covering FY2021 to FY2023)

shift to resilient business structure capable of riding throughas the second step. We shall implement various measures todemanding situations like this, we thoroughly identified waste
in operations and expenses and worked to improve them. We

achieve the specified financial targets; ROE of 10%, ordinary

Aica Group will strength our ESG performance toalso took the opportunity to renew our awareness of the impor-as non-financial targets that would help strengthen our business infrastructure.

become a highly sustainable corporate entity

cess, and we were able to fulfill our responsibilities for supplying

in order to realize a sustainable society.

we had in place. We shall enhance our BCP measures moretance of BCP measures. The BCP measures we had previously
implemented for sourcing raw materials proved to be a suc-supply chains, several issues became evident with the systems

Representative Director and President

AICA Report 2021

New Medium-Term Business Plan Financial Targets
FY2020 Achievement

Around 10%

81.2 billion yen

115 billion yen

to devise the optimum locations of production sites and shift to

Net sales of Overseas andSpecialty & Performance
Materials *multiple suppliers to source our raw materials.

Net sales of AS Products *15.5 billion yen

21 billion yen

Ordinary profit

18.4 billion yen

24 billion yen

Net sales

174.6 billion yen

240 billion yen

than ever by coordinating efforts throughout group companies

ROE

FY2023 Plan

8.1%

Consolidated business results for FY2020 were net sales of

Yuji Ono

income of 24 billion yen, and net sales of 240 billion yen, as well

AICA products in FY2020. Yet in this age of globally connected

FY 2020 Overview

3

plan “C&C 2000” (covering FY2017 to FY2020), has come to

The Aica group’s business performance for FY2020 was* Accumulated net sales prior to consolidation elimination

Creation and Expantion of Growth Businesses (Expanding

174,628 million yen (-8.8% vs LY), operating profit of 17,991
million yen (-13.7% vs LY), ordinary profit of 18,438 million

AS Products)

yen (-13.6% vs LY), and profit attributable to owners of parent(hereafter, net profit) of 10,759 million yen (-15.5% vs LY). Ourtion market—is expected to remain stagnant, we believe that
we can maintain growth by developing and expanding sales ofnet sales have dropped for the first time in the last 11 years;

our “AS (Aica Solution) product range” that is aimed at resolving

While AICA’s chief market segment—the domestic construc-

AICA Report 2021

4About AICA

Message from the President

social issues. This high value-added product range leverages

are focusing on reducing costs in various areas, implementing

we believe that companies unable to adapt to such efforts willtime. We will continue to make efforts to enhance the disclosure

our strengths of “Chemistry” and “Design” to resolve a broad

DX*, streamlining logistics networks and improving production

be left behind in the market. Our aim is to achieve a corpo-of AICA’s sustainability information.

range of social issues, including labor shortages throughout theefficiency as we build a resilient management system. We arerate entity that continues to be selected in the age of net zero

construction industry, deteriorating infrastructure, shifting to amoving toward building a stronger AICA capable of adapting toemissions, by thoroughly “Proposing long-term strategies with

low-carbon society, and adapting to lifestyles that changed withsuch management changes and will be setting aside a total ofa view to 2050 net zero GHG emissions” and “Reducing GHG

the spread of coronavirus, and we are planning to expand net

40 billion yen over three years for capital investment and busi-

emissions” while properly identifying the risks and opportunities

sales of AS Products to 21 billion yen in three years’ time.

ness investments with a focus on capital costs, with plans to

associated with the climate change.
As a company taking an active stance to combat challenges

Creation and Expansion of Growth Businesses (Businesses

efforts shall focus on ROE while maintaining a well-balanced

related to climate change, we established the Climate Change

From 2021, a restricted stock (RS) compensation system

in Non-construction Markets and Overseas Businesses)

capital structure based on growth and financial health potential.

Response Project in April 2020. We then moved the Climate

has been made available for AICA directors (excluding direc-*DX: Digital Transformation

Change Response Committee to make it part of the Sustainability

tors who are members of the Audit and Supervisory Committee

Development Committee in April 2021 with the aim of further so-and external directors). In addition to providing an incentive forlidifying our efforts. Efforts are being ramped up to increase the ef-achieving sustained growth in corporate value, the system aims

In the previous medium-term business plan, the Specialty &positioned as growth businesses, and efforts were focused

Profit Base Enhancement

on developing their business infrastructures. The new medi-

There are increasing demands from stakeholders to ensure

ficiency of energy usage and introduce energy-efficient methods

to foster a greater sense of shared value with shareholders.

um-term business plan “Change & Grow 2400” aims to growthese businesses dramatically, with plans to expand net sales

that our company fulfills its social responsibility for resolvingsocial issues that are growing in severity and complexity on athroughout the group, and we will place an even greater focus on
reducing Scope 1 & Scope 2 emissions resulting from business

An incentive plan has also been introduced that provides
company stocks to employees in management positions at

by 1.4 times.

global scale. In response to this, we devised the medium-term

activities. Activities will also turn to reducing Scope 3 and seizing

AICA and group companies. The plan forms a greater correla-business plan after reviewing our Materialities (material issues).

business opportunities related to climate change. We believe thattion between employee benefits and long-term stock prices or

NAM

Until now, management plans had focused mainly on financial

the role of our company is to act on combating climate change

business achievements and is aimed at fostering sustainable

POLYMER INDUSTRY CO., LTD.” and “VIET NAM SUM YAD

affairs, while the inclusion of non-financial matters and efforts

with manufacturing that harnesses our expertise in chemistry andcorporate growth by providing employees a sense of ownership

TECHNOLOGY LIMITED”, and the UV curing coating material

toward achieving each specified KPI is a way that we believe wedesign. The new Development Planning Department that wasin line with that of management.

production plant for overprint varnish “Covestro Resins (Taiwan)

can further boost our corporate sustainability.

In the Specialty & Performance Materials Business, theurethanemanufacturing

company“U-BEST

VIET

launched in April 2021 also forms a part of the Climate Change

We will be using these remuneration system to form a cor-Ltd. (former DSM Coating Resins Ltd.) Dayuan plant” joined theMaterialities consist of seven categories: (1) Provide econom-

Response Committee to achieve faster product development.

porate culture where AICA Group directors and employees are

EMC Group. Their production equipment, expertise with tech-

ic value; (2) Resolve social issues with products; (3) Human re-

The role of this department—joint development with universities,

able to work together toward the goal of enhancing long-term

nology and sales channels in new fields will be harnessed oursources and organizational development; (4) DX Implementation;

research institutes and businesses in different industries—is lev-

corporate value.

further expand business in non-construction fields.

(5) Responding to climate change; (6) Strengthen governance;eraged as part of group-wide efforts to reduce GHG throughoutand (7) Quality assurance and occupational safety; and wethe entire life cycle of products.

In the Chemical Products Business overseas, the hot melt
adhesive manufacturing and sales company “Aica Adtek

specified KPIs for each category (see P. 29-30 for details.) The

Disasters arising because of extreme climate conditions are

Consolidated Sdn. Bhd.” in Malaysia became part of the AAPH

categories of “DX Implementation” and “Responding to climate

on the rise on a global scale in recent years, and we are acute-Group. This will serve to strengthen business in the high-growthchange” in particular are viewed as challenges that urgently

ly aware of the risks that these pose to our businesses. We

hot melt adhesive for hygiene products field and harnessing its

need to be addressed, and are areas that we are focusing ourshall be reinforcing the scope of our BCP measures, as thesesales channels will also help boost our presence in the hot melt
adhesive market throughout Southeast Asia as well as Africa,

efforts on.

extreme weather events continue to increase in frequency andseverity.

North America, and European regions. At AAPH Group’s pro-DX Implementation

duction sites in China, we have plans in place for three major

In May 2021, we overhauled the core systems responsible

capital investment projects with the aim of increasing their pro-for receiving orders, production, purchasing and financial oper-

duction capacity significantly. Efforts are being made to tap into

ations, and developed a platform that will facilitate a greater shift

the growing demand for PF resins throughout Asia with the aimto the digital realm. There has been remarkable progress in digi-

AICA has released new policies related to sustainability in lineof achieving further growth.

tal technologies in recent years and incorporating such technol-with the newly released medium-term business plan “Change &Toward Achieving Sustainability

In the Construction Materials Business overseas, we madeogies into our systems will help reform our business activities.

Grow 2400.” The AICA Group’s approach to sustainability has

significant progress in developing platforms for expanding withWe are increasing productivity with automation and laborsaving

been valued for a long time and is embodied in our Corporate

recent M&As and plant construction. We will be actively estab-methods at our production plants, and this also serves to ad-philosophy and Corporate policy. Yet we determined that thelishing propulsive our brand in the Asia Pacific region by utilizing

dress future shortages in labor. We are also storing, analyzingcore philosophies and policies related to sustainability manage-

the sales networks, production sites and human resources thatand utilizing various forms of data as a way of boosting busi-

ment should be outlined more clearly. Prior to releasing these

we have acquired.

ness efficiency, and the results of these efforts are also being

policies, in April 2021 we renamed the committee responsible

applied to product development and marketing. DX is providing

for these policies from the CSR Promotion Committee to thethe impetus to revolutionize working styles, not only at our com-

Sustainability Development Committee, with myself appointedpany but also our stakeholders, and we will be leveraging this toas chair. I shall be taking the lead to ensure that the efforts wegive our company a competitive edge.

plan to strengthen our corporate structure are done in a sus-

Strengthening of Profit Foundations
The business environment is expected to undergo further
sudden changes, including changes in demand for housing due
to the shrinking population, lower birthrate and aging popula-tainable manner. The previous “CSR Report” that covered infor-

tion, different lifestyles following the COVID-19 pandemic, andacting on climate change. To ensure that we remain a company

Responding to Climate ChangeCountries around the world are now making concerted ef-

mation related to non-financial matters has also been renamed
to the “AICA Report,” and will cover our “value creation model”

that our various stakeholders need despite such changes, we

forts to achieve net zero greenhouse gas (GHG) emissions, andand other topics based on our integrated thinking for the first

AICA Report 2021

About AICA

expand operating profit to 23.5 billion yen after three years. Our

Performance Materials Business and overseas business were

5

Adoption of Restricted Stock (RS)Remuneration System for Directors andEmployee Stock Ownership Plan (J-ESOP)AICA Report 2021

6About AICA

Uses M&As to build a platformthat would not be swayedby Japanese construction market trends

Transformation of Value Creation
With the resin synthesis technologies that we have cultivated since our foundation at the core, we have re-organized our portfolioof businesses flexibly in line with the times.

Incorporates non-residential market and achieves
growth despite deteriorating market environment

Our spirit of “Challenge and Creation,” including challenges in new businesses and the use of synergies, has been passed down

Chemicalproducts

Construction
materials

Operating profit (x 100 million yen)
Number of new housing starts (x 10,000 units)
Area of non-residential building starts (million m2)

from the past to the present.
Net sales (billion yen)

Shift toward general building
materials manufacturer

200

Convert to new businessin response to the times

Jacks/Other

Building andhousing materials
Laminated
sheetsSpark plugs

Chemicalproducts
Oct.1965Nov.1966

14%

150

Chemicalproducts

18%

NO DATA

Oct.1975Nov.1976

34%

17.5

32%

(non-consolidated)

28%

Ceramics

Building andhousing materials

Laminated
sheets300

Laminated
sheets22%

Paper
manufacture23%

Net sales increases
with addition of
new subsidiaries
2007
Revision of BuildingStandards Law,prompted by earthquake
resistance data
falsification
scandal31%

28%(non-consolidated)

400(Consolidated)billion yen(Consolidated)38%

billion yen

46%

Apr.1995Mar.1996

52%

64.6

Chemicalproductsbillion yen

3.29

46%

Dec. 1946*1(non-consolidated)

24%

174.6
billion yen

48%

17%

About AICA

Establishment of business foundations
in period of rapid economic growth

Apr.2020-Mar.2021

Chemicalproducts

Electronics/
Other

1973
1st oil crisis

100
1979
2nd oil crisis

1985
Plaza Accord

2008
GlobalFinancial
Crisis

1989
Nikkei averagereaches record high

200

1991
Japan’s economic bubble collapse

100

50
1949
Dodge Line announced

Area of non-residential building starts (right axis)

1964
Tokyo Olympics

Number of new housing
starts (right axis)

1965–
Izanagi economic boom

High pressure laminate (HPL) plant completed in 1959

Operating profit (right axis)*2

Established 1936

1940

1950

1960

1970

1980

1990

2000

2010

2021 (Plan)*1 No data exists due to the turmoil after the War ended, so figures are only for the single month of December 1946.
*2 Covers only the four-month period from December 1988 to March 1989.
NB: Consolidated accounting began from the year ended November 1979. All accounting years prior to that are non-consolidated.

1936~1945

1946~1954

Launched Japan’s first urea-based resin
adhesive “AICHI-MUTEKI-NORI” (1939)

Launched melamine resin-baked paint(1951)

1955~1966
Launched “AICA” high pressure laminate(HPL) (1960)

1967~1976
Launched “AICA POSTFORM” (1968)
Launched wall coating material,“JOLYPATE” (1975)1977~1986
Launched premium wooden door,“EASTERN CHERRY DOOR” (1978)
Launched high pressure laminate (HPL),“AICA COLOR SYSTEM 105” (1984)1987~1994
Captured top share of Japanese HPL
marketLaunched melamine noncombustible
decorative panel, “CERARL” (1989)

1995~20092010~“CERARL” became a huge success as
kitchen panel (1996-)
Inaugural edition of “Environmental
Report” (1999)

Acquired shares in subsidiary of Dynea’s
Asia-Pacific division (2012)
Acquired shares in EVERMORE CHEMICALINDSUTRY CO., LTD. (2018)
Acquired shares in Wilsonart subsidiary in
Asia-Pacific region (2019)Social Background and Products Created by the AICA Group

1936

1960s–1970s

Late 1980s

1990s–2000s

2010

Development of Japan’s first synthetic
resin adhesive

Contribution to development ofodorless plywood

Use of rubber trees that had been discarded as scrap

Compliant to sick house syndrome

Support forest resources protection

We developed a urea-based resin adhesive withstrong adhesive properties and water resistance.
This drove the shift from natural adhesives tohigh-performance synthetic resin adhesives.

To increase productivity of plywood in response to expanding demand, we developed
a no-clamp melamine urea formaldehyde
resin adhesive. We encouraged increased
use of this adhesive, which has low formaldehyde detection, and odorless plywoods
were born.

Rubber tree wood left over from the sap extraction process
was recycled into laminated lumber and turned into stair
components and counters. This attracted attention as apioneering concept in the effective use of forest resources.

From the 1990s, hypersensitivity to chemical substances, as exemplified by sick house syndrome, became a serious social problem. In response to the Revised Building Standards Act of 2003 and the Ministryof Health, Labor and Welfare guidelines of 2002, we launched AICA
ECO-ECO BOND, a healthy-housing adhesive that contained no restricted substances such as formaldehyde, toluene, and xylene.

We were the first Japanese manufacturer of high pressure laminates (HPL) to obtain Forest Sustainability
Council (FSC/PEFC) certification for certain of our
HPL products. Subsequently, we were awarded the
Biomass mark for those same products and for someof our decorative board products.

Patent for
urea-based
resin adhesive

7

AICA Report 2021

We were awarded
an honor fromthe Sultan of the
Malaysian state of
Kedah.

AICA ECO-ECO
BOND when it was
first released

High Pressure
Laminate (HPL)

Polyester
Decorative Panels

Marless Board

2017–
Development andexpansion sales ofAS products
We positioned product ranges
that contribute to the solutionof social issues as AS (Aica
Solution) products and concentrated our efforts into developing and expanding salesof those product ranges. The
objectives of those products
are many and diverse, including alleviating labor shortages,
reducing waste, and building
safe cities.
AICA Report 20218About AICA

Genealogy of the Powerof ChemistryUV-curable
resinsSpecialty & Performance Materials

company’s foundation are AICA’s core technologies andInterior housingmaterials

AICA
AITRONThe chemical technologies we have attained since theFunctional
spherical
polymer beads

an important pillar in creating highly original products.
Our history began with the development of adhesives.
Then, it has been passed onto the respective businesses

U.D.
COMFORT

that have branched out from those beginnings, andLumiart

STAPHYROID

Specialty & Performance Materials

Toiletcubiclesystems

Chemical Products Business

Hot melt
adhesives

AdhesivesMOISSGANZPEARLSHONOL

Industrial resins,
Composite board
resinsConstruction Materials Business

MARLESSNONCOMBUSTIBLEPANELS

AICA MELT

About AICA

Noncombustible
decorative
panelscontinues to evolve today.

MACE

ARDICA

CERARLSpecialty & Performance Materials

CERARL

Silicone
Developed recyclable (removable)
elastic hot melt adhesives in 2001.

DYNAMICRESIN

Repair/reinforcing materials,
Corrosion preventive
materials
Construction
resinsUsed in automotive headlamps,
etc.as adhesive and sealant.

JOLYSEAL

Hot melt
adhesives

Became a huge success as kitchen panel
in 1996. Developed dedicated adhesives
to curb warpage peculiar to CERARL,
through collaboration with
Chemical Products
Business.

Postform counter
Succeeded in making urea-based urethanetransparent with proprietary technology
in 2014. Prevents exterior wall tiles
from falling off without
obscuring tile design.

Fiore stoneHeat-resistantPUR

jolyace

Floor coating
materials

Urea Urethane
Hard polyurethane
resin

Construction
resinsDeveloped Post form Countertops,
made of high pressure laminate (HPL)with bending treatment.
First to start production in
Japan in 1968.

Epoxy

AICA
PUR

Countertops

Decorative
boards/Architectural
films

Decorative
polyester
plywoodboardsJOLYPATE
AltynoWall coating
materials
Construction
resinsSigned agreement with French
company, CEGECOL, in 1975 andentered wall finishing materials
segment.

Acrylic

High pressure
laminate (HPL)

CELSUS

Virutect

MELAMINE TILE

High pressure
laminate (HPL)

Solvent-basedCR

Industrial/
Construction
adhesives

AICHIMUTEKI-NORI
Developed Japan’s first urea-based
resin adhesive in 1936.
Selected for aircrafts, etc.

Adhesives
ECO-ECO
BOND

Vinyl acetate
Melamine
Formaldehyde

Released in 1960. Started from “resin
paper” born of synergy between theadhesive business and paper
manufacturing business.
Current mainstay
product.

MELATACKDeveloped floor material with highly durable
melamine resin surface layer in 2019,
applying technologies from Specialty &Performance Materials Businessto curb warpage peculiar
to HPL.

PhenolFormaldehyde
Urea

9

AICA Report 2021

AICA Report 2021

10

About AICA

Construction Materials Business

Our Businesses

Various parts of diverse
buildings
Furniture & countertops

90.4billion yen

33.0%
Overseas net sales 67.0%
Japan net sales

Operating profit

7.1billion yen*

Exterior walls

Fittings & interiors

About AICA

Net salesInterior walls & floor

Net sales

84.1billion yen
Japan net sales

Overseas net sales

83.4%
16.6%

Operating profit

13.7billion yen*

Saitama Prefectural Children’s Medical Center
Design / Kume Sekkei Co., Ltd.
Construction / SHIMIZU CORPORATION

Chemical Products BusinessFor all settings in daily life
Stick (adhesives)

Decorate (construction resins)

Protect (specialty & performance materials)*Operating profit before deduction of unallocated operating expenses

Main Products*Operating profit before deduction of unallocated operating expenses

Main Products
Adhesives

Industrial andArchitectual adhesives

High pressure laminates (HPL) (AICA Virutect, CELSUS)

Industrial resins

Composite board
resinsResins used as a raw
material in plywood
and laminated lumber,abrasives, casting molds,
adhesives, and otherindustrial products.

Adhesives used in the
manufacture of wooden
furniture products andbuilding materials and on
construction sites.

Resins used to formboards made by binding
together woodenmaterials that have been
turned into chips or fibers.

00.0%

Residential

Construction resins

Wall coating materials

Synthetic resin floor
coating materials usedon areas that require
high durability and heat
resistance, such as
factories and warehouses.

Acrylic-based architectural
coating used on interior andexterior walls in housing,shops, public facilities, etc.

Residential

Non-residential

Repair/reinforcing
materials, Corrosion
preventive materials

Residential

Non-residential(DYNAMICRESIN)

Resin products including
repair materials for concrete
structures, materials toprevent falling tiles.
Residential

00.0%

Residential

Non-residential

Noncombustible decorative panels (ARDICA, LUNALITE, MACE, MOISS)

00.0%

Non-residential

Noncombustible panels for walls. They include wallfinishing materials made by decorating calcium silicate
boards with resin or sheets, extruded cement panels
for exterior walls, and interior wall materials with humidity regulation and deodorant properties.

Residential

Counter tops (Postform, Artificial marble, Engineered stone)

Hot melt adhesives

UV-curable resins

Polymer beads

Adhesives and sealants
used in automotive
headlamps andphotovoltaic panels
due to their superiorwaterproof properties.

Instant-curing resins usedin electronic products
such as smartphones andPCs, building materials,
etc.

Highly refined beadshaped resin products
used as ingredients incosmetic products, light
diffusers, and modifying
agents.
Composition of net sales by product

AICA Report 2021

Decorative boards, which are plywood with a decorative surface created with polyester resin, etc., areused predominantly for furniture and wall surfaces.
Architectural films are used mainly on wall surfaces
and for fittings.

Non-residential

Non-residential

Specialty & Performance materials

11

HPL for wall surfaces that are certified as noncombustible. Since 1996, These products became a major
hit for residential kitchen panels. These are used in
hospitals, schools, transport facilities, due to their robustness, design, and easy-to-install.

Residential

00.0%

Non-residential

Melamine noncombustible decorative panels (CERARL)

Floor coating
materials (jolyace)(JOLYPATE)

With their abundant range of colors and patterns andtheir superior durability, these are used as surface fortables and furniture used in shops, hospitals, offices.
We hold a more-than-70% share of the Japanese market for these products.

Boards, Films, etc. (AICA POLY, Altyno)

00.0%

From counters made with HPL to acrylic-resin artificial
marble and engineered stone made with natural crystals, we have an extensive line-up of the major countermaterials.

Residential

Non-residential

Fittings & Interior housing materials

00.0%

Finished products such as doors, sliding doors, storage, and toilet booths made with materials such as
HPL and decorative boards. Our strengths lie in theabundant range of colors and patterns as well as ouruniversal design. Our strengths lie in the abundant
range of colors and patterns that only a material manufacturer can offer, as well as our universal design.
Residential

Non-residential

Composition of net sales by product
AICA Report 2021

12About AICA

AICA’s Value Creation Model
Source of Value Creation (Business Model)

The source of AICA’s Value Creation Model lies in our development capabilities that use core technologies based on chemistry
and design, domestic and overseas sales network and customer base, capabilities in the solution of social issues developed
through dialogue with stakeholders, range of high-quality products and brand value generated from those capabilities, excellent human assets, and a healthy financial base. We resolve social issues through our business activities by creating synergies
between the Chemical Products Business and Construction Materials Business, and continuing the cycle of improving and expanding these strengths. Guided by a philosophy of kyosei* that places importance on dialogue with stakeholders, AICA creates
new value and contributes to society through continuous innovation.

INPUTOUTPUTOUTCOME

External Environment

IMPACT
Globalization
Diversification

Financial
capitals

Capital

9.8 billion yen

HealthSocialresources
Network ofcustomer bases
spread acrossJapan andoverseas, andbrands power

Human assets

Social issues and needs

External Environment

Honest anddiverse humanresources filledwith a spirit of“Challenge andCreation”

ManufacturingassetsGlobalnetwork of
manufacturing
facilities and IT
systems

Cash and cash
equivalents

Customer base
AICA Distributors’
Organization(Japan)Overseas
customers
About

10,000Wood, water,
air, and energy

AICA Report 2021

Business model

1936

Employees[Consolidated]

4,796

Consolidated
companies

50

PlantsSpecialty & Performancematerials

Chemical
Products

FoundedReassurance

Synergies

Chemistry

DesignConstruction
Materials

Detailed diagram on
opposite page
Construction materials(residential)

ComfortEasierconstruction48
Long-life

6.1 billion yen

14 locationsin 5 countries

Contribution
throughbusiness

Employees

Shareholders

Localcommunities

Achievement of
Sustainable
Society

Return ofresources

Brand building
Synergy creation

Brand value

Expansion ofsales channels
M&A

Derivative
products

Solutions to
issues

Improvement

Practical
feedback

Sales
network
Customerbase

Marketdevelopment

Overseas
expansion

Extensiveproduct
range

Quality
Expansion of
applications Environmental
conservation

Provision of seeds
Synergy development

Core technologies

Chemistry

DesignConstruction materials(commercial facilities, offices)

R&D bases*Results of FY2020

13

Environmental
conservationcompanies

Capital investment

Naturalresources

Construction resins

300

Lifestyle changes

Suppliers
Input
resources

About
companies

Intellectual
resources
Accumulated
chemicaltechnologies,
R&D bases, R&D
expenditure,design capabilities

SafetyEnergy issues
Resources
depletion

Climate change

Demographics

Incorporation
into business

Adhesives

41.1 billion yen

Social issues and needs

Politics
Economic trends

Customers

Capital, Cash andcash equivalents

About AICA

Achievement of Sustainable Society*Please refer to page 1 for the meaning of kyosei

Universal
designConstruction materials (health careand welfare facilities, schools)

Corporate Principle
Corporate Philosophy
Corporate Policy

Sustainability Policy

AICA Report 2021

14About AICA

AICA’s Strengths Supporting Value Creation
AICA’s strengths lie in our extensive product range that leverages the advantages in chemistry and design, as well as a solid
customer base which supports that product range, overseas business bases, brand value, excellent human assets, the trustof society backed by high quality and environmental conservation, and a healthy financial base. We will improve our corporate
sustainability by emphasizing dialogue with stakeholders and continuing to enhance these strengths.

In both the chemical products and construction
materials fields, we provide products that service
multiple domains, including housing, construction,
civil engineering, household goods, electronic materials, and automobiles. In doing so, we createsynergies in cross-selling and technology.

Related resources
and assets
Intellectual
resources
ManufacturingassetsNatural resources

Human assets

Naturalresources

Social resources

ManufacturingassetsIn recent years, we have continued to grow by expanding our business domains and networks, witha focus on growth markets in Asia. Through aggressive M&As, we acquire qualified talent overseas toenhance our competitiveness.

Related resources
and assets
Human assets
Social resources
ManufacturingassetsNatural resources

Overseas sales ratio*1

Related resources and assets

AICA’s most distinctive feature is our ability to respond to social issues and needs by delivering unique products
through synergies between performance created by our core technologies: synthetic chemistry technologies andresin design technologies, and design in the broader sense, including ease of use and communication as well as
beauty of color and pattern.

Overseas expansion

About AICA

Using the power of chemistry and design to resolve social issues

Extensive product range

42.7

Intellectual
resources%

Consolidated companies*1

Reassurance

Please refer to pages 9–12 for the details of our business domains.

ComfortEnvironmental
conservation

SafetyCustomer base

Easierconstruction

Chemistry

With its deep understanding of AICA products, theAICA Distributors’ Organization supports the distribution of our HPL, which boast the top share of theJapanese market. We have also established a solid
customer base with more than 10,000 companies
overseas.

Long-life

DesignRelated resources
and assets
Social resources
Human assets

AICA Distributors’ Organization (Japan)*1

Health(Antiviral)

About

Universal
design300

107

Designers with practical experience or qualification holders in architecture or design

35

*

About

*
*AICA Kogyo Co., Ltd. [Non-consolidated]

High pressure
laminate (HPL)

Texture design
Melamine
formaldehyde
resin
modification
technology

Acrylic resin
developed forautomobileseats

Development of
a completely new
flooring material,“MELAMINE TILE”

No need forwaxingSuperior
durability
Easierconstruction
Heel markresistance

Developmentof “CERARLCELLENT,” thebest fake marble
and wood, toprotect natural
resources

10,000

AICA Report 2021

Brand value
The name “AICA” is synonymous with high-pressure laminates, as is the name “JOLYPATE” withwall coating materials, and no cosmetic product developer is unfamiliar with the name “GANZPEARL.”
These are some of our many strong-performing
brands that boast high market shares in their respective industries.

Related resources
and assets
Intellectual
resources
Human assets
Social resources

No.1

companies

Quality / Environmental
conservation

Related resources
and assets
Human assets
Social resourcesIntellectual
resources

Healthy financial baseWe have established a healthy financial base, with ahigh equity ratio supported by stable operating cash
flow. This leads to a virtuous cycle that enables active growth investment and return of profits.

Related resources
and assets
Financial capitals
ManufacturingassetsNatural resources

DesignexcellenceSuperior
durability
Easierconstruction
Certifiednoncombustible
Antiviral specs

Customer Satisfaction Survey*2

4.6

/5

*1 Results of FY2020 *2 Results of FY201915

countries/regions

HPL market share in Japan*1

Constantly receptive of customer feedback, we
provide high-quality, environmentally-friendly products. We also proactively address environmental
issues such as climate change and contribute to
the creation of a sustainable society.

Examples of development

companies incompanies

Overseas customers*1
Holders of master’s or doctoral
degree in chemistry

50 14

Cash and cash equivalents*1

41.1

billion yen
AICA Report 2021

16About AICA

Risk Management
To ensure the mitigation of losses due to unforeseen circumstances, certain departments have been assigned to address thevarious risks surrounding the management environment. After verification of the various risks, rules and guidelines are established as necessary. Further, a company-wide risk assessment is conducted once a year to identify potential risks, the results ofwhich are reported to the Board of Directors and Audit and Supervisory Committee. The Board of Directors and the Audit andSupervisory Committee deliberate on the various risks as necessary and, in the event that a judgment of a legal nature is required, it undertakes measures such as seeking the opinion of in-house counsel and others. Reporting rules to be followed in the

Description

Response

Fluctuations in major
raw materials prices,3
procurement of major raw
materials and components

The AICA Group conducts business with a balance between costcompetitiveness and stable supply in mind. However, with the soaring
price of crude oil and other commodity chemicals and global supply
chain imbalance and disruption, we may face difficulties in securing stablesupplies at competitive price at times. This will affect our profitability and thesustainability of the business.

We strive to build stable supply
frameworks by purchasing from multiple
suppliers and partnership with our main
suppliers.

Product quality, productliability

The AICA Group manufactures and ships its various products inaccordance with ISO9001, the international quality management systemstandard. However, there is no guarantee that all products will be free fromdefects or that no complaints will be made in the future. Despite our productliability insurance, our business performance could be affected if there areany defects in our products that cannot be fully covered by insurance.

In addition to the enhancement of inhouse testing at the development anddesign stages, third-party organizations
undertake testing and inspection if
necessary to maintain quality and keep
defects to a minimum.

event of a crisis are formulated, and swift and appropriate actions, such as setting up a crisis response headquarters, are taken
to minimize the damage. In addition, appropriate information is communicated outside the Company at the appropriate timing.

4

Company’s Risk Management Framework (as of April 1, 2021)

Board of Directors

Audit andSupervisory
Committee

ReportingResponse to changes
5 in the market andcustomer needs

Supervision/Directions

Risk Management Organizations
Corporate Ethics Committee

Internal Control
Committee(General Affairs Division,
Human Resources Division,
Corporate Planning Division,
Legal Division, Finance
Division, Public Relations
and IR Division, etc.)
Coordination

Climate Change Response Committee

Committees

Internal Audit
OfficeSustainability Development Committee

Management Divisions

Directions Reporting

BCP Committee
Overseas Group Governance Committee
Information Management Committee
Quality, E: Environment,
QEO Committee Q:
O: Occupational Health and Safety

Other committees/projects

Audit and recommendations

Reporting of serious matters*

Reporting of potential risks

Promotion of risk mitigation activities

Reporting

7

Divisions / Group companies in Japan and overseas

We are taking measures against
information leaks by thoroughly enforcing
internal rules based on the Information
Management Regulations, reinforcement of
information security, and the reinforcementof monitoring systems and firewalls.

Environmental wellbeing

Some raw materials used in the manufacturing products in the Chemical
Products Business and Construction Materials Businesses contain
substances that are harmful to human health and ecosystems. The
AICA Group complies with laws and regulations related to environmental
protection and works to prevent environmental pollution such as soil andwater contamination. However, in the unlikely event of environmental
pollution resulted from our activities, apart from significant cost penalty
imposed by the authorities, we may face damages to publics’ trust and
AICA reputation. This will affect our business performance.

We
have
built
environmental
management
systemsbasedon
ISO14001 and are working on reducing
our environmental footprint, as well ascomplying with laws and regulations.

Overseas businessdevelopment

The AICA Group is actively expanding overseas business with theobjectives of developing overseas markets and globalizing its production
and procurement. For this reason, it is a fact that there are unforeseen
and unavoidable risks in the countries we do business in. This includes
unforeseen and drastic changes in the laws and regulations, social andpolitical stability, war and terrorism and natural disasters. If such eventswere to occur, it may impact Group’s business performance.

Aica Group sets up overseas
holding companies to strengthen risk
management of the subsidiaries.

Fluctuations in exchange
rates

Foreign currency income and expenses are increasing with the
expansion of business in overseas. Fluctuations in currency exchange rates
could cause major increases or decreases in the amounts of income andexpenses in foreign currencies when converted into Japanese yen, which
could affect our business performance.
Particularly, if the Japanese yen appreciates while foreign currencies
depreciate in the countries where our group companies are located, theamounts converted into yen could lose value, which would affect ourbusiness performance.

We strive to optimize our portfolio ofcurrencies held to reduce the impact
of fluctuations in single currencies asmuch as possible by executing forwardexchange contracts for the purpose ofrisk reduction and to minimize the impact
of fluctuations in a single currency asmuch as possible.

The AICA Group has formulated a Business Continuity Plan (BCP) andput emergency countermeasures in place with the objective of avoiding
material business disruptions due to large-scale disasters, accidents,
epidemics of infectious diseases, and to resume important businessby the target recovery time with the ability to remain when businessactivities are disrupted. However, our business may be disrupted due toequipment failure, disrupted supply of raw materials, disrupted services andinfrastructure. This will affect our business performance.

We prepare for immediate response to
emergencies through the implementationof crisis management regulations and theformulation BCP. Moreover, we are striving
to minimize the impact through purchasingfrom multiple suppliers, maintaining multiple
production sites, earthquake-resistantconstruction in preparation for largescale earthquakes, and anti-inundation
construction in preparation for floods.

*As rules for the reporting of serious matters, the Company has two regulations—an internal whistleblowing system (to report compliance issues to the Corporate Ethics Committee Window) and theCompany’s own reporting rules (urgent reporting of critical matters to the President).

Business risks

8

The major risks that may have a significant impact on AICA Group’s financial position, management performance, and cashflow
situation are as follows. Matters concerning the future in this text are based on the assessment of the Group as of March 31,
2021. Please note that business risks are not limited to these.

9
Risk

1

2

17

Changes in economic
conditions

Dependence on
construction andrenovation demand inspecific sectors

AICA Report 2021

Description

Response

Demand for the AICA Group’s products may be affected by the economic
conditions of the respective countries where our products are sold. Hence,
economic recession in global markets and decline in demand due to sucheconomic slowdowns may affect our business performance.

We monitor the economic situation andengage third-party services. We strive to
identify emerging risks of each country toenable risk management.

Our products are part of the final products which are commonly used
in a wide range of sectors. Therefore, our business performance is not
significantly affected by any specific market environment. Our productsin the Construction Materials Business represent over half of the groupsales. They are primarily being used in the homes, shops, hospitals andother facilities both for construction and renovation application purposes.
Also, both exterior and interior finishing coating products and floor coatingproducts in the Chemical Products Business are being used as housing
construction materials. Therefore, if the demand for construction andrenovation declines, it may affect the performance of both Construction
Materials Business and Chemical Products Business.

In the Construction Materials Business,while maintaining the competitiveness of ourexisting products, we will develop new andresilient markets. This will enable us to beless affected by the decline of construction
and renovation market.
We are also focusing on investing in moreresources in the Specialty & Performance
Materials Business, which targets at the
non-construction sectors. We will develop
more oversea market for hot melt adhesives,
UV-curable resins, and silicone adhesives.
Overseas automotive and electronic
markets are expected to deliver higher
growth in the coming years. Through this,
we aim to dramatically expand the Specialty& Performance Materials Business.

Large-scale disasters
and accidents*
10

The AICA Group pursues new product development technologies with originality that are competitive, to address thechanging needs of the markets and customers globally, and yet considering the safety, security, health and energy-saving
for the end-users. We have been gaining momentum with industry-academia-government collaboration to accumulate andcreate next-generation elemental technologies, which is part of our business strategies. We are also working on sharing
and using technologies through M&As and collaborations, strengthening our technological development capacities as anorganization through the development of technical sales personnel, and strengthening our capabilities in the developmentof new products that will bring greater values in the future.
The AICA Group holds a large volume of personal data and confidential
information related to our business operation. We have instituted a secured
system for the handling of such information. If the system is compromised
through cyberattacks could be a significant cost burden and affecting stakeholder’s trust in us. This would pose significant risk to our business performance.

6 Information security

About AICA

Risk

*Risks associated with COVID-19
In response to COVID-19, AICA Group has placed the health and safety of our employees, their families, and customers as a top priority. We have undertaken a range of measures
including the following: work-from-home in regions where the virus has been spreading; restrictions on business travel; daily temperature checks and washing/sanitization of hands; thetemporary repatriation of some expatriates; suspension or restriction of factory tours, sales activities, and other events where large numbers of customers would gather; and distributionof masks among group companies. We comply with the BCP and strive to maintain stable procurement of raw materials and frameworks for the stable supply of finished products in ourefforts to minimize the impact of the pandemic.
Meanwhile, since February 2020, just when the COVID-19 outbreak was starting, inquiries about our “Virutect” series of antiviral building materials increased. By incorporating thisantiviral feature into various products and expanding the product line-up, we will capture the demand for antiviral building materials for new lifestyles.
Our view is that AICA Group has been recovering gradually from the impact of the pandemic since January 2021. However, we are also cautious that we must continue to respondflexibly to the outbreak of new variants and the lockdowns and other restrictions that are still in place in various countries. In such cases, it could affect actual business performance becauseof various factors, including the timing of the containment of COVID-19, and economic trends overseas and in Japan. Should there be any information that requires disclosure regarding
forecasts of business performance for the current fiscal year, such shall be announced in a timely manner.

AICA Report 2021

18

About AICA

Risk Management

Risk

Response

11 Legal regulations

The AICA Group is subject to various laws and regulations in its business
operations, including laws, tax systems, and permits and approvals in eachcountry.
We conduct training for employees to adhere with these statutory
regulations and comply with them. However, our business performance
may be affected by increases in the cost of compliance or our businessactivities may be restricted due to changes to such laws and regulations or
the tightening of regulations.

We conduct training within the Group,
collect information from third-party
organizations, and work to identify signsof changes in regulations at an early stage
and respond accordingly.

12 M&A

The AICA Group pro-actively engages in M&A as a strategic approachin expanding our business and improving profitability. We conduct due
diligence (financial status, contracts, and other factors) on potential entities
carefully before deciding on acquisition.
However, if problems that we are unaware of become apparent after theacquisition, or in the event that the anticipated profits or synergies cannot
be obtained as a result of significant changes in the business environmentof the acquired company, impairments to the resulting goodwill could berecorded, which may affect our business performance.

We strive to maximize synergies anddeal with issues with pro-active measuresby sharing information through reports
and analysis of subsidiaries’ businessthrough our overseas holding company.

Risks and opportunities of climate change revealed through interviews
Category

Increase in carbon tax

Replacement with low-carbon
products
Changes in consumption behavior

Decrease in demand for products derived from fossil sources
Decrease in demand for non-recyclable products

Energy conservation and low
carbon regulations/policies
Transition scenarios*1

Change in rainfall patterns

Reduction of naphtha production and soaring prices
Cost increases due to transition to biomass feedstockIncrease in wood procurement costs due to changes in wood
demandGrowing criticism of companies that use raw materials derived
from fossil sources
Decline in investors’ evaluation of companies that are reluctant
to decarbonizeRequests from suppliers and customers to reduce greenhousegas emissions
Damage and operation shutdowns caused by disasters
Supply chain disruptions
Increases in insurance premiumIncrease in freshwater procurement costs due to decline ingroundwater

Increase in average temperatures

Increase in employees’ risks of heat stroke
Increase in energy costs due to increased use of air-conditioning

Rising sea levels

Increase in disaster risks at sites near sea and rivers

Infectious diseases

Increase in frequency of infectious disease outbreaks

Increase in raw materials costs
Criticism of industry

OTIF Management (OnTime Delivery In Full)

14 Climate change(1) In the event of climate change related disasters such as typhoons,floods, and heatwaves at catastrophic level, the continuity of businessactivities will be affected as a result of damages such as temporary shout
down to the functioning of the operating sites. Moreover, if the averagetemperature rises and impact on water resources due to changes in rainfall
levels gradually progresses due to the effects of climate change, it will affectour business environment and business performance.
On the other hand, (2) Depending on the situation in the transition to a
low carbon society, stakeholders’ demands for low-carbon products may
increase, leading to more investment in R&D in this area, increases in capital
investment for the introduction of new technologies, and rising prices ofraw materials. And if regulations for the mitigation of climate change aretightened and we are unable to respond appropriately, our operations
would probably be restricted, which could lead to the imposition of new
tax burdens and increases in costs accompanying the shift to renewableenergies and the capital investment accompanying efficiency improvements
in production capacities.

(1) In response to physical risks due
to climate change, the BCP Committee
analyzes and monitors the situation,
pursues preventive measures, andreports to the Board of Directors. (2) A
Climate Change Response Committee
is responsible for the transition to a lowcarbon society. This committee consistsof members from the relevant divisions,Sustainability Development, Production,
Research and Development, and Sales.
They consider and pursue concrete
response measures, whereas theSustainability Development Committee
reports directly to the Board of Directors,
monitors progress, discloses information,and incorporates these measures inbusiness plans. We are expanding andpursuing responses to these risks frommedium to long-term perspectives.

In May 2020, we declared our endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD). For the expansion of disclosures under these recommendations, we first conducted interviews with our stakeholders to
predict how the environment surrounding our company will change in the future due to the impact of climate change. Targeting thedomestic construction market, which is AICA’s main market, we interviewed concerned parties in a wide range of fields, including
raw material suppliers, construction companies, design firms, developers, and industry bodies, from November 2020 to March
2021. Based on these interviews, we acknowledged the risks and opportunities due to the impact of climate change and the matters AICA should address to respond to climate change, as shown in the table at the top of the opposite page.
Going forward, we will check these risks and opportunities against scenarios and analyze them from the financial aspect, monitor
climate change as part of company-wide risk management, and take appropriate measures.
Please refer to pages 49-53 for details of specific initiatives

AICA Report 2021

Frequent occurrence of typhoons
and torrential rainIncrease in demand for products that help reduce greenhousegas emissions
 evitalization of the construction market due to increase inR
ZEH*3 and ZEB*4 subsidies
Increase in demand for products that use raw materials derived
from non-fossil sources
Increase in demand for recyclable products
Increase in demand for products derived from non-fossil sources
Increase in demand for low-carbon products
Increase in demand for products derived from non-fossil sources
Increase in demand for recyclable products
Increase in demand for the practical use of wood arning trust by promoting appropriate environmental
E
indicators and social issue-resolving productsImprovement of corporate evaluation by strengthening
initiatives
 xpansion of business opportunities with disasterE
countermeasure products
Increase in demand for products that help to reinforce buildings
Increase in demand for products offering greater ease of construction
due to decline in labor productivity at construction sites
Increase in demand for insulation-related productsIncrease in demand for antiviral products due to infectious
disease epidemics
Change in construction demand due to work-style transformations*1 Transition scenarios: Scenarios that accompany transition to a low-carbon society, including stricter regulations related to climate and responses to transition to decarbonization technologies *2 Physicalscenarios: Scenarios that accompany increases in physical damage caused by growing frequency of natural disasters due to climate change and normalization of abnormal weather *3 ZEH: Net zero energy
house *4 ZEB: Net zero energy building

Actions AICA should take

Passive response
We will take measures to minimize the impacts of climatechange and to prepare for risks to business continuation.

Active response
We will strive to develop and expand sales of products that
respond to climate change and contribute to society with theaim of the sustainable development of AICA and society.

– Examples of measures to prepare for risks –Strengthening BCP against natural disasters
Strengthening BCP for raw materials procurement
Deliberation and implementation of drastic measures to reduce greenhousegas emissions
Optimization of the use and mix of energy Reduction and recycling of wastes
Efficient use of resources
Appropriate information disclosure and engagement– Examples of products for adaption to climate change –Low-carbon products Products derived from biomass materials
Recyclable products Products that help utilize wood resources
Products that help reinforce buildings
Products that offer greater ease of construction
Insulation-related products Antiviral products

Greenhouse gas emissions reduction targets

Additional information on climate change

19

Physical scenarios*2

13

We strive to achieve on timedelivery through effective supply chain
management involving sales, production,purchasing and logistics functions.

Opportunities

 tricter regulations on the use of raw materials derived fromS
fossil sources
Increase in energy costs
Increase in costs of purchasing emissions allowancesDecline in clients’ motivation to build due to tax increases,
causing contraction of the construction market
Increase in waste disposal costs due to stricter regulations onplastic waste
Delays by AICA in responding to low-carbon technologies
Increase in capital investment and R&D investment

Changes in reputation among
stakeholders
The AICA Group acts to satisfy orders received from our customers
based on the sales agreements.
However, our business performance could be affected by large costburdens or loss of trust as a result of delivery delays caused by the receipt
of orders in excess of supply capacities due to changes in the production
capacities of our competitors.

Risks
Cost increases due to introduction of carbon tax

About AICA

Description

In the New Medium-Term Business Plan “Change & Grow 2400” launched in April 2021, AICA set the following targets forthe reduction of greenhouse gas emissions. For Scope 1 and Scope 2, in addition to numerical reduction targets, we set a goalof conducting a concrete scenario analysis aimed at net zero greenhouse gas (GHG) emissions, in response to the Japanese
government’s declaration on net zero GHG emissions by 2050. We recognize that our current numerical target (reducing GHG
emissions revenue intensity by 26% from FY2013 levels) for FY2030, the halfway point to achieving net zero by 2050, is insufficient and plan to engage in repeated discussions about raising our target in line with this scenario analysis.

Scope 1 and Scope 2(From AICA’s own activities)

Scope 3
(From other companies’ activities related to
AICA’s business activities)

Reduce GHG emissions revenue intensity by 10% by FY2023 (compared to FY2020)
Conduct simulations aimed at net-zero GHG emissions by 2050, and develop measuresEstablish calculation methods for Scope 3 emissions and develop emissions

reduction measures

AICA Report 2021

20

AICA’s Vision

AICA’s 10 years Vision and Medium-TermBusiness Plan

New Medium-Term Business Plan is the 2nd phase of
AICA’s 10 years Vision

Background to establishment of AICA’s 10 years Vision
NEXT JUMP
1500

174.6
billion yen

151.6
billion yen

1st Medium-TermBusiness Plan

FY2026

Net sales

151.6 (billion yen)

Ordinary profit

18.3 (billion yen)

300 billion yen
30 billion yen
10% or more
45% or more

Mar. 2017170

Construction
Materials Businessbillion yen

Aica Group will aim to be Asia’s No.1 resin manufacturer in theconstruction sector to support people’s lives and social infrastructure. We will also grow our business in non-construction sectors,
including automotive/household goods/electronic materials.

Sales:

130

Chemical Products
Business

Sales:

170 billion yen

3rd Medium-TermBusiness Plan
Mar. 2024

Mar. 2027

Financial targets and achievementsbillion yen

The Construction Materials Business will continue to growas a “solution provider for space design” that can offer comfort & safety in residential & non-residential living
spaces.

TargetAchievement

Net sales

200 billion yen

174.6 billion yen

Ordinary profit

22 billion yen

18.4 billion yen

ROE

10% or more

8.1%

Overseas sales ratio

35% or more

42.7%

Proactive leveraging of M&As, establishment of newplants, and opening up of new markets enabled us toachieve dramatic growth until FY2018. However, in the
final year of the plan, we only achieved our overseas
sales ratio target, and other targets were not met due
to the impact of COVID-19.

Business collaboration

We will continue to enhance the collaboration between Chemical Products Business andConstruction Materials Business to develop unique products that contribute to the society.

Recognition of Issues in 2nd Medium-TermBusiness Plan

Utilizing capital tie-up
and M&A

We will actively and efficiently utilize our own funds for our future growth, including
capital tie-up or M&A.

For the establishment of 2nd Medium-Term Business Plan, we organized the issues we are facing. In the midst of significant changes in society, we believe that we are able to realize sustainable growth by addressing those changes ourselves.

Internal resources and assets
Group Collaboration& Operation Base
Enhancement

In order to establish a system which can respond to changes in market environment, we arestrengthening group collaboration and business foundations.

Optimize production & logistic systems
Compliance

Human resources
development

Technology and material cooperation
QEO management

Responsibility to
stakeholders
Increase corporate value

AICA Report 2021

R&D investment

Healthy financial base

IT infrastructure investment

We promote diversity management. In order to develop globally competent human resources and professional human resources, we will establish a variety of development systems.

Globally competent human resources

21

130 billion yen

2nd Medium-TermBusiness Plan
Mar. 2021

Item

Sales:

Sales:

Results of 1st Medium-Term Business Plan

The future vision at FY2026

Chemical
Products Business

Construction
Materials Business

Diversity

Professional human resources

We will put an emphasis towards engagement with stakeholders, and promote management
which contributes to local communities and enhances CS and ES.
Corporate governanceenhancement

Harmony with local communities

AICA’s Vision

FY201630.8%

anniversary

FY2020FY2016

Financial targets in 10 years

Overseas sales ratio

300 billion yen
90th

240 billion yen

AICA’s 10 years Vision

9.9%

FY2026FY2023In April 2017, AICA established AICA’s 10 years Vision with the goal of FY2026, the 90th anniversary of the company. With
the aim of transforming into a solid, robust management structure that will not be easily influenced by trends in the Japaneseconstruction market, in the Chemical Products Business, we will aim to become Asia’s top manufacturer of resins for the construction sector, which supports people’s lives and social infrastructure. We will also grow non-construction sectors such as automotive, household goods, and electronic materials. In the Construction Materials Business, we are aiming for further businessgrowth as a “space design manufacturer” that can provide comfort and safety to residential and non-residential living spaces.

ROE

AICA’s 10
years Vision

Improvement of CS & ESIntellectual
resources• Next-generation

large-scale coreproducts• Quality / Safety• Accumulation ofknowledge• Insufficient brandvalue of products
other than domestic
HPL• Implementing DX*1

ManufacturingassetsHuman assets• Aging plants• Action on• Delay in automation developmenttraining and• Insufficient action
on reduction ofgreenhouse gas
emissions• Optimization of
production systems

career-path designfor managementhuman resources• Building of
succession plan

External resources and assets
Financial capitals• High dependence

on profit from
CERARL and HPL• Business investment
impairment risk
• Foreign exchangeriskSocial resources• Contraction of domestic wooden

furniture market (HPL, decorative
polyester plywood boards)• Decline in number of new housing
starts in Japan (800,000 dwellings)• Shortage of skilled workers, expansionof easier construction needs• Progress of automation at work sites
where AICA’s products are used
• Expansion of ZEH and ZEB, changes
in the taxation system• Lifestyles that changed with the
spread of coronavirus• Soaring logistics costs

Naturalresources• Transition to lowcarbon society• Penetration of ZEH
and ZEB• Transition tobiomass products
and products with
low CO2 emissions• Natural disasterrisks• Raw materials costs
soaring risks

In particular, the following two points are changing rapidly, driven by the national government,
capital markets, and the international community.
Responding to climate change

DX*1 Implementation

Given that individual governments, including Japan, have declaredtargets of net zero greenhouse gas emissions by 2050, we recognize that the demand for lower carbon levels in AICA’s products
and business activities will increase.

AICA’s work styles and those of our stakeholders are being changed significantly by digital technologies, and we believe that action on DX*1 taken
by AICA’s businesses and products will become increasingly important.
*1 Digital Transformation

AICA Report 2021

22

AICA’s Vision

Medium-Term Business Plan
Measures by business segment

Medium-Term Business Plan “Change & Grow 2400” (FY2021 to FY2023)
As the second step toward realizing AICA’s 10 years Vision, AICA established financial targets and basic policies to be achievedin the next three years in its new Medium-Term Business Plan, “Change & Grow 2400.” The basic policies in the Medium-TermBusiness Plan are [1] creation and expansion of growth businesses, [2] profit base enhancement, and [3] reinforcement ofbusiness infrastructure. By pursuing such measures with certainty, we will establish a corporate structure that is strong againstchanges and strive for sustainable growth.

1 Provide economic value

Please refer to pages 29–30 for the details•Profit generation •Expansion of growth business •Secure wages, dividends esolve social issues with
2 R

•Reduction of GHG through products •Development and sales expansion of products that
require easier construction effort and less labor •Extension of life of buildings and infrastructure uman resources and3 H•Management personnel development •Career-path design •Formulation of succession
plan •Improvement of employee satisfaction •Promotion of use of diverse human

products

organizational development

resources (foreign nationals, women, senior citizens, people with disabilities)

6 Strengthen governance•Strengthening of Group company management •Reconstruction of risk management
systems •IT revamp, strengthening of security

 uality assurance and
7 Q•Securing of product safety and quality •Elimination of industrial accidents•Strengthening of frontline personnel

readiness equipment)

Business
Infrastructure

Process for selection of materialities
1

STEP

2

STEP

3

3

STEP

5

Strengthening of governance
Responding to climate change
HR development and Strengthening of organization
DX Implementation
Quality assurance and Occupational safety

7

23

AICA Report 2021•

• E xpansion of highly

environmentallyfriendly products
Expansion ofadhesives for retailmarket•functional productsthat meet local marketP enetration of AICA
brand

Link with materialities (P29-30)

Financial Targets

Prioritization ofmaterialities

The top-ranking issues from both stakeholders’ perspectives and company management perspectives
are provisionally decided as key issues.

Leveraging our strengths to capture market growth

FY2020• ROE

Manage capital efficiently and generate profit

GrowthHigh

Profitability

MediumTotal value provided to society

FY2023

8.1%

Around10%• Net sales of Overseas and81.2 billion yen

115 billion yen• AS product sales

15.5 billion yen*2

21 billion yen
24 billion yen
240 billion yen

Specialty & Performance Materials*1

Issue solutions*2• Ordinary profit• Net sales

18.4 billion yen*2

174.6 billion yen*2*1. Simple total of net sales before elimination of intercompany transactions *2 Aica Solution
Low

MediumHigh

Importance to AICA Group(Significance of organization’s impact on economy,
environment, and society)

Investment Plan

Deliberate on report contents, measure indicators

Three-year cumulative investment

Capital investment

Review report outcomes and consider responses• Expansion of PF resins• Expansion ofStrengthening of sales foundations, Establishment of brands

Efficiency

STEP

AALH*3 Group

Automation, Cost reduction, Enhance production efficiency, Optimization of production foundations

The potential materialities are assessed from the dual angles of the perspectives of stakeholders (customers, shareholders, suppliers, employees, local communities) and our corporate philosophy and corporate
policy. They are then plotted onto a matrix and the issues are organized.

Report6

AAPH*2 Group

Optimization of sales & logistics networks

Organization ofissuesSTEP

Growth of overseas markets*1 EVERMORE CHEMICAL INDUSTRY CO., LTD. *2 AICA Asia Pacific Holding Pte. Ltd. *3 AICA Asia Laminates Holding Co., Ltd.

Importance to stakeholders(Impact on stakeholder
evaluations and decisionmaking)4

Construction
Materials (Overseas)

Expansion of cross synergy, Strengthening of R&D functions • Chemical products x Construction materials • AAPH*2×EMC*1×AICA • AALH*3×AICA

Potential materialities were extracted from various guidelines related to sustainability, including the GRI
Standards, the SDGs, and ISO 26000.

Finalization ofmaterialities• Automobiles• Cosmetics / householdgoods• Electronic materials• Clothing / footwear

Expansion of applications and business domains

Expand share of products that solve social issues in Japanese market

STEP

Chemical Products(Overseas)

Expansion of nonconstruction sectorbusinesses

EMC*1 Group

Extraction ofissues

The suitability of the selected material
issues is discussed and approved in the
Board of Directors, and the issues thatare ultimately at the top of the list (itemsin the colored section of the figure atright) are finalized as the materialities.

Specialty &Performance Materials(Japan&Overseas)

AICA’s Vision

5 Responding to climate change•Reduction of GHG emissions •Reduction of industrial waste•Adaptation to extreme weather events (development of BCP, investment in disaster-

STEP• Antiviral• Easier construction products, labor-saving, light weight• Safety and security• Universal design• Action on SDGs

Profit Base•Construction of information infrastructure •Automation, labor-saving•Work style reform •Data accumulation and use

Construction
Materials (Japan)

Expansion of AS product sales

2

4 DX Implementation

occupational safety

1Growth Business

Materialities (material issues) overview<Basic Policy>

Chemical Products(Japan)Business investment
R&D expenditure
Human resources investment

23 billion yen
17 billion yen
12 billion yen─Enhancement of production capacity, optimization of production systems, automation, DX
Implementation, responding to climate change, and Action on BCP
Entry into new markets and new business domains, expansion of technological foundations
Development next-generation core products and strengthening of development capacity
Development of diverse human resources, individuals’ skill improvement and skills management

AICA Report 2021

24

AICA’s Vision

Basic Policy for the Medium-Term Business Plan

① Creation and Expansion of Growth Businesses
Expanding AS products

Expansion of non-construction sector businesses and Growth of overseas markets

We will focus our efforts on the expansion of sales of AS (Aica Solution) products in Japan, to respond to constantly changing
social issues, including labor shortages, aging infrastructure, soaring logistics costs, and antivirus measures. We plan to increase
our sales to 21 billion yen in three years by identifying social issues through active engagement with our stakeholders, developing
high added-value products that leverage our strengths in chemistry and design, and expanding our sales in the domestic
construction market.

We consider the non-construction business and overseas business as two important growth businesses, and will expand net
sales in these two business by 1.4 times in three years. We were able to build a foothold for the growth of these businesses
during the previous Medium-Term Business Plan period. In the three years of the new Medium-Term Business Plan, we will
strengthen our initiatives in areas such as synergy creation, equipment reinforcement, expansion of sales channels, and branddevelopment, with the aim of expanding our markets and business domains.

Background

Background• Inactive domestic construction market, which
AICA depends on• Shortage of skilled workers, increase in need foreasier construction products• Progress in automation at sites of consumption• Transition to low-carbon society• Changes in lifestyle in post-COVID-19 era

AS Product Sales

15.5 billion yen

21billion yen(FY2023)(FY2020)• Product development capability combining
Products for repair/
reinforcement domains

Builder
WorkerDistributor
Agent
Tradingcompany

81.2

Construction Material
Overseas
30.5

44.4

(FY2020)

19.4/ expand sales channels

Lightweight
products

Easier construction
products• Brand development overseas• Develop core large products of the next

*1 AICA Asia Pacific Holding Pte. Ltd. *2 EVERMORE CHEMICAL INDUSTRY CO., LTD.

generation• Capture growth markets in non-construction*3 AICA Asia Laminates Holding Co., Ltd. *4 Accumulated net sales prior to consolidation elimination

sectorArchitectural adhesives that keep evolving in
response to needs of building sites

Interior building materials that assist with infectious
disease control

We use our extensive network built up over many years ofsales activities to identify needs and deliver products that reflect those needs.

With people spending more time at home today, AICA’s building materials are proving useful to keep infectious diseases
at bay in the home. ​Easy-removal adhesives for floors*

Smart Sanitary Entrance Type

When replacing floors, if the subfloor material was damaged
when peeling off the old floor material, the subfloor material needed to be repaired or replaced, delaying the completion of workand adding extra costs. AICA’s solution to these problems was
to develop a floor adhesive that allowed for easy removal of thefloor material when dismantling the old floor. This greater ease ofremoval is also contributing to the reduction of waste materials on
construction sites.

One impact of the COVID-19 pandemic has been the growing
consciousness of antiviral and antibacterial measures when “building homes.” Smart Sanitary Entrance Type responds to these kindsof needs with the installation of a washstand designed specificallyfor the entrance hall, so people can wash their hands as soon as
they come home. The antiviral housing material, “Virutect,” is used
for the surface materials, reducing the viral count of the product’s
specified viruses*.

*Products sold exclusively to specific customers*Fiore stone counter tops, cabinet, bowl, faucet, base plate, and hardware do not haveantiviral or antibacterial specs.

AICA Report 2021

(FY2023)
billion yen*4• Create synergies / increase and strengthen plant

Newly introduced AS products

25billion yen*4

17.4

Action to be Taken
Engineering
DesignChemical
Products
Overseas
57.0

AICA’s Vision

Highly functional
products

Chemical
Products
27.5

115• Resin synthesis technology / design strengths
and strengths of AAP*1, EMC*2,• Sales channels
and AALH*3• Technologies and expertise cultivated in Japan• No. 1 brand with top share of Japanese market

Owner

Generalcontractor

1.4

times over 3
years

AICA’s Strengths

AICA’s strengths and business model
chemistry and design• Broad range of sales domains in domestic
construction market

Sales
revenue ofgrowth businesses
Increase• Market growth in Asian region• Dependence on domestic construction market• Change in needs regarding high-quality products• Shift to biomass products and low-carbon
emission products• Changes in lifestyle in post-COVID-19 era

Expanding business by
growing fields with highmarket growth potential

Distribution of products for non-construction sectors
Market growthpotential

The EMC*2 Group joined the AICA Groupin the previous Medium-Term Business Plan
period, which has made great progress in
the Specialty & Performance Materials business. The EMC*2 Group has subsequently
advanced into Vietnam in July 2020 and into
the overprint varnish business in July 2021.
Reinvigorating products with high market
growth potential such as UV-curable resins
and hot melt adhesives in collaboration withJapan, the EMC Group will aim for the expansion of non-construction sectors.

Aiming for No. 1 in Asia
Our platform for overseas sales
expansion is now in place. Goingforward, we will engage in business expansion by leveraging our
newly acquired strengths, such as
sales channels, production sites,
human resources, technologies,
and brand power. We will strive
to become the No.1 HPL manufacturer in Asia, well ahead of
our competitors, with AALH*3theoverseas holding company for theConstruction Materials Business,playing a central role.

Tripling of production
capacity and acquisition of
new markets through M&As

Advance into new
businesses through M&As
UV

In addition to products
for headlamps, focus
on sanitary materials
and packaging
applications

Hot melt
adhesives

Focus on consistently popular
products for rubber gloves
and products for construction
materials/industrial sector

Polyurethane
Acrylic products
compounds

Polymerbeads

Deep dive into household
goods market, e.g. PUS forsoles of world-leading sports
shoes

In addition to products forelectronic materials, expanded
range and higher sales of products
for automobiles,
following thechanges indemand due to
CASE, etc.

Also considering developmentof new markets in addition to
products for cosmetics with highmarket share

Competitiveness onstruction Materials
C
Business: Overseas sites

Newly consolidated/established in
FY2017-2020
Existing overseas sites for Construction
Materials Business

Investing 10 billion
yen in East Asia
We will continue to implement various measures forbusiness expansion, centeredon AAPH*1 as the driving force.
To capture brisk demand, we
have plans for three large-scale
capital investment projects valued at a total of more than 10
billion yen, with the aim of further elevating our presence inAsia.

AAPH*1 Group
Production Sites

AICA Fujian Co., Ltd.
Newly established

AICA Nanjing Co., Ltd.
Expanded

AICA Guangdong Co., Ltd.
Expanded

Aica Adtek Sdn. Bhd.
Newly consolidated

Scheduled for new consolidation/expansion
in FY2021 and beyond
AAPH Group existing sites

AICA Report 2021

26

AICA’s Vision

Basic Policy for the Medium-Term Business Plan

② Profit Base Enhancement

Generation of profit through proactive capital investment and business investment

Breakdown of profit growth

In the previous Medium-Term Business Plan period from FY2017 to FY2020, we established business platforms for “Overseas busi-

Our target is an increase in operating profit to 23.5 billion yen in three years by improving efficiency of fixed costs and selling, general

ness,” “Specialty & Performance Materials business,” and “AS (Aica Solution) products,” which have been positioned as AICA Group’s

and administrative expenses through various measures, including various cost reductions, digitization of operations, optimization of

growth segments for the future. We believe that the three years of the new Medium-Term Business Plan, from FY2021 to FY2023, will

logistics networks, and improvement of production efficiency. We will strive to maintain ROE of around 10% with a solid profit base.

be a key period for the Group, in which we will engage in the integration and evolution of our platform for these segments and in thecreation of synergies, to put the business on a solid path toward growth.

The breakdown of profit generation over the three years under the new Medium-Term Business Plan is as follows: AICA Kogyo
Co., Ltd. [Non-consolidated-base], in particular, will need to minimize increase in fixed costs and selling, general and administrative

To do this, we need to identify customers’ needs accurately and make capital investment in manufacturing facilities for new prod-

expenses, as well as to generate increased sales profits from the expansion of sales of new products and AS products that help to

ucts and active growth investments for the expansion of manufacturing capacity.
We are entering a complicated and uncertain era of drastic change brought by globalization, the development of AI and IoT tech-resolve social issues. We will strive to evolve our business structure to further generate profits by putting our efforts into the automationof production facilities, the optimization of logistics networks, and the digitization of operations.

nologies, the unprecedented super-aging of society, and the pandemic. There is a sense of crisis that any company left behind in thewake of such changes will be eliminated. In such a business climate, if the AICA Group is to continue to be needed by all stakeholders,
it must invest appropriately in responses to digitization, automation, climate change, and other issues.
Under the previous Medium-Term Business Plan, the total amount of expenditure that was actually spent, including business investment and capital investment, totaled 48.3 billion yen for the four years. Under the new Medium-Term Business Plan, we plan toChange in operating profit (Unit: million yen)

FY2018FY2019FY2020

New Medium-Term Business Plan

191,363

191,501

174,628240,000*1

Operating profit

19,092

20,83420,85017,991

23,500*1

Ordinary profit

19,60021,24921,333

18,43824,000*1

Depreciation

3,569

4,173

4,632

5,683

20,000*2

Capital investment(4,522)(7,896)(8,487)(6,113)23,000Business investment(5,855)(102)(13,522)(1,805)17,000*2

Free cash flow

8,485

5,127

1,442

9,957

11,500*2

Optimize logistics networks
Digitization of operations●

Reduction of raw materials costs
Improve production efficiency● Reduce costs of wastage

●

●

●
●

Change inprofit margin

17,991
Profit fromincreased sales-350

Change in
fixed costs

-600

5,160

Change in selling,
general andadministrative
expenses-2,800*2●

Opening of growth markets
Overseas roll-out of Japan technology

Opening of focus markets
Improve production efficiency

Chemical
Products
Groupcompanies

Construction
Materials
Groupcompanies

670

210

Implement M&As but withdepreciation of goodwill, notexpected to contribute to profit

AICA’s Vision

FY2017

10% level●(million yen)

163,726●●

invest a total of 40 billion yen over three years.

Net sales

Maintain ROE at

Expand sales of products that solve social issues● Develop new products and open of new channels● Invest in growth●

New consolidated

0

Chemical
Products
Groupcompanies

1,320

23,500Construction
Materials
Groupcompanies

1,900

AICA Kogyo

Group companies in Japan

Overseas Group companies+1,410+880+3,220*1 Target for final fiscal year of the plan *2 Cumulative three-year total

FY2020
Achievement

FY2023Plan

Maintaining ROE through capital efficiency-conscious investment and optimization of capital structure
Securing operating cash flow which is themain source of growth investment, we will

Bottom-up approach to promote improvement proposal activities

Trends in ROE

save retained earnings after returning a portion to shareholders and reinvest our capital

12.0

in growth segments while employing financial

10.0

leveraging. By connecting reinvested capitalto profits with capital efficiency that exceeds

8.0

10.7
10.1

9.9

9.9

ROE target of around 10%.

To build a resilient profit base, we need to reinvigorate the C&C circle activities and improvement proposal activities that AICA
had been conducting in the past. The following case is one example of automation achieved through on-site circle activities. We willfurther strengthen our competitiveness with a combination of these kinds of bottom-up initiatives and a top-down approach to majordecision-making.

Example of improvement of operational
efficiency through equipment automation

8.1

the cost of equity, we will strive to achievesustainable profit growth and to maintain our

The growth of overseas
business may constrain
profits due to the amortization of goodwill, etc., buteven with this, we will aim
to maintain ROE of around
10%.

(%)

6.0
2016

2019

2023

Until last year

To realize the return of profits to our shareholders and the sustainable growth of thecompany, we issue dividends that consider
the consolidated performance of each period,

Trends in payout ratio

Annual Dividend (left axis)

(yen)

120

new Medium-Term Business Plan, “Change

90& Grow 2400,” we plan to issue shareholder

60

solidated payout ratio of 50%.

Dividend increase projected this fiscal year also(%)

Payout ratio (right axis)

150

payout ratio, and internal reserves. Under our

returns in a stable manner, with a target con-

Increase in dividend for 12 consecutive years
No dividend reduction for 23 consecutive years
100
108

51.2
43.3

85
38.5
37.1

30
28

30

32

34

30.1

30.8
30.2
36

38

27.6
43

50.2

92
50.1

103

50.5

106

54.4

107
64.9

60
54.2

46

0
2008

AICA Report 2021

40
20

0

27

80

2011

2014

2017

2020 2021(projected)

Automatic pouring device that was
key to automation

To meet the need for increased production of polymer
Particulates
beads resulting from the product’s adoption by a major cosmetics manufacturer, the Tanba Plant engaged in an automation project that would allow them to do so without the
Rotary valve casenumber of workers needed. After analyzing the bottlenecks
at each process (reaction → dehydration → drying → sifting
Rotary valve rotor→ sorting → filling), the project circle deliberated on counterSieve
measures and automated the sifting process. This automation freed up two workers who could be redirected to thefilling process, leading to a major improvement in production
capacity.
Production
Required
Production
hours
efficiency
workers
Reduced by
Reduced by
38 %

2,083

hours/year

improvement2

 icro-dimpling of wireMmesh for greater efficiency

Particulatecontainer, e.g.
hopper, silo

Drive motor

Wire mesh

Adapted the “lotus effect,”
named after the way lotus leaves
repel water. Friction coefficient iscurbed, improving the microbeads’ filtration fluidity.
Because we work in three shifts,
we have few opportunities to
conduct the circle activity with all
12 members present, but we areworking on it every day with “Effort
and will are up to us” as our teamslogan.

Sho Kitajima, Circle Leader

AICA Report 2021

28

AICA’s Vision

Basic Policy for the Medium-Term Business Plan

③Reinforcement of Business Infrastructure
Integrating financial and non-financial factors to reinforce the foundation
for sustainable growth
Amid the growing spotlight on social sustainability and in light of the business environment in which greater emphasis is being
placed on corporate social responsibility, AICA has re-identified our materialities (material issues), incorporating them into theMedium-Term Business Plan, to integrate financial and non-financial factors and address business activities and sustainability asone. We aim to be a sustainable corporate entity that has high tolerance of change, with a business infrastructure that has been
reinforced by enhancing the driving force of our sustainability initiatives and steadily implementing these measures.

FY2021-FY2023 Materialities (material issues)

Target year

FY2023•

Expansion of growth business•

Secure wages, dividends

Target year

Target figures

FY2023•ROE: Around 10% (FY2020 actual result: 8.1%)•Ordinary profit: 24 billion yen (FY2020 actual result: 18.4 billion yen)
•Net sales: 240 billion yen (FY2020 actual result: 174.6 billion yen)
•Payout ratio: Maintain at 50% (FY2020 actual result: 64.9%)

Target scope

Related SDGs

AICA GroupFY2023•Reduction of GHG through products •Development and sales expansion of products that require easier construction effort andless labor •Extension of life of buildings and infrastructure
Target figures•Sales of AS products: more than 21 billion yen (FY2020 actual
result: 15.5billion yen)

•Define SDGs-contributing products and Set the sales targets

Target scope

Related SDGs

AICA Kogyo
Non-consolidated

Focus Point
Target year

AICA Group

3 Human resources and organizational development

FY202329•Management personnel development •Career-path design •Formulation of succession plan •Improvement of employee
satisfaction •Promotion of use of diverse human resources (foreign nationals, women, senior citizens, people with disabilities)

•
•
•
•

AICA Report 2021

Target figures

investment in disaster-readiness equipment)

Target figures•GHG emissions revenue intensity: 10% reduction vs. FY2020 (FY2020 actual result: 82.2tCO₂ 100 million yen revenue)•Perform scenario analysis aimed at net zero GHG emissions (Scope 1 and Scope 2 onabsolute volume basis) by 2050. And establish calculation methods for Scope 3 andpropose measures how to reduce Scope 3
Industrial waste emission per revenue intensity: 10% reduction vs. FY2020 (FY2020 actual•

result: 15.6 tonne/100 million yen revenue)

Target scope

Related SDGs

Related SDGs

AICA Group
AICA Group

AICA Group
AICA Group•Strengthening of BCP (extreme weather events, natural disasters)•BCP training at all consolidated production bases

AICA Group•Strengthening of Group company management •Reconstruction of risk management systems •IT revamp, strengthening of security
Target figures•Strengthening of BCP (extreme weather events, natural disasters)•BCP training at all consolidated production bases•Enhancement of group governance rules•Digitization investment that will contribute to strengthening of security: 300 million yen

Target scope

Related SDGs

AICA Group
AICA Kogyo
Non-consolidated

7 Quality assurance and occupational safety
To ensure “product safety and quality” and “employee safety,” which are the missions of a manufacturing company, we strengthen on-site
educations and checking systems, and foster a corporate culture that does not neglect the basic requirement of complying with market
demand, laws and regulations, and procedures.
Focus Point

Target year

AICA Group

Target scope•Water use per revenue intensity in high-risk areas: 6% reduction vs. FY2020(for 3 years in total)

A company’s most valuable resource is its people. We establish the solid foundations of personnel management that will increase sustainability of the company. Also, we develop leaders, support career path, build up workplaces where diverse personnel can thrive, and aim forthe company to grow together employees.

Ascertain and improve education and training spending at all
Group companies
Ascertain and improve training time per employee at all Group
companies
Creation and operation of skills lists by division and by
employment grade
Conduct and make use of employee satisfaction surveys at all
Group companies•Reduction of GHG emissions •Reduction of industrial waste •Adaptation to extreme weather events (development of BCP,

For the further strengthening of group governance, we enhance rules concerning the management and supervision of affiliated companies
and transfer of power to raise their effectiveness. We strive to deepen the risk management through the accurate ascertainment, evaluation,
addressing of risk, and devote efforts to information security measures.

FY2023

Target year

•Related SDGs

6 Strengthen governance

FY2023Focus Point

AICA Kogyo
Non-consolidated

Focus Point
Target year

We have declared “create new value and contribute to society” in our corporate philosophy. We identified social issues through engagementwith our various stakeholders and contribute to the realization of a sustainable society through providing values that will resolve issues
through business activities.

Target year

Target scope

We accurately ascertain the risks and opportunities of climate change and develop proposals for long-term strategies with carbon neutral by
2050. As well as contemplating measures for the drastic reduction of greenhouse gas (GHG), we strive to deepen BCP measures to address
the frequency of extreme weather events.

2 Resolve social issues with products

Focus Point

Target figures

Capital investment and digitization investment that will contribute to automation andlabor-saving: 800 million yen (for 3 years in total)

AICA’s Vision••Construction of information infrastructure •Automation, labor-saving •Work style reform •Data accumulation and use

Focus Point

5 Responding to climate change

We work to expand sales revenue and generate profit through providing high value-added products and productivity improvements. Also,
we distribute the profits thus generated to shareholders and employees properly, and aim for the sustainable development by investing in
growth businesses.
Profit generation

We leverage digital technologies to further improve productivity and strive for the transformation of our business activities. Also, we engage
in the automation of production sites, the improvement of operational efficiency through data accumulation to raise our corporate competitiveness, assuming that the working population will be declined in the near future.

Results for the FY2020 target will be disclosed on our website

1 Provide economic value

Focus Point

4 DX Implementation

Every fiscal
year
FY2023•Securing of product safety and quality •Elimination of industrial accidents •Strengthening of frontline personnel
Target figures•Quality improvements based on customer satisfaction surveys•Lost-time accidents: Fewer than previous year (FY2020 actual result: 19)•Establishment and operation of departmental training programs

Target scope

Related SDGs

AICA Group
AICA Kogyo
Non-consolidated

AICA Report 2021

30

AICA’s Vision

Business Overview

Chemical Products Business

FY2020 Results
The impact of COVID-19 on the economy was significant, with falls in both domestic and overseas net sales. Overseas business
was also affected by decreased selling prices caused by the decline in raw material prices. While the lower raw material prices lifted

Carry out decisivereforms to move onto
the next stage

Continue to evolveby responding tochanging needs

With the aim of growing the Chemical

At a time when society, as well

Products Business into a more profitablebusiness, we will pursue structural

as goods and services, areundergoing major changes, wereforms and focus on the expansion

will respond flexibly to changing

of overseas businesses and theneeds and work on developing

development of new segments,

products and opening up

in our efforts to achievemarkets for the future.

profits, they were pushed down significantly by the decline in sales. Under such circumstances, in the second half of fiscal 2020, operating income increased with the recovery from the impact of COVID-19 and the reduction of logistics costs and other various costs.

Trends in Business Performance
Net sales (billion yen)
109

Operating profit*1 (billion yen)
103.9
90.4

82.9

74.8

7.4
6.2

Sales performance by productcategory
Other

8.1

6.5

Adhesives

11.8%

7.1

Specialty &Performance
Materials

18.6%

60.1%

FY202090.4 billion yen

9.5%
2016

2017

2018

2019

2020

(FY)

2016

2017

2018

2019

2020

Construction
resins

(FY)

46.5%

Of which,
AAPH*2Group

AICA’s Vision

sustainable growth.

*2 AICA Asia Pacific Holding

Director and Managing Executive Officer
Head of the Chemical Products Company

Kenji Ebihara

Director and Managing Executive Officer
Head of Specialty & Performance Materials
Company

Nobuyuki Omura•Building foundations in growth markets andcapturing market share
Decline in profitability of existing businesses
Further growth and expansion of overseas
businesses
Rapid growth of nurtured products and new
business creation•

Challenges ••Adhesives•Launch of distinctive products and construction
Response

methods that leverage chemical technologies
Improvement of operational efficiency andproductivity through structural reforms
Appropriate capital investment and flexible M&As
Group collaboration & R&D base enhancement

•
•
•

Through proactive capital investment aimed at the steady growth of existing businesses, we aim to enhance profit,
making the most of new businesses acquired through M&As and other means.

Expansion of product range to increase
competitiveness in PF resins business

Plans for three large-scale capital investment projects
in East Asia to respond to brisk demand for PF resins

In March 2021, AICA acquired part of the Phenol
Formaldehyde (PF) resins business of DIC Corporation. AICA’s
PF resins business already had a range of products for manydifferent applications, and this acquisition has further expandedthat range.

We have three large-scale capital investment projects
planned for AAPH*, the driving force of the business, for thefurther expansion of the adhesives business overseas. We will
greatly reinforce the production capacity at each location tocapture the brisk demand for PF resins in China. In recent years,
demand for adhesives for bamboo materials has been growing,particularly in China. Bamboo generally grows faster than otherwoods and its use is being encouraged by the Chinese
government as an environmentally friendly material. We will
strive to capture further demand by moving into the major
bamboo production regions.

Accomplished M&As to expand hot melt adhesive
business, and contributed to strengthen BCP by
multiple site production
In April 2021, Aica Adtek Sdn. Bhd., a major manufacturer ofhot melt adhesives in Malaysia, joined the AICA Group through
AICA Asia Pacific Holding Pte. Ltd. (AAPH). This significantly
enhanced the Group’s production capacity for hot melt
adhesives. The Group now has two bases for the manufactureof hot melt adhesives for sanitary materials to meet growing
demand, which has strengthened our BCP in terms of supply
stability.

AAPH* Group Production Sites
AICA Nanjing Co., Ltd.
Expand production
capacity for PF resins

AICA Report 2021

AICA Fujian Co., Ltd.
Establish new manufacturing
plant for PF resins for bamboo
materials

Construction resins

Net sales

102

Operating profit
billion yen

8billion yen*1*1 Operating profit before deduction ofunallocated operating expenses

Further focusing on the development and sales expansion of AS products that resolve social issues, we aim toenhance the presence of products for responding to climate change and products for building resilience and longevity, for which demand is expected to expand further in the future.

Identifying various social issues and reflecting them in product development
AICA positions the development and sales expansion of AS products that help to resolve a variety of social issues at the core of ourmanagement strategy and focuses our efforts on them. We identify social issues through engagement with our customers and offer
high value-added products that help to resolve those issues.
PASSIVE WALL
External insulation method thatuses a combination of the wall
coating materials that are AICA’s
mainstay products. This method
helps to extend the life of thebuilding by shutting out the weather.
Specialty& Performance
Materials

DYNAMICRESIN Series
Repair and reinforcement material
for concrete structures such asaging infrastructure. A tough resin
membrane keeps tiles from fallingand prevents concrete spalling.

As well as uniting as a Group to accelerate initiatives aimed at rapid growth and business expansion, we will concentrate our efforts into expanding the range of products that meet the needs of growth markets and increasing
sales.

EMC Group enters overprint varnish business for expansion of UV resin business
In July 2021, EVERMORE CHEMICAL INDUSTRY CO., LTD.
(EMC) acquired Covestro Resin’s Dayuan plant and attendantbusiness in UV-curable coating for overprint varnish. Thisacquisition has allowed EMC to enter a new market. EMC is
also involved in the production of UV resin, monomers andAICA Guangdong Co., Ltd.
Relocate to nearby industrial park,
doubling production capacity*AICA Asia Pacific Holding

31

FY2021 Targets

 cheduled for new
Sconsolidation/expansion in
FY2021 and beyond
Existing siteoligomers, and has a high standard of resin design technology.
Aica Adtek Sdn. Bhd.
More than triple hot melt
adhesives production capacity

It will leverage this strength to further expand its UV coatingsbusiness.

UV-curable coating agent
Example of use (for labels)

UV-curable coating agent
Example of use (for packaging materials)

AICA Report 2021

32

AICA’s Vision

Business Overview

Construction Materials BusinessWe will further expand social issue-solving
products and overseas business, and evolve
into a more robust structure

FY2020 Results
The impact of COVID-19 on the economy and the construction markets in Japan and overseas was significant, resulting in declines
in net sales and profits. The impact on newly consolidated companies was also great, preventing us from securing the levels of profit we
initially envisaged. This left us unable to absorb goodwill amortization losses, which became a factor in the decline in profits. However, if we
focus solely on the second half of the fiscal year, with the recovery from the impact of COVID-19, rallying by the newly consolidated companies, reductions in logistics costs and various other expenses, the result for the six-month period was an increase in net sales and profits.

Trends in Business Performance
Net sales (billion yen)Through proactive investments, the foundation for the
expansion of our overseas business has been built.
We will leverage our respective strengths and unite as aGroup to build our brand.
Further, by using digital technologies and responding toclimate change, we will aim for further development bothin Japan and overseas.

76.7

•
•

•Development and expansion sales of productsthat resolve social issues•Strengthening BCP by decentralization of raw
materials and production sites
Response•Improving sales and production efficiency with theuse of digital technologies•Strengthening of governance framework andbuilding brand aimed at expanding Group synergies

As well as offering high value-added products with a focus on AS products that resolve social issues, we will promote proposals for entire spaces for all kinds of buildings in our efforts to secure profits in the Japanese construction market, which is expected to trend at low levels.

Identifying changing social issues through dialogue
with our stakeholders and connecting them toproduct development
It is four years since AICA positioned AS products, which
resolve social issues, as a growth strategy. In the Construction
Materials Business, we have rolled out easy-construction
products as a response to the shortage of skilled workers on
construction sites, as well as products aimed at the renovation
market. In the past year or so, demand for antiviral products andproducts that respond to climate change has increased rapidly,
and we are stepping up the pace of development to enhance our
product line-up. We will continue to capture these kinds ofchanges quickly and reflect them in our product development.

Antiviral building materials
donated to education andwelfare facility in Aichi Prefecture

AICA Report 2021

16.1

Fittings & Interior
Housing Materials

15.8
13.7

Counter /Postform

High pressure
laminate (HPL)

5.8%

28.8%
FY20202017

2018

Making progress in business expansion by gaining
foothold in ceiling and floor markets
In July 2019, we began selling MELAMINE TILE, opening up
a new product segment in the floor market. This product has
been adopted for major retail facilities and continues to grow.
We have also established a new ceiling installation method forour mainstay product, “CERARL,” and have started proposing it
for facilities of a highly public nature that require noncombustibility performance.

Reinforcement of production equipment forincreasingly popular treated products
At the Ibaraki Plant of AICA Interior
Kogyo, which manufactures theengineered stone, “Fiore stone,” andour “LAMINAM” ceramic tiles, there areplans for capital investment to increase
the plant’s production capacity by
40%.
Fiore Stone growing by capturing market foralternative to natural marble in housing market

Overseas
Markets

2019

2020

Net sales

(FY)

98

2016

2017

2018

2019

2020

Operating profit
billion yen

Noncombustiblebuilding materials

(FY)

17

billion yen

13.3%
22.8%

Boards,films, etc.

AICA’s Vision

Challenges •

15.6

14.4

FY2021 Targets

such as shortages of skilled workers on
construction sites and climate change
Avoiding risk of pandemics and large-scaledisasters
Improving labor productivity
Reducing dependence on Japanese construction
market84.1

84.1 billion yen

Satoshi Toudou•Responding to increasingly serious social issues

87.5

9.8%

Director and Senior Managing Executive Officer/
Head of the Construction Materials Company

33

82.3

Sales performance by productcategory

19.5%

2016

Domestic
market80.8

Operating profit* (billion yen)

CERARL* Operating profit before deduction ofunallocated operating expenses

Taking maximum advantage of our sales networks, production sites, human resources, technologies, and brandstrengths in the Asia and Oceania regions, where our business foundations have been built, we will aim to become
the No. 1 manufacturer of laminates in Asia.

Newly consolidated companies contribute to major growth inoverseas net sales

Construction Materials Business: Overseas sites

In FY2020, the consolidation of the Wilsonart companies and AICA HPL
Trading Joint Stock Company (AHT) commenced, resulting in major growth inoverseas net sales from laminates. Net sales were down in some regions due tothe impact of COVID-19. Although under this circumstance, we were able tobounce back from that and grow our overseas net sales.

Launch of manufacture and sale overseas of antiviral building
material, “Virutect” to meet growing demand
We have started overseas manufacture of our high pressure laminate (HPL)with embedded antiviral agent, “AICA Virutect,” and the sale of this product inAsian countries. Demand for antiviral measures is also increasing overseas invarious places that people come in contact with, such as hospitals, educational
facilities, and public facilities. Our product is being progressively adopted by such
facilities. Going forward, we will further promote the overseas roll-out of Japantechnology and contribute to the solution of social issues in Japan and overseas
through the provision of high value-added products.

Wilsonart sites
AHT sites
Virutect overseas manufacturing sites
Other Construction Materials Business sites

Strengthening sales strategy of local-production/local consumption with aim to expand synergies
The melamine noncombustible decorative panel, “CERARL,” has become a byword for kitchen
panels in Japan. This long-selling product was first launched more than 30 years ago. We areconcentrating efforts into building the brand with the intention of rolling out this hit product in Asia as
well. Until now, our mainstay products overseas have been high pressure laminates (HPL) for furniture
and woodworking, and CERARL has very little brand recognition. We started with awareness-raising
activities and, concurrently with those activities, we worked on building a framework for the installationof CERARL in cooperation with our local distributors, with whom we have been a tag team for many
years. Inquiries about CERARL are gradually increasing, and our activities, which have leveraged theexpertise cultivated in Japan, are starting to bear fruit. We will use this example as a foothold to further
expand the range of products we sell and connect it to expansion of net sales.

CERARL adopted as kitchen panel inIndonesia

AICA Report 2021

34

Foundations of AICA

AICA’s Sustainability
Basic Approach to Sustainability

Toward integration of business activities and sustainability

We recognize the fulfillment of the social responsibility demanded of corporations and the promotion of activities that will increase the sustainability of the global environment as missions that have been imposed on AICA. In April 2021, we establisheda new Sustainability Policy. We will foster common Group values by clearly indicating our basic principles and policies for sustainability-oriented management and placing it on the same level as our Corporate Policy.

AICA has adopted the word kyosei* as a core of our Corporate Philosophy, and wehave engaged in the solution of various social issues as a way of embodying that principle.
Recognizing that this ideology has much in common with the voluntary action principles of“human rights,” “labor,” “environment,” and “anticorruption” of the United Nations Global
Compact (UNGC), we announced our support of the UNGC in 2018. With this announcement, we committed to proactively addressing the Sustainable Development Goals (SDGs)
adopted by the UN and embarked on activities aimed at achieving those goals.
In 2018, we began organizing the relevance between our individual materialities andthe SDGs. Both within the company and to the outside world, we clarified the importantbusiness activities that the AICA Group should undertake for the solution of global social issues. For the first time, the materialities (material issues) were included in the new
Medium-Term Business Plan that began in April this year. By setting and steadily pursuing
KPIs for each of them, we will contribute to the realization of a better, sustainable society.

Sustainability Policy

1 We address social issues through our business activities to contribute to the creation of a better society.
 e have established “Compliance with laws and regulations,” “Respect for human rights,” “Harmony with society,” “Fair business
2 Wpractice,” “Customer’s security and trust,” “Proper information disclosure,” “Protection of company information and property,”and “Environment and safety” as the basic principles of the Code of Conduct, and we base our actions on these principles asshared values for all employees.
 e emphasize dialogue with stakeholders, including customers, employees, shareholders, suppliers, business partners, local
3 W
communities, and local governments, and respond promptly to social needs and changes.
 e identify material issues from the perspectives of both corporate management and stakeholders, address those issues along4 W
side our business activities, and disclose our progress in addressing them.

Sustainability Development Framework

Board of Directors
Reporting

Supervision

Sustainability Development Committee

Various Committees
and Projects

Chair: Yuji Ono, Representative Director and President● Corporate Ethics

Committee● Internal Control Committee

Secretariat: Sustainability Development Division● Information Disclosure

Committee

System Engineering
Department

Development Division

AAPH *

Information Systems
Division

Public Relations & Investor
Relations Division

Overseas Planning Division

Sales Division

Purchasing Division

Quality Assurance Division

Sustainability Development
Division

General Affairs Division

Human Resources DivisionCorporate Planning Division● Business Continuity Plan

Coordination(BCP) Committee● Overseas Group

Governance Committee● C&C Promotion

Committee● QEO Committee● Security and Trade Control

Committee● Work Style Reform

Promotion Project

Climate Change Response Committee● Diversity Promotion

Project● Career Support Project*Person in charge of sustainability at AICA Asia Pacific Holding Pte. Ltd.

Heads of departments
and divisions

etc.

Sustainability Officers at Group companies in Japan and overseas

QEO Management System
Relationship between QEO Management System andAICA has built our QEO management system, which operates with a trinity
Sustainability Activitiesof quality (Q: ISO 9001), environment (E: ISO 14001), and occupational healthand safety (O: ISO 45001) management systems. Under this management
Supervision Sustainability
system, the production, R&D, sales, and administrative divisions work as a
Dvelopment
Board of Directors
Committee
Reportingunited team. This structure is the main axis of the Company’s activities tostrengthen its business infrastructure and is one of the measures included inManagement from Executive
Perspective
AICA’s 10 years Vision. Through the implementation of this management sysE: Environment, S: Society,tem, as well as complying with laws and regulations, we conduct risk hedging
G: Governanceand kaizen activities, promote the enhancement of quality, improvement ofenvironmental indicators (reduction of greenhouse gas emissions and indusBusinesstrial waste, reinforcement of water management, etc.), and the creation of
Infrastructure
Enhancement
safe and comfortable workplaces, and strive to strengthen our business infraParticipation
structure from the perspectives of both risk and opportunity.
A QEO Committee, managed by the Sustainable Development
Management from On-site
Perspective
Department and Quality Assurance Department, has been established as
Q: Quality, E: Environment,
O: Occupational Health andthe central body for the promotion of the QEO management system. The
Safetycommittee conducts activities to achieve the policies and goals that have
QEO Group
been formulated on the basis of the management system. A QEO Group
Supervision
Representatives
QEO Committee
Representatives Meeting is convened once every six months, attended byMeeting
Operation
AICA’s top management and representatives of Group companies in Japanand overseas. As well as confirming QEO achievements and the status of improvements at individual Group companies, themeeting’s attendees exchange information by sharing case studies and discuss and decide on countermeasures.

Foundations of AICA

A Sustainability Development Committee has been established as the central body for the development of more in-depth sustainability, and the entire Group is working toward the achievement of our materiality goals that integrate our business activities.
The name of this committee was changed in April 2021 and the President and Executive Officer was appointed as its chair. As
well as identifying the roles that corporations should fulfill from broader perspectives, the Group will work as one to strengthen
our corporate structure with the aim of sustainable development.

*Please refer to page 1 for the meaning of kyosei

Toward the strengthening of initiatives toward climate change issues
We consider “Responding to climate change”, which was included in the revised materialities with the formulation of the New
Medium-Term Business Plan, to be an important issue that should be addressed with urgency. We will strengthen our activities,
with the Climate Change Response Committee, which was incorporated into the Sustainability Development Committee in April
this year, playing the central role. We will also strive to identify the latest trends and be involved in government and social recPlease refer to page 49 for details of specific initiatives.)
ommendations through participation in international frameworks and initiatives. (Endorsement of TCFD recommendations
In May 2020, we declared our endorsement of the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD). Going forward,
we will further reflect initiatives to address climate change issues in our business strategies and pursue information disclosure based on the TCFD recommendations.

Participation in climate change initiatives
From January 2019, we have joined the Japan Climate Initiative. We will engage proactively in efforts to realize a low-carbon society.

(As of October 1, 2021)

35

AICA Report 2021

AICA Report 2021

36

Foundations of AICA

Business Infrastructure
tained. In that kind of environment, ample time is given to debate
and the Board meetings as a whole are vigorous. My assessment
is that it is functioning effectively from a governance perspective.

Interview with External Directors

Ayako Shimizu

Shoji Miyamoto

External Director

External Director (Member of Audit and Supervisory Committee)

What do you believe are AICA’s strengths?
Miyamoto One of its multiple strengths that I could list is its corporate culture. In the company magazine recently, I glimpsed thatthe spirit of AICA’s corporate principle, “Challenge and Creation,”really has become an integral part of the workplace. The article wasabout the history of CERARL, an AICA product first launched 30
years ago that is still a long-selling product. It concluded by sayingthat it was Team AICA’s spirit of challenge that enabled the company to create such a product, grow it to such a large market, andmaintain that status even today. That “Challenge and Creation” spirit and respect for the corporate philosophy have nurtured a uniqueand wonderful corporate culture, which I believe lies at the heart of
the AICA Group’s growth and prosperity today.
Shimizu I think that the corporate attitude of seeking to grow thecompany while sincerely meeting the needs and expectations ofsociety is one of AICA’s major strengths.
In terms of governance structure, when considering changes,
the company not only responds to official requests in ways thatare accompanied by actual actions, but they also respond to the

37

AICA Report 2021

I hope to express my opinion basedon the actual circumstances,with valuing “the importance ofon-site decision-making”.
recommendations of the external directors and the GovernanceCommittee. In terms of business activities, as well as its proactive
approach to the development of AS products, which help to solve
social problems, AICA takes flexible action such as M&A activities,
to fill in any missing pieces in order to become the kind of company
that it is expected to be.

What are your impressions of the operation of theBoard of Directors?
Miyamoto In Board meetings, the Chair checks who wants to
speak about each proposal and, when necessary, encourages themembers to speak up. The question-and-answer sessions are always very lively. An atmosphere has been created in which external
directors feel comfortable speaking up, and I can sense the management team’s proactive desire to incorporate the views of theexternal directors. I believe this is the result of the external officers
who have served over the years fulfilling their expected roles andcontributing to the efforts to make the company better. The current
directors, both internal and external, bring many and varied experiences to the table, so I feel that a diversity of values is being main-

What kind of role do you hope to play as external directors?
Miyamoto As an external director and member of the Audit andSupervisory Committee, as well as preventing misconduct, I want
to devote myself to helping create strong, sustainable growth andmedium- to long-term corporate value and to establishing a quality
governance structure that will respond to social trust. As a member of the Audit and Supervisory Committee, the area I want toemphasize when expressing my opinions is “the importance of onsite decision-making.” There is a tremendous difference in one’s
impressions and awareness between merely reading the briefing
materials and actually going out into the work sites and speaking
to the people there. For example, when I visited a new plant that
had been established overseas, I saw with my own eyes the local
employees working there on site, and I understood just how muchtime and effort had been required to make the same products as inJapan in a country where the culture and common practices were
so different. Merely expressing textbook opinions could potentiallybe an unwelcome favor for the sites that are putting internal controls
into practice. As much as I can, I want to visit these sites myself andexpress my opinions based on the actual circumstances there. Theinternal audit department gives us in-depth audit information andmeticulous reports, so I hope to keep in close collaboration withthem and make appropriate recommendations based on a proper
understanding of AICA’s actual situation.
Shimizu I do believe that the role expected of me as a non-executive Director is to supervise. As well as supervising management itself through decisions made on important agenda items, I also want

What are your expectations of AICA?
Miyamoto The overhaul of the company’s core system was completed in May 2021, and the next step will be the implement ofdigital transformation (DX) across the whole company. For the sakeof future growth and to enhance the company’s competitiveness,there are expectations of improvements to business efficiency and,in turn, the transformation of the very nature of its operations andbusiness. In addition, the large-scale M&A push overseas has settled down, and the foundations for the company’s overseas business have been established. Instead of being satisfied with this,thoroughly managing post-merger integration (PMI) will help AICA
to realize the goals and consolidated business results that were envisaged when those M&As were decided.
AICA recently established its new Medium-Term Business Plan,“Change & Grow 2400.” The financial targets may seem lofty
from our current position, but I believe that, if all employees of the
AICA Group put “Challenge & Creation” into action, they can beachieved. “Change & Grow 2400” has both financial and non-financial elements. I believe that, through the process of executing andachieving the items included in the plan outline, AICA will be more
recognized as a company whose presence offers value to society.

Foundations of AICA

It is important to bring diverse
opinions together and reflect them inmanagement decision-making.

Shimizu My impression is that, instead of starting from foregone
conclusions, the company wants to hold substantive discussions
about each proposal put to the Board. I think that this has a great
deal to do with the Chair’s flexible discretion. Also, as well as distributing briefing materials about the proposals in advance, they have asystem that allows us to seek more detailed information from the staff
involved before going into the Board meeting, so we can discuss the
proposals with a proper understanding of their content. However, I do
think that, in terms of the briefing materials, some of the information
could be expanded on a little more. For M&A projects, if we could bepresented with all possible impacts from the viewpoint of the mostknowledgeable staff involved, such as the background behind AICA’s
selection of that company to acquire, its strategic position, and therisks that should be shared, we could have more spirited discussions
and make more appropriate judgments.
In response to a request from the Governance Committee, it has
been decided that, from this fiscal year, the Executive Officers
responsible for the proposals on the agenda will also attend theBoard meetings. I am delighted about this, because it will give us aninvaluable opportunity to get to know the Executive Officers, who
are potential executives of the next generation.

to supervise any potential conflicts of interest between the company and the management team. I also think that, precisely because I
have one foot outside the company, one of my roles is to be candid
and direct in mentioning anything I feel uncomfortable about. One
reason for my selection as a director was, I believe, the fact that thecompany wanted to bring more diversity to the Board’s composition. As well as gender differences, we all have differences in theway we feel about things that come from our different experiences,
positions, and areas of specialization. By listening to the opinions
that emerge from those different feelings, we are able to realize thatthings that we had previously thought were the norm were not actually the norm in general society. It is important for diverse voices tobe reflected in corporate management. Overseas sales’ percentage
of AICA’s total net sales has been growing over the past several
years, so the Board of Directors needs to start considering the likely
need for a director who has a certain level of knowledge about overseas markets, and the Asian region in particular.

Shimizu AICA will be called on to fulfill its social responsibilities
more than ever, so it should strive to enhance its corporate value and achieve steady growth without budging from its positionof responding to society’s requirements and expectations. The experience of the COVID-19 pandemic has changed people’s values
greatly, so those requirements and expectations are also changing.
If AICA is to adapt to these changes, securing diversity in its personnel and in the values within the company will be very importantin terms of deciding the company’s direction. I talked about thecomposition of the Board of Directors earlier, but in terms of theworkforce, the challenge will be to gain the active participation of
the post-retirement-age generation and women. I would like to see
AICA concentrate its efforts into nurturing people who will support
the company’s future.

AICA Report 2021

38

Foundations of AICA

Business Infrastructure

List of Directors (As of June 24, 2021)
Directors (excluding directors who are members of the Audit and Supervisory Committee) (5 male, 1 female)Yuji Ono

Directors who are members of the Audit and Supervisory Committee (3 male, 0 female)

Satoshi Toudou

Ryoji Mori

Kiyoshi Katagiri

Born August 16, 1957

Born September 29, 1959

Born September 20, 1946

Apr. 1980
Apr. 2009

Joined The Tokai Bank, Ltd.
Joined AICA, General Manager,
Financial Planning Dept.
Jun. 2009 Executive Officer
Jan. 2010 General Manager, General Planning Dept.
Jun. 2010 Director
Apr. 2013 General Manager, Overseas Business Dept.
Jun. 2014 Managing Director
Apr. 2017 Responsible for Financial
Administration Dept., Responsible for
Logistics Dept.
Apr. 2018 Responsible for Operations
Administration Dept.
Jun. 2018 Director (present)
Senior Managing Executive Officer (present)
Apr. 2019 Responsible for Information Systems Dept.
Mar. 2020 General Manager, Corporate
Planning Dept.
Apr. 2021	Head of the Construction Materials
Company (present), General Manager,
Sales Administration Division (present)

Apr. 1982 Joined AICA Kogyo
May 2000 General Manager, Laminates
Production Dept.
Apr. 2006 General Manager, Production Administration
Dept., Construction Materials Company
Oct. 2009 General Manager, Production Administration
Dept., Chemical Products Company
Jun. 2011 Executive Officer
Jun. 2013 Senior Executive Officer
Jun. 2015 Director
Jun. 2018 Managing Executive Officer
Apr. 2019 Responsible for Safety and Environment
Dept., Responsible for Purchasing Dept.
Apr. 2020	
Deputy Head of Construction
Materials Company, Responsible forTechnology, Construction Materials
Company, General Manager, Production
Administration Dept., Construction
Materials Company
Apr. 2021 Assistant to President, Responsible
for Special Missions
Jun. 2021 Director (full-time member of Audit andSupervisory Committee) (present)

Apr. 1969 Joined Nippon Telegraph andTelephone Public Corporation(today’s Nippon Telegraph andTelephone Corporation)
Apr. 1994 Vice President Tokai Branch		
Nippon Telegraph and Telephone
Corporation
Jul. 1997 Advisor and General Manager,
Corporate Planning Office,		
C-CUBE Corporation
Jun. 1998 Senior Managing Director, C-CUBE
Corporation
Jun. 1999 Representative Director andPresident, C-CUBE Corporation
Jun. 2011 Director and Counsellor, C-CUBE
Corporation
Jun. 2017 Representative Director andPresident, MYPLANET Co., ltd.
Jun. 2018 External Auditor, AICA Kogyo
Jun. 2020 External Director, AICA Kogyo(member of Audit and Supervisory
Committee) (present)

Nobuyuki Omura

Kenji Ebihara

Shoji Miyamoto

Born April 7, 1964

Born April 15, 1967

Apr. 1988
Jan. 2009
Apr. 2009

Joined MITSUI & CO., LTD.
Joined AICA Kogyo
General Manager, Overseas
Business Dept.
Jun. 2009 Director
Apr. 2011 General Manager, New Business
OfficeApr. 2015 Director and Chairman, AICA Asia
Pacific Holding Pte. Ltd.
Jun. 2017 Managing Director
Apr. 2018 Head of the Chemical ProductsCompany
Jun. 2018	Director (present)
Managing Executive Officer (present)
Apr. 2020 Head of the Specialty & Performance
Materials Company (present)

Apr. 1991 Joined AICA Kogyo
Apr. 2009	General Manager, Chemical
Development Dept., R&D Center
Oct. 2010	Manager, Jimokuji Laboratory, R&D
CenterApr. 2013 General Manager, R&D Center
Apr. 2015 Head of Specialty & Performance
Materials Section
Jun. 2017 Executive Officer
Jun. 2018 Senior Executive Officer
Apr. 2019 Managing Executive Officer (present)
Jun. 2019 Director (present)
Apr. 2020 Head of the Chemical ProductsCompany (present), Deputy General
Manager, Sales Administration
Division (present)

Kenji Ogura

Ayako Shimizu

Born October 1, 1947

Born June 6, 1972

Apr. 1970
Oct. 1988

Apr. 1999	Registered as attorney, joined
Ishihara Law Office (present)
Apr. 2015	Deputy Chair, Aichi Bar Association
Director, CHUBU Federation of Bar
Associations
Apr. 2016 Member, Aichi Dispute Coordinating
Committee (present)
Apr. 2017	Member, Nagoya City Information
Disclosure Screening Commission (present)
Jul. 2017 Member, Aichi Prefecture Committee
for Adjustment of Construction Work
Disputes (present)
Jan. 2018 Judicial Commissioner (present)
Apr. 2019	Mediator/Arbitrator, Dispute
Resolution Center, Aichi Prefecture
Bar Association (present)
Dec. 2019	External Director, MTG Co., Ltd.
(member of Audit and Supervisory
Committee) (present)
Apr. 2020	Member, Ombuds 6 Committee,
Nagoya Broadcasting Network (present)
Jun. 2020 External Director, AICA Kogyo (present)
Mar. 2021	External Director, SYNCLAYER, Inc.
(member of Audit and Supervisory
Committee) (present)

Representative Director and President
Born August 24, 1956
Apr. 1979
Apr. 2000
Oct. 2002
Jun. 2004
Oct. 2004
Apr. 2008
Jun. 2008
Jun. 2009
Jun. 2010		Jun. 2018

Joined AICA Kogyo
No. 1 General Manager, Chemical
Development Dept.
General Manager, Sales Dept.,
Chemical Products Company
Executive Officer
Director, No. 2 R&D Center
Head of the Chemical ProductsCompany
Director
Managing Director
Representative Director (present)
Director and President
President and Executive Officer(present)

Director and Managing Executive Officer

Director and Senior Managing Executive
Officer

Director (full-time member of Audit andSupervisory Committee)

Director and Managing Executive Officer

External Director (member of Audit andSupervisory Committee)

External Director (member of Audit andSupervisory Committee)
Born February 8, 1956

Joined Sony Corporation
Director and General Manager,
Administration Dept., Sony Nagasaki
Co., Ltd.
Jun. 1995 Director and General Manager,
Administration Dept., Sony Kokubu
Co., Ltd.
Oct. 1997	Director and General Manager,
Administration Dept., ST Liquid
Crystal Display Corporation
Jun. 2005 Representative Director andPresident, C-CUBE Corporation
Jun. 2012 External Auditor, Cool. revo Inc.
Jun. 2014 External Director, AICA Kogyo(present)
Jun. 2015 External Director, Cool. revo Inc.
(present)

39

AICA Report 2021

Foundations of AICA

External Director

Apr. 1978 Joined Konishiroku Photo Industry
Co., Ltd. (today’s KONICA MINOLTA,
INC.)
Oct. 1985 Joined Ito Accountants Audit Firm
Mar. 1989 Registered as Certified Public
Accountant (CPA)
Jul. 2005 Senior Partner, Chuo Aoyama PwC
Aug. 2007 Managing Partner, Azusa Audit Firm
(today’s KPMG AZSA llc)
Sep. 2010 Director, KPMG AZSA llc
Sep. 2014 Auditor, KPMG AZSA llc
Jul. 2018 Director, Miyamoto Shoji CPA Office(present)
Jun. 2019 External Auditor, AICA Kogyo
Jun. 2020 External Director, AICA Kogyo(member of Audit and Supervisory
Committee) (present)		
External Director, Meito Sangyo
Co., Ltd. (member of Audit andSupervisory Committee) (present)

Reasons for appointment of external directors

External Director

DutiesExternal Director

Name

Kenji Ogura(Independent Director)

External Director

Ayako Shimizu(Independent Director)

External Director/
Member of Audit
and Supervisory
Committee

Kiyoshi Katagiri

External Director/
Member of Audit
and Supervisory
Committee

Shoji Miyamoto(Independent Director)(Independent Director)

Reason for Appointment

Reason for Designation as Independent Director

Mr. Kenji Ogura has extensive experience and knowledge as a Because he has no background at any of AICA’s subsidiaries, major
corporate executive, which we believe he will be able to lever- shareholders, or major trading partners, he has no particular stake inage in enhancing AICA’s management structures.
AICA, and we believe that no conflict of interest with general shareholders
would arise. For these reasons, he has been designated as an Independent Director.
Ms. Ayako Shimizu will be able to leverage her extensive expert
knowledge and experience as an attorney in the supervisionof AICA’s management. We also believe that, as an external
director, she will be able to offer advice based on diversity perspectives.

Because she has no background at any of AICA’s subsidiaries, major
shareholders, or major trading partners, she has no particular stake in
AICA, and we believe that no conflict of interest with general shareholders
would arise. For these reasons, she has been designated as an Independent Director.

Mr. Kiyoshi Katagiri has been involved in corporate management and has extensive experience and knowledge as a business owner. We believe that he will be able to offer advice andoversight to the company’s management overall as an external
director and member of the Audit and Supervisory Committee.

Because he has no background at any of AICA’s subsidiaries, major
shareholders, or major trading partners, he has no particular stake in
AICA, and we believe that no conflict of interest with general shareholders
would arise. For these reasons, he has been designated as an Independent Director.

Mr. Shoji Miyamoto has extensive expert knowledge andexperience as a certified public accountant. We believe that
he will be able to offer advice and oversight to the company’s
management overall as an external director and member of the
Audit and Supervisory Committee.

Because he has no background at any of AICA’s subsidiaries, major
shareholders, or major trading partners, he has no particular stake in
AICA, and we believe that no conflict of interest with general shareholders
would arise. For these reasons, he has been designated as an Independent Director.

AICA Report 2021

40

Foundations of AICA

Additional information about human resources is available on the AICA website.
AICA Home Page

Internal Control Activities

Basic Approach to Corporate Governance
The AICA Group aims to ensure and improve the value of the company and the common interests of its shareholders throughthe enhancement of corporate governance at each of its Group companies in Japan and overseas.
In June 2020, we transitioned from a Company with a Board of Auditors to a Company with Audit and Supervisory Committee.
The Audit and Supervisory Committee, more than half of whose members are external directors, is responsible for auditing andsupervising the legality and appropriateness of the execution of business for the realization of more transparent management. In
this way, we aim to strengthen our corporate governance further and also to build a framework that will more appropriately meetthe expectations of our stakeholders in Japan and overseas.
We have also established a Governance Committee as an advisory committee to the Board of Directors. This committee ischaired by an external director and four of its five members are also external directors. The Governance Committee deliberates
on key matters concerning governance, including the appointment and remuneration of management executives, with the aimsof sustainable growth, medium to long-term improvement of corporate value, and further enhancement of governance functions.
Corporate Governance Structure and Internal Control Systems (as of June 24, 2021)

General Meeting of Shareholders
Appointment/ Dismissal

Appointment/ Dismissal

Board of Directors

ReportDirectors (except for members of Audit and Supervision
Audit and Supervisory Committee):
6 personsMembers of Audit
and Supervisory
Committee
3 persons

ReportManagement Meeting
ReportDirections

Internal Audit unit

Coordination

Audit and Supervisory
Committee Secretariat

Accounting Audit

Internal Control Committee

In compliance with the Companies Act, the Board of Directors of the AICA Group has adopted a Basic Policy for Establishmentof Internal Control Systems. Under this policy, the Group is working to reinforce the supervisory functions of the Board of
Directors, risk management structures, and the creation of systems to improve the effectiveness of corporate compliance. The
Internal Audit Unit assesses the status of development and operations in these areas through auditing activities and interviews
with the relevant departments, to confirm the effectiveness of the Company’s internal control systems. We have also establishedan Internal Control Committee to respond to the internal control reporting system for financial reporting under the Financial
Instruments and Exchange Act. The main committee members in charge of four major control processes conduct maintenancemanagement and self-inspection. Meanwhile, the Internal Audit Unit conducts separate internal audit assessments to maintainand improve the reliability of our financial reporting.
Each year, the Unit reports to the Internal Control Committee on the development and operational status of internal control in
the previous year relevant to financial reporting under the Act and obtains approval for the current year’s activity plans.

Directors’ Remuneration
Remuneration of Company directors (excluding Directors who are Audit and Supervisory Committee Members and External
Directors) consists of a fixed basic remuneration, performance-based remuneration and share-based remuneration, the last twoof which are variable according to business performance. From the viewpoint of their role and independence, remuneration of
Directors who are Audit and Supervisory Committee Members and External Directors consists of basic remuneration only.
Determination of basic remuneration is based on a standard amount for each position and also takes into account publicly
announced levels of remuneration at other companies, the Company’s business performance, and other factors.
Performance-based remuneration is determined at around 15% to 20% of total remuneration, depending on the director’srole. In FY2020, performance-based remuneration accounted for 15.9% of total remuneration of Company directors (excluding
Directors who are Audit and Supervisory Committee Members and External Directors).
Please refer to the Notice of Convocation of the 121st Annual General Meeting of Shareholders for details of remunerationof Directors and Audit and Supervisory Committee Members. A system of remuneration of Directors by granting of shares withrestrictions on transfer was introduced in 2021. The objectives of this system are to provide an incentive for the sustainableenhancement of corporate value and to promote greater sharing of value with shareholders. It is planned to grant shares oncea year, to be determined based on the standard amount for each position and taking into account the Company’s businessperformance and other factors.
The appropriateness of evaluations and remuneration amounts for individual directors is examined by the GovernanceCommittee, whose main members are the external directors, to ensure objectivity and fairness.

Foundations of AICA

ReportReportManagement Promotion Meeting

Audit andSupervisory
Committee

Accounting Auditor

Appointment/ Dismissal

Representative Director

Internal Control Audit

Corporate Ethics Committee
AdviceCorporate Lawyer

Effectiveness of the Board of Directors
In order to verify the effectiveness of the Board of Directors, we have conducted an annual survey of all directors (including
directors who are members of the Audit and Supervisory Committee) regarding the structure, operation, and agenda of theBoard and the Board’s support structure. The effectiveness of the Board is evaluated on the basis of the results of this survey.
In the survey conducted in February 2021, responses of “appropriate or reasonably appropriate” were obtained for all except
two of the matters surveyed. Based on this positive feedback, we confirmed that our Board of Directors is generally functioning
appropriately and that its effectiveness is being ensured.
On the other hand, matters raised as issues were the enhancement of reference materials for proposals to the Board of
Directors and Management Meetings (explanation of terms, background to proposals, details of past discussions, etc.), enhancement of explanations in advance of key agenda items, and enhancement of deliberation of appointment and dismissal ofsenior executives. Of these matters, the areas of insufficiency regarding proposals to the Board of Directors and Management
Meeting have been improved from the January 2021 meetings and incorporated into the reference materials, and explanationsof key agenda items are being provided in advance of the meetings. Ample deliberation of the appointment and dismissal of
executive managers will be conducted in the Governance Committee and the Board of Directors.
Going forward, we will work on making improvements to further raise the effectiveness of the Board of Directors.
AICA Report 2021

Corporate governanceThe company website is scheduled for relocation to a new website in January 2022.

Corporate Governance41

CSR Activities

http://www.aica.co.jp/company/environ/governance/

Business Infrastructure

Governance Committee

About AICA

Introduction of Stock Granting Trust for Employees (J-ESOP)In 2021, as part of the employee incentive plan, we introduced an Employee Stock Ownership Plan (ESOP), an employeecompensation system in which Company shares are granted to employees and the value of those shares are reflected in theemployees’ conditions . The introduction of this system can be expected to cultivate a sense of belonging in employees, while
also increasing employees’ interest in share price increases and the improvement of business results, motivating them to engage
more eagerly in their work.

Strengthening of Overseas Group Companies’ Governance
Given the current situation, in which there has been a sharp increase in the number of overseas Group companies acquired by
M&As in recent years, we have organized a Overseas Group Governance committee attended by representatives of the Overseas
Planning Department, General Affairs Department, Legal Department, Internal Audit Unit, Finance Administration Department,
Human Resources Department, Quality Assurance Department, Sustainable Development Department, Corporate Planning
Department, and overseas business holding companies, which is working to strengthen governance of overseas Group companies.
The committee has set specific themes and schedules and is conducting the PDCA cycle for nine matters with a high degree ofimportance (compliance, authority, quality, safety and environment, accidents, markets, human resources, finance, audits).
The operational division, administrative division, and audit division each conduct their own, independent audits, and a system
for three-line checks is being built. Working together with AICA Kogyo, the overseas business holding companies, and overseas
Group companies, the committee will strive to enhance the AICA Group’s governance functions.

AICA Report 2021

42

Foundations of AICA

Additional information about compliance is available on the AICA Kogyo website.
AICA Home Page

Business
Infrastructure

About AICACSR Activities

Additional information about human resources is available on the AICA website.
Compliance

http://www.aica.co.jp/company/environ/compliance/

The company website is scheduled for relocation to a new website in January 2022.

ComplianceCorporate Ethics Committee

Human Resources and Labor

http://www.aica.co.jp/company/environ/resource/

The company website is scheduled for relocation to a new website in January 2022.

Internal Whistleblowing System oncept diagram: Corporate Ethics Committee andCwhistleblowing system

The AICA Kogyo Labor Union was formed in May 1947 and has remained active since then. The union is a partner and excellent supporter of the company that has shared in the joys and sorrows of AICA Kogyo for many years. The company cherishes
the relationship of trust that it has built up with the union and has maintained favorable labor-management relations.
To deepen mutual understanding, the top three executives of the union and the Human Resources Department hold meetings once a month to exchange information. The union also meets with the senior executives several times a year, including
at labor-management negotiations, to discuss corporate policy, the progress of the Medium-Term Business Plan, the generalsituation in individual businesses, and the various programs and schemes.
AICA group companies respect the rights of their employees under the laws and regulations of those countries and regions
and strive to build favorable relations with employees through close communication.

Employee Survey
As social values have become more diverse, how employees who work at a company think about that company and theirmindset toward their work have changed and diversified. As social values have become more diverse, how employees think
about their company and their mindset toward their work have changed and diversified. The most recent of these surveys was
conducted in July 2019, and we will continue to conduct them every three years going forward.
The survey company reported that “General Satisfaction,” which indicates the degree of employees’ satisfaction with the company, was “slightly higher” than the average for common companies in the past two surveys. Of course, there were variations in
the results according to age group and occupation. We will analyze the details of these findings and incorporate them into ourvarious policies, including our human resources programs. We will also conduct regular surveys into the future and implement
measures to raise employee satisfaction from medium to long-term perspectives.
Foundations of AICA

AICA has established a Corporate Ethics Committee, whose objectives include the development and promotion of necessary
policies for compliance, the investigation, confirmation, and implementation of corrective action regarding whistleblowing reports
being made to the internal whistleblowing hotline, Corporate Ethics Committee Window, and matters that cannot be resolved byGroup companies on their own, and the consideration and proposal of disciplinary action to be applied in the event of a compliance-related issue. The Corporate Ethics Committee promptly investigates and addresses all whistleblowing reports and, where
necessary, takes corrective action. The details of all such cases are reported to the senior executives and the members of the
Audit and Supervisory Committee on a regular basis.

AICA Report 2021

CSR Activities

Basic Approach to Labor-Management Relations

The AICA Group is firmly committed to complying with local laws and regulaAICA Group Code of Conduct
tions and conducting its business activities ethically at all of its sites in Japan andBasic Principles
overseas. The AICA Group Code of Conduct forms the foundation of the Group’s[1] Compliance with laws andcompliance program. It has been established with the objective of realizing ourregulations
Corporate Philosophy and Business Plan in accordance with our Corporate principle[2] Respect for human rights
of Challenge & Creation. We have also established Action Guidelines, which set out[3] Harmony with society
specific standards for conduct in accordance with the Code of Conduct.
[4] Fair trade
To raise awareness about compliance among employees, we use the AICA Group[5] Reassurance and trust of
Code of Conduct and Action Guidelines to hold annual training in individual workcustomers
places at all of our sites in Japan and overseas, including Group companies. In this[6] Proper information disclosure
training, we thoroughly instill in our employees a consciousness of the positioning of[7] Protection of company inforthe Code of Conduct and Action Guidelines and the significance and necessity ofmation and property
compliance. We confirm employees’ understanding through training reports, and we[8] Environment and safety
also confirm any requests made by employees.
Further, the Corporate Ethics Committee, Legal Department and Internal Audit UnitOffice play a central role in traveling aroundto all of the sales offices, plants, Group companies, and other sites to conduct harassment education, including for managers,
and compliance training for operational staff, and to educate employees about the importance of compliance. Any issues discovered in the course of these visits are incorporated into improvement activities throughout the entire company.

43

Human resources

About AICA

Labor-management Relations

Basic Approach to ComplianceTo ensure that potential risks of breaches of workplace morals,
such as infringements of laws and company regulations, bribery andcorruption, and harassment, can be addressed promptly, we haveestablished an internal whistleblowing hotline, Corporate Ethics
Committee Window, inside the company and at a law firm outside
the company.
Employees of the AICA Group are able to report to or seek
advice from the Corporate Ethics Committee Window about any
problems or concerns they may have regarding corporate ethics
and compliance. The telephone number and e-mail address of the
Corporate Ethics Committee Window are included on the AICA
Group Employees Code of Conduct Card that is distributed to employees, and employees confirm how to use the Corporate Ethics
Committee Window at the annual Group-wide training. This systemassures anonymity so that whistleblowers do not suffer any disadvantages, so whistleblowing reports may be made anonymously.
Whistleblowing reports by e-mail are accepted 24 hours a day inmultiple languages.

AICA Home Page

Human Resources Development
Basic Approach to Human Resources Development
AICA Kogyo cultivates people who have a strong awareness of personal growth and their futures, and who strive forcefully
toward the corporate principle of “Challenge & Creation.” Recognizing that employees are an important presence who will transform the company and raise our corporate value, we are placing efforts into human resources development that will allow every
individual employee to demonstrate their strengths to the fullest.

Corporate Ethics Committee
President

Corporate Ethics
Committee
Window

General Manager,
Corporate Planning Dept.

Internal hotline

Manager, Internal Audit Office

Law firm

Secretariat (General Manager,
Human Resources Dept.)

Corporate lawyer (observer)

Employees*Number of cases brought to Corporate Ethics Committee Window in FY2020: 5

Training Schemes
A variety of human resources programs is available. They range from follow-up programs for prospective employees to gradebased training and self-development assistance to encourage employees’ steady career advancement.
For new recruits, a training program has been introduced to cultivate “independent personnel” who are able to think and act
for themselves. This program is conducted over a period of three years from the commencement of their employment. A combination of OJT and mentor programs is also used, with the Human Resources Department and the divisions to which the new
recruits are assigned working in tandem to cultivate the new employees.
We are also focusing efforts on the development of global human resources. This entails the incorporation of language training
in the second and third years of the new recruit training, as well as opportunities to experience meetings with overseas Group
companies via video teleconferencing systems. We have also established an overseas trainee scheme, which provides opportunities to work overseas, such as being dispatched to overseas Group companies.
We have also established correspondence education schemes and schemes for obtaining public qualifications, and we support employees’ individual study endeavors by covering costs and granting bursaries.

AICA Report 2021

44

Foundations of AICA

Additional information about human resources is available on the AICA website.
AICA Home Page

Target scope: AICA Kogyo Co., Ltd. Non-consolidated

Prior to joining

General gradeMid-level grade

Manager gradeMid-level grade training

Management training
Labor affairs, legal, humanresources, finance andmanagement strategy, etc.

New employee training
On-the-job
training (OJT)

2nd-year training
Mentor training 3rd-year training

Occupationbased grouptraining

Plant manager
training

Production division skills training

Next-generation
executive training

Compliance education
Labor management education
Quality, safety, and environment education
Selfdevelopment
assistance

At a time when, in more and more families, both spouses are working, and with nursing care for middle-aged and older households developing into a social problem, we are working to expand our programs to assist employees to balance their home lives
and work without interrupting their careers as much as possible, by responding flexibly to diverse work styles.

Re-employment Scheme, Employment of People with Disabilities

Sales skills enhancement training

Workplacetraining

Expansion of Work-Life Balance Assistance Scheme

New manager training

Global Human Resources Development

Online English conversation
Correspondence education

Assistanceto obtain
qualifications

Human Resources and Labor

The company website is scheduled for relocation to a new website in January 2022.

Training framework

Grade-based
training

CSR Activities

http://www.aica.co.jp/company/environ/resource/

Human Resources

Correspondence
education prior
to joining thecompany

About AICA

Hazardous materials engineer / Health and safety manager / Adhesives management engineer / Forklift operator /Construction project management engineer / TOEIC, etc.

In the hope of active participation in the workplace of older adults against the background of the rapidly declining birthrate
and aging of the population, the Revised Act on Stabilization of Employment of Elderly Persons, which mandates the provisionof employment opportunities up to the age of 70 years, came into force on April 1, 2021. With the aims of responding to theselegislative revisions, raising employee motivation, and guaranteeing their lifestyles, we are planning to make revisions to our
Re-Employment Scheme. We will continue to develop an environment in which our employees can work with peace of mind.
Further, with the aim of ongoing employment of people with disabilities, we have identified the types of work that people withdisabilities are able to perform and are working to firmly establish them in the workplace. With a view to further increasing thenumber of people with disabilities whom we employ, we will continue to engage actively in measures such as recruitment interview sessions for people with disabilities.
 rends in newly engaged employees under the re-employment schemeTat AICA Kogyo Co., Ltd.

Trends in number of employees with disabilities at AICA Kogyo Co., Ltd.

(persons)

Diversity / Work-life Balance(persons)

FY2018FY2019FY2020FY2018FY2019FY2020

27

14

15

22

24

26

Basic Approach to Diversity and Work-life Balanceen’s participation in particular, we launched a Women’s Participation Promotion Project in June 2013 and have focused efforts
on initiatives and the development of an environment in which the power of women can be put to use in the management of thecompany. The name of this initiative was changed to the Diversity Promotion Project in FY2018 and we are working to promote
the establishment of foundations in which more diverse personnel can participate actively in the workplace.
Certification Status
Certification as Company Promoting Women’s Participation by City of
Nagoya (Jan. 2016 and Jan. 2019)“Kurumin” certification from Ministry of Health,
Labor and Welfare (Feb. 2016)

This is a program that certifies companies engaged
in initiatives to allow women to shine in their organi-

Companies that meet certain criteria, including assisting
employees with raising children, are certified by the Min-zations and that presents awards to companies withister of Health, Labor and Welfare and are able to use theparticularly outstanding initiatives in this area.

“Kurumin” logo on their advertising, products, and othermedia.

Diversity Promotion Activity Goals (Act on Promotion of Women’s Participation and Advancement in the Workplace)Target scope: AICA Kogyo Co., Ltd. Non-consolidated

Target categories

Target figures

Target Initiatives Period: April 1, 2019 - March 31, 2022

Current status (as of March 31, 2021)

Percentage of women recruited to new-graduate
career-track positions: 30% or more

14.0% (new-graduate recruits joining in April 2021)

New proposals/revision of work-life balance assistance scheme: 3 or more

1[2] Increase percentage of female
managers

5.8% (average for other manufacturing industries)
or more3% (7 female managers of a total of 231 managers)[3] Improve rate of recruitment ofpeople with disabilities*

2.3% or more

2.66%

Percentage of paid leave taken: 70% or more

Percentage of paid leave taken: 55.9% (FY2020 actual
result)[1] Increase percentage of female
employees[4] Cultural reform

AICA Report 2021

As the issue of excessively long working hours has become a social problem and the entire nation is pursuing work stylereform, we launched our own Work Style Reform Promotion Project on April 1, 2017. We are working actively to create a culture
and change mindsets to discourage employees from working excessively long hours. Initiatives include “No Overtime” days andthe reduction of overtime. In March 2020, we urgently introduced a work-from-home scheme due to the impact of the spread of
the novel coronavirus, COVID-19. Taking this opportunity, we launched a Work Improvement Committee in April 2020 with theobjective of promoting further diversification of work styles. Through C&C activities*, we are making improvements to equipment
and operations, pursuing a shift to multi-skilled workers, and striving across the entire company to reform operations to maintainappropriate working hours. We are also promoting scheduled taking of paid leave and the enhancement of our childcare andnursing care assistance schemes.
*C&C activities: Small-group activities in which all employees in all divisions participate. These groups discuss and implement specific actionplans, using QC methods and other scientific approaches, to consider ways of achieving operational improvements andimplement division policies.
These activities have a long history, with their predecessor, the ZD (Zero Defects) Campaign, starting in 1965 with theobjective of raising productivity. The initial aim of that campaign was to achieve “zero mistakes” in the work through carefulattention and innovative efforts by individual employees. From 1979, the C&C Campaign was rolled out, taking the initialsof the present Corporate principle, Challenge & Creation. The campaign took on a broader meaning to include “promoting
initiatives for the achievement of management goals,” which has been passed down to today’s C&C activities.

State of paid leave consumption at AICA Kogyo Co., Ltd.

Average days taken*According to statutory calculation methods

45

Work Style Reform

Foundations of AICA

We promote diversity in response to the globalization of business and the diversification of market needs. In the area of wom-

Average rate of leave
taken

FY2018FY2019FY202011.3 days

12.1 days

10.3 days

61.7%

66.7%

55.9%

*Target periods: March 16 of previous fiscal year to March 15 of current fiscal year
*Target employees: Employees of AICA Kogyo Co., Ltd., excluding people on temporary
assignment, child-care leave, and leave-of-absence, and part-time andcasual workers

AICA Report 2021

46

Foundations of AICA

Additional information about human resources is available on the AICA website.
AICA Home Page

Human Resources and Labor

The company website is scheduled for relocation to a new website in January 2022.

Risk Assessment

Occupational Health and Safety
Basic Approach to Occupational Health and Safety
To maintain a sound foundation for the company and achieve sustainable growth, it is important that we strive to maintainthe health of each individual employee and to improve workplace safety. We recognize that our business activities also have an
impact on the health and safety of contractors who work on our sites and residents of the surrounding area, and we are striving
to maintain the health of stakeholders and to improve the safety of our workplaces and surrounding environments.
Pursuant to the Industrial Safety and Health Act, we have established Health and Safety Committees at each of our sites.
Based on environmental measurements and the findings of health check-ups, we investigate and deliberate on important matters that will form the foundation of measures for mitigating risks to workers and impediments to health.
Membership of the Health and Safety Committee is comprised of managers and labor union members in equal numbers.
Regular meetings are also held with contractors who work on site in an effort to further invigorate communication.

Prevention of Industrial Accidents
To ensure that the serious accident that happened at the Jimokuji Plant on January 17, 2006 is not forgotten, we have declared
January 17 as All AICA Safety Day. Every year on All AICA Safety Day, a minute of silence is observed, and morning assembly
has a safety theme at all workplaces. The AICA Group Occupational Health and Safety Convention also takes place on this day.
On the factory floor level, KYT (kiken yochi kunren or risk prediction training) activities, hiyari-hatto (near-miss) activities, andp.46 ). To enhance these lowrisk-source improvement activities are conducted in the small-group activities (C&C activities
key, steady efforts, from FY2018, the KYT activities being undertaken by the individual small groups are now being assessed
under a point rating system. Pursuing improvements so that training is not just a formality, but will be something meaningful that
leads to greater awareness of safety, we are striving to eliminate industrial accidents.

Target scope: All AICA Group production sites in Japan

Frequency rate*

Number of industrial accidents(accidents)

FY2018FY2019AICA Group production sites in Japan (non-consolidated)

FY2020

AICA Group production sites in Japan (consolidated)

Risk assessment is a method for discovering potential risks and hazards in the workplace and eliminating or mitigating them.
We conduct risk assessments under internal regulations based on our Occupational Health and Safety Management Systemat major AICA Group production sites in Japan. We conduct risk assessment of chemical substances and pursue activities toeliminate or mitigate risk.

Prevention of Traffic Accidents
We have a fleet of company vehicles that are in use in our
day-to-day operations. Only those employees who have beenregistered after their driving aptitude has been confirmed are
permitted to drive the company vehicles. In addition to traffic laws, we have also established our own Rules for Use ofCompany Vehicles in our efforts to prevent traffic accidents.
Although there were fewer vehicle accidents last fiscal year
than previous years, there was a large number of accidents
caused by younger drivers when reversing the vehicle intoparking spaces. Fortunately, none of those accidents wereserious, but we will continue to devote efforts to eliminating
serious accidents and elevating driving skills.

Vehicle accidents (caused by negligence of AICA Kogyo Co., Ltd. employees andnegligence by both parties)(accidents)

FY2016FY2017FY2018FY2019FY2020

23

26

22

25

10

Mental Health
In an economic environment of intensifying market competition and rapid change, the stress felt by workers is only increasing,
becoming a serious social issue.
We have put a variety of measures in place to maintain not only the physical health of our workers, but also their mental andemotional health. The results of annual stress checks are fed back to the individuals, and the findings from analysis of the results
on a departmental level are fed back to the head of each department, to promote initiatives aimed at improvements in the workplace. We have set up a health advice hotline, run by an external organization, as an avenue for employees to seek advice withthe assurance of confidentiality.

Foundations of AICA

Achievement Trends

FY2017

CSR Activities

http://www.aica.co.jp/company/environ/resource/

Human Resources

FY2016

About AICA

National manufacturing industry average

Fatal accidents

0

0

0

0

0

Lost-time accidents

2

7

6

7

6

Of which, those
involving people
other than full-time
employees

Non-lost-time
accidents
Of which, those
involving people
other than full-time
employees

0

3

6

4

4

12

10

12

13

6

3

*Frequency rate = Number of fatalities and injuries caused by industrial accidents(excluding non-lost time accidents) x 1,000,000 ÷ Total work hours
Figures are for permanent employees
2.85

2

1.73

1
0.82
0

4

4

7

6

1

1.40

1.36
0.83

0.00

0.00
2016

1.41

0.00
2017

2018

2019

Regular Health Check-ups
In addition to the health check-ups mandated by law, we also provide a combination of Lifestyle Disease Check-ups andGynecological Check-ups tailored to employees’ age, gender, and preferences. In this way, we are strengthening our employee
health management functions. Since FY2014, the company has covered part of the cost of influenza vaccinations, including
for family members (conditions apply), to step up efforts to prevent our workers falling ill. In June 2021, we made it possible for
employees to take special leave to be vaccinated against COVID-19 and if they are unwell from side effects of the vaccine.

2020 (FY)

Major initiatives in FY2020

Occupational Health and Safety Convention (Jan. 2021)
Plant manager training (Jan. 2021)

AICA Group Occupational Health and Safety Convention (FY2019)47

AICA Report 2021

AICA Report 2021

48

Foundations of AICA

Additional information about the environment is available on the AICA website.
AICA Home Page

Environment

About AICACSR Activities

Environment

http://www.aica.co.jp/company/environ/plan/

The company website is scheduled for relocation to a new website in January 2022.

Basic Approach to the Environment
The AICA Group has developed an environmental management system based
p.36 ).
on ISO 14001 and operates an original QEO Management System (To realize a sustainable society, we are actively engaged along the two central themes of “responding to climate change issues” and the “effective use ofresources”.
The Sustainability Development Committee has jurisdiction over environmental themes. The Climate Change Response Committee established under thiscommittee plays the central role in responding to climate change issues. The
details of the Subcommittee’s activities are periodically reported to the Board of
Directors via the Sustainability Development Committee.

Medium and Long-term Targets
Environmental Philosophy

We will strive to protect the environment
and achieve harmony with local
communities and deliver environmentallyfriendly products.
Environmental Policy

In the New Medium-Term Business Plan launched in April 2021, AICA set the following targets for the reduction of greenhousegas (GHG) emissions. For Scope 1 and Scope 2, we set a goal of conducting a scenario analysis aimed at net zero GHG emissions, in response to the Japanese government’s declaration on net zero GHG emissions by 2050. We recognize that our current
numerical target (reducing GHG emissions revenue intensity by 26% from FY 2013 levels) for the halfway point of FY2030 isinsufficient. As such, we plan to engage in repeated discussion about raising our target alongside conducting this scenario analysis. We are not yet at the point of setting targets for Scope 3, but we will steadily work toward the establishment of calculation
methods on a Group basis and on developing emissions reduction measures.

1 Creating products that are kind on
both the environment and humans• Conduct simulations aimed at net-zero GHG emissions by 2050, and develop
measures(From AICA’s own activities)

3 Contribution to the circular economy
4 Harmony with local communities
5 Compliance with laws and regulations• Reduce GHG emissions revenue intensity by 10% by FY 2023 (compared to FY 2020)

Scope 1 and Scope 2

2 Responding to climate change

Scope 3

• Establish calculation methods for Scope 3 emissions and develop emissions
reduction measures(From other companies’ activities related to
AICA’s own business activities)

Please refer to pages 23-30 for an overview of the Medium-Term Business Plan.

Target scope: The target scope of each category is clearly stated. The breakdown of sites and locations is as follows.
• AICA Group production sites in Japan: All production sites of AICA Kogyo Co., Ltd., AICA Interior Kogyo Co., Ltd., AICA Harima Kogyo Co., Ltd., andAICA-TECH Kenzai Co., Ltd.
• AICA Group production sites overseas: All production sites of PT. AICA Indonesia, PT. Techno Wood Indonesia, Aica Laminates India Pvt. Ltd.,
Aica Laminates Vietnam Co., Ltd., AICA Asia Pacific Holding Group, Evermore Chemical Industry Group, andWilsonart companies

Targets and Achievements (Scope 1 and Scope 2)
FY2020 Targets*

FY2020 Achievements

AICA Group production sites in Japan
GHG emissions revenue intensity
3% year-on-year decrease 46.4 t-CO2/100 million yen
revenue or less

FY2023 Targets
AICA GroupGHG emissions revenue intensity
10% decrease from FY2020

0.2% year-on-year decrease
47.8t-CO2/100 million yen revenue* Due to the discovery of an error in the achievement figures for FY2019 and the resulting changes in the numbers, the numerical targets announced last year have been revised.

Responding to Climate Change

Please refer to pages 19-20 for details of initiatives aimed at expansion of disclosures under TCFD recommendations

Reinforcement of management of boiler equipment, e.g.
optimization of temperature settings
Improvement of efficiency by increasing quantity per lot of
products placed in dryers
Replacement of equipment to higher-efficiency models
Reduction of product defect rate
Stabilization of temperature inside curing chamber in
extruded cement board manufacturing process

Air distribution fan (left) and heat retention curtain (right) newly installed to stabilize temperatureinside curing chamber
Third-party assurance have been obtained for some environmental indicators, e.g. GHG emissions.
Please refer to the Environmental Data at the back of this booklet (pages 61-64) for details.

Achievement Trends (Scope 1 and Scope 2)

Target scope: AICA Group production sites in Japan, AICA Group overseas production sites, AICA Group sales locations in Japan (26 sales offices)

GHG emissions

GHG emissions revenue intensity

100,000
88,13780,000

Basic Approach① 26,917
66,18660,000Moves to aim for net zero GHG emissions by 2050 are gaining pace in various countries, and we believe that any company
that is unable to respond to those moves will be gradually eliminated from the market. In our aim to be a chosen company in the
net zero age, we will pursue with certainty the targets incorporated as materiality KPIs in the New Medium-Term Business Plan.
Alongside our deliberation of drastic emissions reduction measures, we will conduct our usual energy-saving activities andappropriate capital investment, including the introduction of higher-efficiency production equipment, in our efforts to optimize
our energy use.

Production sites in Japan

Overseas production sites
Sales Locations in Japan
Production sites(left axis)(left axis)
in Japan (left axis)① Newly consolidated in FY2018 ② Newly consolidated in FY2019 ③ Newly consolidated in FY2020
Production sites in Japan + Overseas production sites (right axis)(t-CO₂)

Reduction of GHG Emissions (energy saving)Foundations of AICA

In the Global Risks Report, published annually by the World Economic Forum (WEF), an international organization committed
to resolving global-scale issues, “extreme weather” and “climate action failure”, both related to climate change, were perceived
as the highest likelihood risks and highest impact risks. Extreme weather events are also increasing on a global scale. AICA
Kogyo has sustained damage several times in recent years from disasters caused by such events, and we feel keenly that climate change is a major business risk. With this recognition, we incorporated materialities (material issues), including “responding
to climate change,” in the new Medium-Term Business Plan that began in April 2021. We have set concrete KPIs for each of
the materialities. For Responding to climate change, we have declared targets for greenhouse gas (GHG) emissions, industrial
waste, and water consumption. We will thoroughly manage progress toward these targets and pursue them with certainty.
As an organization to promote more concrete deliberation and implementation of our responses to climate change, welaunched the Climate Change Response Project in April 2020. The Project was relocated into the Sustainability Development
Committee in April 2021, with production, sales, development, and administrative divisions joining forces to propose drastic
GHG reduction measures and promote initiatives aimed at capturing opportunities resulting from climate change.

Major initiatives in FY2020

64,38655,206

63,132

89,19790,029② 1,332③ 9,366

60,00456,76453,608

Production sites in Japan + Overseas production sites(t-CO₂)(t-CO2/100 million yen)

500,000

100

400,000

80

300,000

60

80.0

57.9

74.0

79.1

53.4

51.3

2017

2018

80,66387,86561,22040,000151,269
121,392

121,150

149,201

1,450

2016

1,331

2017

1,284

2018

1,184

2019*

40

100,000

20

0

0

82.2

47.9

47.8

2019*

2020 (FY)

143,637

20,0000200,000

77.9

1,060

2020

(FY)

2016

* Due to the discovery of an error in the achievement figures for FY2019, the figures for last year have been changed.

49

AICA Report 2021

AICA Report 2021

50

Foundations of AICA

Additional information about the environment is available on the AICA website.
AICA Home Page

About AICACSR Activities

Environment

http://www.aica.co.jp/company/environ/plan/

Environment

The company website is scheduled for relocation to a new website in January 2022.

Green Logistics

Reduction of Industrial Waste / Recycling

Reducing GHG emissions from transport is another challenge that companies must address. In the AICA Group, the logistics
officers at major shipping sites throughout Japan are working together with the sales divisions on ongoing improvement efforts,
including modal shift, improving the efficiency of truck freight, and depot organization.
We will continue to put various measures in place to reduce energy consumption (heavy oil equivalent) per freight tonne-kilometers (t-km), which is a management index for this area.
Targets and Achievements

Basic Approach
We began concrete initiatives for the reduction of industrial waste in 1998. This is an important environmental indicator for theentire Group. Reduction initiatives being considered and pursued include reducing the volumes of industrial waste generated andthe processing of generated waste into valuable materials.

Target scope: Domestic transport (Logistics in which AICA Kogyo Co., Ltd. is the shipper)

FY2020 Targets

FY2020 Achievements

1% year-on-year decrease
43.00 kl/1 million t-km or lessTargets and Achievements

FY2021 Targets

4.1% year-on-year increase
45.23 kl/1 million t-km

FY2020 Targets

1% year-on-year decrease
44.77 kl/1 million t-km

Achievement Trends
Target scope: Domestic transport (Logistics in which AICA Kogyo Co., Ltd. is the shipper)

t-km energy use intensity in transport(kl/1 million t-km)

FY2016FY2017FY2018FY2019FY2020

44.99

44.58

44.12

43.44

45.23

FY2020 Achievements

FY2023 Targets

AICA Group production sites in Japan
Industrial waste generation revenue intensity
2% year-on-year decrease 41.7 tonne/100 million yen
or less

26% year-on-year decrease
31.5 tonne/100 million yen

AICA Group
Industrial waste emissions revenue intensity
10% decrease from FY2020

Landfill rate at production sites in Japan
1.0% or less

13.0%

-

Major initiatives in FY2020

Scope 3 Emissions

Conversion of used film to valuable material

 reakdown of GHG Emissions at AICA Group Production Sites
B
in JapanEffective use of calcium silicate panel offcuts
Reduction of effluent through introduction of automatedScope 1

Scope 3container cleaning equipment

Scope 2(Category 12)

End of life
treatment ofsold products

5%
14%Foundations of AICA

We have been working to identify and calculate GHG emissions related to product manufacture (LCA) since FY2006. In
FY2013, we calculated our Scope 3 emissions for the firsttime. In FY2020, we conducted an extensive review of ourCategory 1, 5, and 12 calculation methods and updated our
figures. Our calculations revealed that the largest volume of
Scope 3 emissions at AICA Group production sites in Japan
were in Category 1 (purchased goods and services), followed
by Category 12 (End of life treatment of sold products). Goingforward, we plan to calculate our Scope 3 emissions for the
major categories on an annual basis.

Improvement of product defect rate

4%

Achievement Trends
Target scope: AICA Group production sites in Japan, AICA Group production sites overseas

Please refer to pages 61-64 for details of emission volumes and for the
status of third-party assurance obtained.

66%
Scope 3(Category 1)
Purchased goods
and services

Industrial waste emission volumes*
Production sites in Japan (left axis)

Industrial waste emissions revenue intensity
Production sites in Japan

Overseas production sites (left axis)① Newly consolidated in FY2018 ② Newly consolidated in FY2019 ③ Newly consolidated in FY2020

Production sites in Japan + Overseas production sites

Production sites in Japan + Overseas production sites (right axis)

Use of LCA
We have introduced Life Cycle Assessment (LCA) in thedevelopment of our products. LCA of CO2 emissions has become particularly important in recent years and we are concentrating efforts on analysis.
In addition to using LCA in the development of low-carbon
products, we will identify the carbon intensity and environmental impact of each product and strive to develop productsthat are kind on the global environment.

51

AICA Report 2021

(tonne)50,000LCA Concept

40,00027,20330,000Mining/Refining

IN
Energy23,256

Raw materials

Manufacture

Disposal

AICA Products

28,591
24,59327,298Substancesof Concern,e.g. CO2

26,560

Shipment/Use

3,903

10,00003,947① 80.8

3,998

6,611
② 572

3,095

2016

30,00020,784

OUT

2017

2018

6,514

15,000③ 1,857

6,039

2019

(tonne/100 million yen)
50.0
40.0

36,04030,46320,000Natural resources(tonne)45,00042,651

4,657

2020

28.8

30.0
20.0

20.3

20.4

17.9

17.5

0

2016

2017

18.6

22.3

10.0
0
(FY)

21.6

15.6

15.9

2018

2019

2020 (FY)*From this year’s report, we have changed the indicator for industrial waste from “volume generated” to “emissions volume.”

AICA Report 2021

52

Foundations of AICA

Additional information about the environment is available on the AICA website.
AICA Home Page

CSR Activities

Environment

http://www.aica.co.jp/company/environ/plan/

Environment

The company website is scheduled for relocation to a new website in January 2022.

Environmental Risk Management

Reduction of Water Consumption
Basic Approach

State of Compliance with Environmental Laws

The AICA Group strives to use water, a finite resource, effectively and makes a point of appropriate water use in all Group
companies. In the new Medium-Term Business Plan that began in April 2021, we declared “Responding to climate change” asone of our materialities (material issues) and set targets for “reduction of water consumption revenue intensity in high-risk areas,”
which is as one of our KPIs. We will strive to optimize water use in those areas after conducting on-site investigations.
Our production sites in Japan use industrial water and underground water, and we are pursuing the cyclic usage of water at
our Nagoya and Jimokuji Plants.
Some of our overseas production sites are located in countries with grave water situations. Each of our business sites istaking the necessary measures and managing its water usage with the recognition that water is a finite resource. With reference
to AQUEDUCT, which is released by the World Resources Institute (WRI), we identify high-risk areas and promote effective useof water in those areas as a priority. Aica Laminates India, which is located in the northwest of India, recycles water for use in its
manufacturing processes, and any waste water is treated and used for gardening purposes.

In FY2020, no Japanese site in the AICA Group was subject to correction directives from the competent authorities or toenvironment-related litigation.

Complaints from Neighbors and Responses
In FY2020, we made the following responses to complaints from neighbors of AICA Group’s Japanese sites.
Complaints from neighbors and responses
Location

AICA Kogyo Co., Ltd.
Targets and Achievements

Nagoya Plant

FY2020 Targets

FY2020 Achievements

AICA Group production sites in Japan (excluding AICATECH Kenzai Co., Ltd.)
Water intake production intensity
2% year-on-year decrease

Water consumption revenue intensity in high-risk areas
6% decrease from FY2020

6% year-on-year increase

AICA Kogyo Co., Ltd.

Liquid raw material stuck on vehicle in neighboring

Jimokuji Plant

carpark

Nagoya Plant

Actual water consumption in FY2020 in high-risk areas*1

Water usage(1,000 m³)

3,000
2,514
2,241

2,382

2,291

2,382

2,000

802

998

1,381
② 18

1,137
① 325

1,363

1,434
③ 38
1,396

812
0

Name of site

Location

Consumption

Aica Laminates India Pvt. Ltd.

Northwest India

26,100 m3

PT. AICA Indonesia
PT. Techno Wood Indonesia

Cikampek(Indonesia)

25,300 m3

PT. AICA INDRIA(AAPH*2 Group)

Pasuruan(Indonesia)

44,600 m3

Northeast China

4,700 m3

Shenyang AICA-HOPE Kogyo Co., Ltd.

Environmental Accidents
In FY2020, there were no environmental accidents that would have an impact outside AICA Group sites in Japan, but thefollowing accidents related to us did occur. We share information and roll out responses horizontally across the Group to ensurethat no inconvenience is caused to our neighbors or to the government agencies with jurisdiction.
Environmental Accidents
Location

Details

Response

Product delivery
destination(Yokohama City)

Several 18-liter drums of chemical products being
delivered to a customer fell off the truck’s load-carrying tray at the entrance of the customer’s premises.
Approximately 100 kg of resin leaked from the drums,
some of it flowing out onto the road.

The leaked resin was covered with sand as a stopgap measure to prevent dispersal, and it was latercollected. Rectified truck tray stacking methods.

Tanba Plant

Fire in dust-collection duct and machine. Assumed
that there was a dust explosion in an outdoor pipe,
which caused the dust inside the duct to ignite, withthe fire moving into the machine.

Established that the exhaust pipe was made of vinyl
chloride, which is highly electrostatic. The cause wasdetermined to be ignition from static electricity of resin dust in the duct, so the exhaust pipe was changed
to stainless steel to reduce electrostatic properties.
Sprinkler placement was also changed.

Jimokuji Plant

In a building where epoxy is manufactured, curing
agent was mistakenly poured into vat containing theprincipal agent, causing a sudden heat reaction that
resulted in fumes.

Worker judged the container drum by external appearance only, mistaking the principal agent compounding ingredient (diluent) for the curing agent
compounding ingredient. To prevent such misjudgments, curing agent was moved to a different locationand the containers were differentiated by color.

*1 Sites assessed as at “extremely high” risk in WRI Aqueduct’s Overall Water Risk.

2016

2017

2018

2019

2020 (FY)*2 AICA Asia Pacific Holding

Effective Use of Resources
The AICA Group strives to use resources effectively and tocontribute to the realization of a circular economy. In productdevelopment, we adopt product specifications that consider
efficient use of raw materials, and we are working to reduce
the weight of packaging materials. In our production processes, we have set annual targets for the reduction of productdefect rates with the aim of the effective use of raw materials
and waste reduction. We are also working on the recycling ofgenerated waste.

AICA Report 2021

Recycling in collaboration with external companies in Japan
Collaborators
Machinery manufacturer

Foundations of AICA

Overseas production sites

Production sites in Japan① Newly consolidated in FY2018 ② Newly consolidated in FY2019 ③ Newly consolidated in FY2020

Established that raw material had leaked from thepipe of an outdoor storage tank and theorized thatit had scattered in the wind. Conducted emergency
repairs and took more permanent action of replacing
pipe. Apologized to vehicle owner.
Conducted noise abatement measures on machinerynear the northern edge of the site, which was the likely source of the noise. Prevention of no-load runningof rotary valves and continued maintenance of chain
bearings, etc.

Late-night noise

Ltd.

Response

Established that the noise was from forklift operations, so staff were educated about forklift driving andhandling. Apologized to neighboring residents.

Early morning noise

AICA-TECH Kenzai Co.,
Target scope: AICA Group production sites in Japan, AICA Group production sites overseas

1,000

Details

FY2023 Targets

Achievement Trends

53

About AICA

Details
Reduction of volume of waste resinand dewatered sludge

Compost manufacturer

Development of uses for compost

Compounding and granulatingmachinery manufacturer

Modify the properties of industrial
waste sludge and process for fuelapplications

AICA Report 2021

54

Foundations of AICA

Additional information about engagement with stakeholders is available on the AICA website.
AICA Home Page

Engagement with Stakeholders

About AICACSR Activities

Engagement with Stakeholders

http://www.aica.co.jp/company/environ/principle/

The company website is scheduled for relocation to a new website in January 2022.

Basic Approach to Engagement with Stakeholders

Cultural Activities

As a company that is widely trusted by society, we have instilled in our corporate policy our belief in the importance of fair andhighly transparent compliance-based management in accordance with the law and social order and in engagement with stakeholders. Based on this corporate policy, we have a basic policy of disclosing information about the company to all stakeholders
in a fair and timely manner.

Through the supply of high-quality products, we have strived to contribute in some small way to the elevation and development of architectural culture. With the intention of further contributions, we hold the AICA SEMINAR IN CONTEMPORARY
ARCHITECTURE, the AICA DESIGN ACADEMY, and various contests for applications of our products.

Involvement with Customers

Engagement with Suppliers

Voluntary Action Guidelines Concerning Product Safety
We believe that the most important challenge in quality management is to deliversafe and reliable products to our customers. To put this into practice, we have established voluntary action guidelines regarding product safety and strive to ensure
product safety and information disclosure.

Basic Approach to Engagement with Suppliers roduct Safety Voluntary Action
P
Guidelines - Basic Principles[1] Compliance with laws andregulations[2] Initiatives for ensuring productsafety[3] Response to product-related
incidents

To fulfill the AICA Group’s corporate social responsibility (CSR), we believe that it is essential that we obtain the understanding
and cooperation of our stakeholders. In our procurement activities, in addition to acting responsibly as the AICA Group, we also
pursue CSR activities with the cooperation of our suppliers.
Based on this belief, in June 2017, we undertook a major overhaul of our earlier procurement policies and established the
AICA Group CSR Procurement Guidelines. We have obtained the consent of our suppliers in Japan and overseas to these
Guidelines, for the further mutual improvement of our CSR activities.

Communicating with Suppliers
Provision of Product Safety Information

Value Chain Collaboration
We have built a strong network to facilitate collaboration with the distributors and builders that handle our products. We haveestablished the AICA Distributors’ Organization as a network of distributors, with which we share product knowledge and sales
and product strategies, and strive for healthy communication between distributors. We have also established separate construction groups for each product sold, through which we share information about improving construction quality and about productimprovement and development.

AICA Support Center
We have established the AICA Support Center as a direct point of contact with customers who have adopted our products.
We are striving to improve the quality of responses to inquiries, including the introduction of a call center system in FY2018. To
allow us to be of even more assistance, the Center is making efforts to enhance our proposal-making capabilities in collaboration
with the business divisions.

We held a Purchasing Policy Briefing in June 2019 as a forum for communication
with our suppliers, at which we shared our company policies and purchasing policies.
Further, with the objective of sharing our CSR procurement philosophy and investigating the actual situation, we have conducted self-evaluation questionnaire
surveys since FY2018. For the targets of this survey, we selected suppliers thatcover approximately 70% of the total value of AICA Kogyo’s (parent company only)
materials procurement, with a particular focus on our main suppliers.
Based on the results of this survey, where necessary, AICA Kogyo employees thenconduct an audit (on-site inspection). If any outstanding initiatives are confirmed, we Purchasing policy briefing
will learn their methods, and if we encounter matters that require correction, we will
provide guidance and instruction to those companies. By continuing with this two-way dialogue, we aim for the mutual improvement of our standards.

Foundations of AICA

In the midst of ever-increasing concerns about chemicals, including the enforcement of the Revised Buildings Standards Act,the revision of the standards for school environmental hygiene, and restrictions on chemical substances overseas, our businessoverall is widely involved in these issues.
To fulfill our responsibilities as a member of the supply chain, such as inquiries about new legislation in various countries, andrequests for investigation and provision of information about new chemicals, the relevant departments work together to provide
prompt and more accurate responses.

Business Continuity Plan (BCP) in Procurement Activities
To ensure stable supplies even after a disaster or accident, we purchase our main raw materials from multiple suppliers andsites, and ensure that we have alternative options for purchasing. Regarding our own products, we have built production structures at multiple sites and have taken measures to ensure that we maintain a certain level of inventory. We will continue to consider measures to ensure that we can fulfill our supply responsibilities even in the event of a disaster or accident, and implement
various measures as required.

Customer Satisfaction Survey
With the objective of asking our customers to evaluate our products and services, we have conducted a Customer Satisfaction Survey since FY2002. To put the opinions received from our customers to good use in product development and improvement of services, we identify issues from the survey findings, communicate them to the relevant departments after the senior
executives have checked them, and put responses into place.

55

AICA Report 2021

AICA Report 2021

56

Foundations of AICA

Additional information about engagement with stakeholders is available on the AICA website.
AICA Home Page

CSR Activities

Engagement with Stakeholders

http://www.aica.co.jp/company/environ/principle/

Engagement with Stakeholders

The company website is scheduled for relocation to a new website in January 2022.

Involvement with Shareholders

Engagement with Local Regions and Communities

Ensuring Appropriate Information Disclosure and Transparency

Basic Approach to Engagement with Local Regions and Communities

As a company that is widely trusted by society, we have a basic policy of disclosing information about the company to all
stakeholders at the right time and in the most fair and appropriate manner. We comply with the Companies Act, the Financial
Instruments and Exchange Act, and the rules for timely disclosure prescribed by the stock exchanges on which our shares arelisted, and conduct information disclosure in accordance with our Disclosure Policy.
Even for information that is not covered by the relevant legislation or by timely disclosure rules, if we believe the information to
be important for shareholders and investors to make investment decisions, we will disclose that information, giving consideration
to fairness and timeliness.
Please refer to the company website (http://www.aica.co.jp/company/ir/) for information disclosure documents.

As a company with global operations, the AICA Group values its connections with local regions and communities in both
Japan and overseas. In addition to promoting local employment, we take all complaints made to the company seriously andrespond appropriately when any problems are detected in our business activities.
We continue to conduct activities based on a philosophy of mutual harmony, such as participating in volunteer activities incollaboration with local community action groups, including clean-ups in the areas surrounding our production and sales sites.

Communication with Shareholders and Investors
We take proactive steps, within a reasonable extent, to achieve constructive dialogue with our shareholders.
Any opinions and information obtained through such dialogue is reported to the Board of Directors
and we strive to reflect it in future management and IR activities. To obtain their understanding andappropriate evaluation, in addition to the General Meeting of Shareholders, we hold Financial Results
Briefings for analysts and institutional investors twice a year, at which our Representative Directors provide explanations. The Public Relations and IR Group responds to requests for individual interviews andtelephone press inquiries. Any information to be disclosed in such cases is approved by a Representative
Director and the Officer responsible for the matter at hand.

Number ofindividual dialogues
with institutional
investors in FY2020

196

To realize the return of profits to our shareholders and the sustainable growth of the company, we plan to issue dividends thatconsider the consolidated performance of each period, payout ratios, and internal reserves.
Under our new Medium-Term Business Plan, “Change & Grow 2400,” our basic policy is to issue shareholder returns in astable manner, with a target consolidated payout ratio of 50%. Internal reserve funds will be used appropriately in considerationof investment efficiency from long-term perspectives. This includes prioritizing their use for capital investment for the expansionof existing core businesses and investments to increase future corporate value, such as M&As.
In FY2020 results, profits were down due to the extraorDividend and payout ratio
dinary circumstances presented by the COVID-19 pandemic,
FY2021FY2017FY2018FY2019FY2020but given that both ordinary profit and operating profit reached(projected)
record high levels in the second half of the fiscal year and in
Payout ratio
50.1% 50.5% 54.4% 64.9% 54.2%
consideration of past dividend payments and the capital adequacy rate, we increased the dividend by one yen per share.
Dividend
92 yen 103 yen 106 yen 107 yen 108 yen
We also plan to pay a dividend of 108 yen per share, an increase of one yen, in FY2021.

Donation of Antiviral Building Material, “Virutect,” to Special Needs School Run by Aichi PrefectureWith the protraction of the COVID-19 pandemic, transmission prevention measures have been reinforced in schools, wherestudents spend long periods of time in groups. This has placed increased burdens on the people in schools. To maintain sanitaryconditions inside the schools, teachers and staff spend their breaks and time after lessons on transmission prevention measures,such as disinfecting desks and other various surfaces.
Under these circumstances, as part of our contribution to local communities through our products, we donated equipment and renovations using our antiviral building material, “Virutect,” to Aichi Prefecture. Speaking about this donation, Ms.
Chihiro Higaki and Ms. Kyoko Taguchi, teachers at the
Aichi Prefectural Minato Special Support School, said,‘Because we are a special needs school, almost all of
our students have underlying conditions. The time spent
on disinfection has increased to the extent that we feelas though we are disinfecting every time we do anything.
We are particularly careful at mealtimes, when the students remove their masks, so we are extremely gratefulfor the donation of lunch tables and other equipment.’

Donation of Goods for Prevention of Transmission of COVID-19 at Overseas Sites
With some areas of Asia suffering more severe COVID-19
levels than Japan, we donated transmission prevention goods
to neighboring residents and nearby facilities.

External Evalution
After our addition for the first time in 2019 to the FTSE4 Good Index Series and FTSE
Blossom Japan Index, leading ESG indices developed by FTSE Russell, we have also
been adopted for the next two years, 2020 and 2021.
We have been part of the JPX Nikkei Index 400, a stock index developed by the Japan
Exchange Group, Inc., Tokyo Stock Exchange Group and Nikkei Inc., for nine consecutive
terms.

AICA Report 2021

Foundations of AICA

Shareholder Returns

57

About AICA

AICA HATYAI Co., Ltd.

Aica Bangkok Co., Ltd.

Main donations made in FY2020
AICA Guangdong Co.,
Ltd. (China)

Donated masks, thermometers, and liquid
sanitizer to nearby schools

AICA Shanghai Co., Ltd.
(China)Donated masks, thermometers, and liquid
sanitizer to nearby schools

AICA Nanjing Co., Ltd.
(China)Donated masks, thermometers, and liquid
sanitizer to nearby schools

KUNSHAN AICA KOGYO
CO., LTD. (China)

Donated masks, thermometers, and liquid
sanitizer to nearby schools

Shenyang AICA-HOPE
Kogyo Co., Ltd. (China)

Donated masks, thermometers, and liquid
sanitizer to nearby schools

PT. Techno Wood Indonesia (Indonesia)

Donated masks, gloves, and liquid sanitizer tonearby residents

PT. AICA INDRIA(Indonesia)

Donated PPE to nearby hospitals

AICA HATYAI Co., Ltd.
(Thailand)

Donated food supplies and thermometers to
support COVID-19 patients

Aica Bangkok Co., Ltd.
(Thailand)

Donated masks and alcohol to local residents
and nearby hospitals

AICA Report 2021

58

Data

11-Year Financial Summary
AICA Kogyo Co., Ltd. and consolidated subsidiaries

(FY)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Net sales

89,216

95,071

101,353

141,096

143,843

150,061

151,633

163,726

191,363

191,501

174,628[Net sales by segment]*1 Chemicals

31,56832,56933,59469,31675,081

77,26974,881

82,911109,062

103,945

90,446

Construction Materials

51,74656,59062,53967,016

68,762

72,79176,75280,81582,30087,55584,182

Electronics

5,901

5,911

5,219

4,762

-

-

-

-

-

-

-

Operating profit

9,286

10,564

12,06914,527

15,181

16,18418,09919,092

20,83420,85017,991

Ordinary profit

9,447

10,771

12,64014,74815,885

16,352

18,374

19,60021,24921,333

18,438

Profit attributable to owners of parent

5,417

5,986

7,633

8,221

10,137

9,962

11,064

11,996

13,316

12,732

10,759[Profit by segment] *1 *2 Chemicals

2,350

2,154

2,471

4,258

4,673

5,417

6,223

6,537

7,444

8,123

7,109

8,336

9,843

11,32012,16012,602

12,83814,48815,623

16,16915,874

13,751

527

581

475

430

-

-

-

-

-

-

-

Capital investment

1,502

2,004

2,828

3,829

2,960

2,934

3,876

4,522

7,896

8,487

6,113

Depreciation

2,835

2,514

2,216

2,998

3,100

3,491

3,458

3,569

4,173

4,632

5,683

R&D expenditure

1,786

1,878

2,012

2,146

2,356

2,597

2,672

2,856

3,208

3,454

3,327

Total assets

94,638102,997

119,301

131,812147,017

153,434

164,634

189,626

191,025

206,439

207,363

Net assets

72,12476,19185,006

94,389107,226

112,501

119,685

132,616

136,116

146,221150,505

Interest-bearing debt

1,038

747

1,342

2,746

3,376

1,898

2,041

5,152

5,298

7,194

7,671

Cash and cash equivalents: at end of period

28,51030,114

18,981

23,77235,22037,44947,622

48,89645,37940,644

41,185

Cash flow from operating activities

6,689

8,402

9,479

11,22813,08014,612

18,331

16,436

13,275

18,24019,713

Cash flow from investing activities

1,464(4,386)(18,312)(4,851)(143)(7,025)(3,269)(7,950)(8,147)(16,798)(9,756)

Cash flow from financing activities(2,242)(2,403)(2,363)(1,950)(1,912)(4,849)(4,587)(7,406)(7,557)(6,210)(9,179)

Free cash flow

8,153

4,015

(8,833)

6,377

12,936

7,586

15,062

8,485

5,127

1,442

9,957

Earnings per share (yen)

84.22

92.78

117.95126.77155.99152.62

169.48183.76203.95195.01164.79Net assets per share (yen)1,109.01

1,166.27

1,263.11

1,405.27

1,581.17

1,654.14

1,759.91

1,880.13

1,936.87

1,994.03

2,064.24

Dividend per share (yen)

32.00

34.00

36.00

38.00

43.00

46.00

85.00

92.00

103.00106.00107.00

Payout ratio (%)

38.5

37.1

30.8

30.2

27.6

30.1

50.2

50.1

50.5

54.4

64.9

Overseas sales ratio (%)

5.1

6.6

7.2

29.2

33.3

33.2

30.8

33.4

42.0

40.7

42.7

Operating profit margin (%)

10.4

11.1

11.9

10.3

10.6

10.8

11.9

11.7

10.9

10.9

10.3

Return on equity (ROE) (%)

7.8

8.2

9.7

9.5

10.4

9.4

9.9

10.1

10.7

9.9

8.1

Return on assets (ROA) (%)

5.9

6.1

6.9

6.5

7.3

6.6

7.0

6.8

7.0

6.4

5.2

Net debt-to-equity ratio (times)

0.015

0.010

0.016

0.030

0.033

0.018

0.018

0.042

0.042

0.055

0.057

Equity ratio (%)

75.5

73.2

68.6

69.2

70.2

70.4

69.8

64.7

66.2

63.1

65.0

Domestic naphtha price (yen)46,30054,50055,10065,30069,70046,00032,80040,50051,00042,00033,000Exchange rate (JPY/USD) *3

87.69

79.77

79.93

97.11

106.37120.99110.29112.38110.56109.37106.67

Number of new housing starts in Japan (10,000 units)

81.9

84.1

89.3

98.7

88.0

92.0

97.4

94.6

95.2

88.3

81.2

44,48947,52252,031

56,43852,612

49,98851,33453,31351,01647,97944,921

Management Results (million yen)

Construction Materials
Electronics

Per Share Data

Data

Financial Indicators

Other Indicators

Area of non-residential building starts (1,000 m2)*1 With the sale of the Electronics Business in FY2014, some sections of the Electronics Business was transferred to the Chemicals Segment from FY2014.
*2 Operating profit before deduction of unallocated operating expenses *3 Annual average

59

AICA Report 2021

AICA Report 2021

60

Data

Non-Financial Data (Environment)
Assured by an independent assurance provider
Scope of Calculation

FY2016FY2017FY2018FY2019AICA Group total

2,308

2,429

3,029

1,971

1,939

   Group in Japan total

1,179

1,221

1,200

808

758

   Group overseas total

1,129

1,208

1,829

1,163

1,181

Water withdrawal volume (1,000 m³)

Ground water (1,000 m )3Atmospheric Emissions

GHG emissions
Scope 1 (t-CO2)

GHG emissions
Scope 2 (t-CO2)

GHG emissions
Scope 3 (t-CO2)

FY2017FY2018FY2019FY2020

AICA Group total

3,319

3,239

3,334

3,763

3,818

   Group in Japan total

2,517

2,241

2,291

2,382

2,384

   Group overseas total

802

998

1,043

1,381

1,434

AICA Group total

2,474

2,314

2,467

2,468

2,425

AICA Group total

519

582

61

172

1,103

AICA Group total

327

343

806

1,123

290

Scope of Calculation

Use of Water Resources

Energy Use

Energy inputs (TJ: Terajoules)

FY2016FY2020Industrial water (1,000 m )3

AICA Group total

54,21454,68469,35363,933

61,243   Group in Japan total

33,461

34,71834,57032,16730,608   Group overseas total

20,753

19,96634,78331,76630,635COD (tonne)

Group in Japan total

34.4

39.5

22.3

11.8

31.2

AICA Group total

67,17866,466

81,91685,26982,394

Nitrogen (tonne)

Group in Japan total

9.0

10.2

15.8

5.6

11.7

   Group in Japan total

32,72529,66828,562

27,83823,000

Phosphorous (tonne)

Group in Japan total

2.7

3.9

3.3

6.9

6.1

   Group overseas total

34,45336,79853,35457,431

59,394

Substances subject to PRTR (tonne)

Group in Japan total

0.3

0.4

0.5

0.6

0.5

Municipal water supply (1,000 m )3Released into Waterways

Group in Japan total

517,456

Category 1

Group in Japan total

378,633

Category 5Group in Japan total

3,375

Category 12

Group in Japan total

79,594

Group overseas: A ll production sites of PT. AICA Indonesia, PT. Techno Wood Indonesia, Aica Laminates India Pvt. Ltd., Aica Laminates Vietnam Co., Ltd., AICA Asia PacificTotal of all other categories

Refer to calculation criteria

55,854

AICA Group: All production sites of the AICA Group in Japan and overseas

Scope and Criteria for Calculation of Environmental Indicators

SOx (tonne)

Group in Japan total

6.2

5.9

5.4

5.3

5.9

NOx (tonne)

Group in Japan total

26.7

27.3

25.4

26.9

31.9

Soot and dust (tonne)

Group in Japan total

2.2

2.5

3.7

9.4

9.3

Substances subject to PRTR (VOC) (tonne)

Group in Japan total

54.5

56.6

56.5

52.1

53.6

• Target scope
The target scope of each category is clearly stated. The breakdown of sites and locations is as follows.
Group in Japan: All production sites of AICA Kogyo Co., Ltd., AICA Interior Kogyo Co., Ltd., AICA Harima Kogyo Co., Ltd., and AICA-TECH Kenzai Co., Ltd.
Holding Group, Evermore Chemical Industry Group, and Wilsonart companies• Energy use– Energy input volumes are the sum of the values obtained by multiplying the volume of each energy use by the unit calorific value of each fuel type and the value obtainedby multiplying steam input volume by the unit calorific value. For unit calorific values, we used the Ministry of the Environment’s Calculation Methods and List of Factors for
Calculation, Reporting, and Publication Programs. Further, whereas we had previously used primary energy inputs for purchased power volumes, from this report, we havechanged to calculating it by energy consumption at 1 kWh = 3.6 MJ. This change has been applied retrospectively to revise the FY2019 figures.
• Greenhouse gas emissions– For Scope 1 and 2 calculations, we calculated the energy-derived CO2 emission/non-energy-derived greenhouse gas emission volumes based on the Ministry of the Environment/Ministry of Economy, Trade and Industry’s Greenhouse Gas Emissions Calculation and Reporting Manual (Ver. 4.7). For the electric power emissions factors, we used theUse of Substances

national average of general power distribution companies from the List of Emissions Factors by Power Supplier (For 2021 Submission) (Ministry of the Environment/MinistryGroup in Japan total

272,091

257,770317,041

305,457

247,158

Raw materials (tonne)

Group in Japan total

261,152

241,096

279,580

284,565

231,117

Ancillary materials (tonne)

Group in Japan total

744

575

625

629

538

Substance inputs (tonne)

Group in Japan total

10,195

10,392

31,555

15,147

11,576

Substances subject to PRTR (tonne)

Group in Japan total(32,842)(40,115)(30,274)(40,582)(25,458)

Group in Japan total

243,260

237,756

255,093

268,552

216,818

Group in Japan total

16,565

17,572

16,445

17,203

12,224

Ministry of the Environment. The details of calculation methods for each category are as described below. Emissions factors are taken from these Guidelines unless otherwise
stated below.
Category 1:

Product Shipment
Product shipment volumes (tonne)
In-house Recycling of Waste
Heat recovered (thermal recycling) (tonne)

Category 2:

Target scope: AICA Kogyo Co., Ltd. Non-consolidated
Amount of capital investment in FY2013 multiplied by emissions factor.

Category 3:

Target scope: Group in Japan
Purchased power and fuel volumes in FY2020 multiplied by the emissions factor at time of purchase in LCI Database IDEA Version 2.3.

Category 4:

Target scope: AICA Kogyo Co., Ltd. Non-consolidated
Calculated based on shipped ton-kg of FY2013 logistics (transport,
stevedoring, storage) in which AICA Kogyo Co., Ltd. was the shipper

Industrial Waste Emissions
27,20328,59130,46342,651

27,298Group in Japan total

23,256

24,593

26,56036,04020,784

Group overseas total

3,947

3,998

3,903

6,611

6,514

AICA Group total
Industrial waste emission volumes (tonne)

61

External recycling (tonne)

Group in Japan total

22,63422,04525,836

24,70816,182Landfill disposal (tonne)

Group in Japan total

411

2,195

589

11,3094,593

Substances subject to PRTR (Including VOC) (tonne)

Group in Japan total

13.3

11.7

13.1

15.1

12.6

AICA Report 2021

Target scope: Group in Japan
Weight or value of raw materials, products, etc. purchased in FY2020
multiplied by emissions factor. For emissions intensity, we used either (1) LCI Database IEDA version 2.3 (AIST Research Institute of
Science for Safety and Sustainability’s Advanced LCA ResearchGroup; Japan Environmental Management Association for Industry)or (2) Emissions Intensity Database for Calculation of Organizations’
Greenhouse Gas Emissions, etc. Throughout the Supply Chain (Ver.
3.1) (Ministry of the Environment), depending on the item being calculated. For items produced at some of our plants, we calculated
raw materials usage based on production volumes. Items that arepurchased in very small quantities have been excluded from the calculations, but these calculations cover around 90% of all purchased
raw materials either on a weight or value basis.

Category 5:

Target scope: Group in Japan
Industrial waste emission volumes in FY2020 multiplied by emissions
factor.

Category 6:

Target scope: AICA Kogyo Co., Ltd. Non-consolidated
FY2013 travel expenses multiplied by emissions factor.

Category 7:

Target scope: AICA Kogyo Co., Ltd. Non-consolidated
FY2013 supplementary commuting expenses multiplied by emissions factor.

Category 8:

Lease assets are minor and have been excluded from calculations.

Category 9:

Target scope: AICA Kogyo Co., Ltd. Non-consolidated
Shipped ton-kg of FY2013 logistics (transport, stevedoring, storage)
for delivery of sold products to final consumer, for which AICA Kogyo
Co., Ltd. was the shipper.

Category 10:

Identified as relevant, but emissions have not been calculated due tothe difficulties of calculating emissions for the individual processes ofour many and diverse products.

Category 11:

There are no greenhouse gas emissions in the use of our products.

Category 12:

Target scope: Group in Japan
Calculated by multiplying weight of products sold in FY2013 by emissions factor allocated for each product category. For some productsthat include volatile substances, product weight excluding the weightof those volatile substances was substituted for calculation purposes.

Category 13:

Power use accompanying use of leased buildings in FY2013 multiplied by emissions factor.

Category 14:

No applicable businesses.

Category 15:

Some company funds are invested, but the percentage of our shareholdings in each investee company is slight and has an extremely low
impact on business activities, so this category has been excluded
from calculations.

AICA Report 2021

Data

Containers and packaging materials (tonne)of Economy, Trade and Industry) for Japan sites and the International Energy Agency’s (IEA) Emissions Factors (2020) for overseas sites.
– Scope 3 calculations were calculated in line with the Basic Guidelines for Calculation of Greenhouse Gas Emissions Throughout the Supply Chain (Ver. 2.3) published by the

62

Data

Third-Party Assurance

Non-Financial Data (Human Resources and Labor)

Scope of Calculation

FY2016FY2017FY2018FY2019FY2020

Employment (as of end of fiscal year unless otherwise indicated)
Employees [Consolidated] *1

AICA Group total

3,349

3,850

3,920

4,781

4,796

Employees [Non-consolidated] *1

AICA Kogyo Co., Ltd. Total

1,097

1,175

1,194

1,239

1,228

Male

AICA Kogyo Co., Ltd. Total

926

993

991

1,026

1,011

FemaleAICA Kogyo Co., Ltd. Total

171

182

203

213

217

Number of non-regular employees

AICA Kogyo Co., Ltd. Total

111

166

234

248

239

Percentage of non-regular employees

AICA Kogyo Co., Ltd. Total

9.1%

12.3%

16.3%

16.6%

16.2%

Number of new-graduate recruits *2

AICA Kogyo Co., Ltd. Total

41

54

60

36

21

Male

AICA Kogyo Co., Ltd. Total

32

38

48

28

18

FemaleAICA Kogyo Co., Ltd. Total

9

16

12

8

3

Newly engaged employees under the re-employment scheme AICA Kogyo Co., Ltd. Total

16

18

27

14

15

AICA Group

17

23

24

28

31

AICA Kogyo Co., Ltd. Total

17

21

22

24

26

Number of employees with disabilities
Percentage of employees with disabilities*3

AICA Group

Statutory employment rate of people with disabilities *4 AICA Kogyo Co., Ltd. Total

0.5%

0.6%

0.6%

0.6%

0.6%

1.93%

2.26%

2.26%

2.35%

2.66%

Years of service (as of end of fiscal year unless otherwise indicated)
Average years of service *5

AICA Kogyo Co., Ltd. Total 15.3 years 15.5 years 15.4 years 15.5 years 16.1 years

Male

AICA Kogyo Co., Ltd. Total 15.8 years 16.0 years 16.0 years 16.1 years 16.6 years

FemaleAICA Kogyo Co., Ltd. Total 12.5 years 12.8 years 12.5 years 12.8 years 13.7 years

Staff turnover rate *6

AICA Kogyo Co., Ltd. Total

1.7%

2.2%

3.3%

3.0%*11

2.7%

Staff turnover rate after 3 years *7

AICA Kogyo Co., Ltd. Total

3.8%

13.0%

16.1%

16.1%

17.5%

Rate of union membership

AICA Kogyo Co., Ltd. Total

80.2%

80.5%

80.4%

80.9%

80.7%

State of paid leave consumption*8

AICA Kogyo Co., Ltd. Total

Average days taken

AICA Kogyo Co., Ltd. Total

Average rate of leave taken

AICA Kogyo Co., Ltd. Total

45.0%

56.0%

61.7%

66.7%

55.9%

Fatal accidents

Group companies in Japan

0

0

0

0

0

Lost-time accidents

Group companies in Japan

2

7

6

7

6

Of which, those involving people other than full-time employees Group companies in Japan

0

3

6

4

4

Group companies in Japan

12

10

12

13

6

Of which, those involving people other than full-time employees Group companies in Japan

4

4

7

6

1

Union membership (as of end of fiscal year)

8.2 days 10.3 days 11.3 days 12.1 days 10.3 days

State of industrial accidents

Industrial accident frequency rate*9Group companies in Japan

0.82

1.73

0.00

0.83

2.85

Industrial accident severity rate*10

Group companies in Japan

0.05

0.05

0.00

0.00

0.08

*1 Excludes temporary workers (non-regular employees).

*7 Calculated for graduates of university and graduate school.

*2 Graduates of high school, university, and graduate school. Number of new recruits joining in
April of following fiscal year.

*8 Target periods: Until FY2017: September 16 of previous fiscal year to September 15 ofcurrent fiscal year; From FY2018: March 16 of previous fiscal year to March 15 of current
fiscal year.

*3 Figure obtained by dividing number of employees with disabilities by total number of
employees. This differs from the calculation method for statutory employment rate (legallyprescribed minimum employment rate for persons with disabilities).
*4 Calculated according to calculation method for statutory employment rate. Figure calculatedon June 1 every year.
*5 Figures are for permanent employees.
*6 Calculated by dividing number of employees who resigned for personal reasons each fiscal
year by number of employees at beginning of that fiscal year.

63

AICA Report 2021

Data

Non-lost-time accidents*9 Frequency rate = Number of fatalities and injuries caused by industrial accidents (excluding
non-lost time accidents) x 1,000,000 ÷ Total work hours
Figures are for permanent employees.
*10 Severity rate = Work-days lost x 1,000 ÷ Total work hours. Figures are for permanent
employees.
*11 Amended due to the discovery of errors in figures disclosed last fiscal year.

AICA Report 2021

64

Data

AICA Group Network
Chemical Products Business:▶East Asia

AICA Asia Pacific Holdings Group

Chemical Products Business

Construction Materials Business

Evermore Chemical Industry Group

AICA Guangdong Co., Ltd. Manufacture Sales

Wilsonart (Shanghai) Co., Ltd.

Construction Materials Business:

Aica Nanjing Co., Ltd. Manufacture Sales

Manufacture Sales

Chemical Products Business

KUNSHAN AICA KOGYO CO., LTD. Manufacture Sales

Sois Mendinni Industrial

AICA America, Inc. Sales

Shenyang AICA-HOPE KOGYO Co., Ltd.

Technology (Shanghai)

ア ア

AICA Kogyo Production sites

AICA Kogyo Sales LocationsJ

J Group companies in Japan

Manufacture Sales

Aica Shanghai Co., Ltd. Sales▶North America

Co., Ltd. SalesJ AICA Interior Kogyo Co., Ltd. Manufacture Sales

Wilsonart Asia Limited
Sales

EVERMORE CHEMICAL INDSUTRY CO., LTD.

ア

Manufacture Sales Holding company

Tanba Plant Manufacture

J SOKO Service Co., Ltd.

POU CHIEN CHEMICAL CO., LTD. Manufacture Sales

Replenishment and transport

LEADERSHIP (SHANGHAI) CO., LTD. Sales▶South Asia

ア

TOPCO (SHANGHAI) CO., LTD. Sales
CHEM-MAT TECHNOLOGIES CO., LTD.

Chemical Products Business

Manufacture Sales

DYNEA PAKISTAN Limited Manufacture Sales

GIANT STAR TRADING CO., LTD. Salesア

J AICA-TECH Kenzai Co., Ltd. Manufacture

Isesaki Plant

J AICA-TECH Kenzai Co., Ltd.
Manufacture (Akeno Plant)

Manufacture(Ichikawa Plant)ア

J AICA Harima Kogyo Co., Ltd. Manufacture

Construction Materials Business

Fukushima Plant Manufacture

Ibaraki Plant Manufacture

J AICA Interior Kogyo Co., Ltd. Manufacture

Aica Laminates India Pvt. Ltd.
Manufacture Sales

ア

Hiroshima Plant Manufacture
J Nishi Tokyo Chemix Corporation SalesJ AICA-TECH Engineering Co., Ltd. Application
J AICA-TECH Kenzai Co., Ltd. Head Office Sales

AICA Kogyo Co., Ltd. Head Officeア

Nagoya Plant Manufactureア

Jimokuji Plant Manufacture

J AICA-TECH Kenzai Co., Ltd. Manufacture(Nagoya Plant)

Other▶Southeast Asia

Chemical Products Business
Construction Materials Business

Aica Bangkok Co., Ltd. Manufacture Sales

AICA Asia Laminates Holding Co., Ltd. Sales Holding company

AICA HATYAI Co., Ltd. Manufacture Sales

Wilsonart (Thailand) Company Limited Manufacture Sales

Asia/
Oceania

Thai Chemical Corporation Ltd. Manufacture Sales

Aica Laminates Vietnam Co., Ltd. Manufacture Sales

AICA Dong Nai Co., Ltd. Manufacture Sales

AICA HPL Trading Joint Stock Company Sales

42.0%

Aica Adtek Sdn. Bhd. Manufacture Sales

PT. AICA Indonesia Manufacture Sales

AICA Malaysia Sdn. Bhd. Manufacture Sales

PT. Techno Wood Indonesia Manufacture Sales▶Oceania

57.3%
Breakdownof net sales
by region(FY2020)

Company Overview (as of March 31, 2021)
Company NameAICA Kogyo Co., Ltd.

Headquarters
Location

26F JP Tower Nagoya, 1-1-1 Meieki, Nakamura-ku,
Nagoya, Aichi, 450-6326, Japan

Top Well Elastic Technology CO., LTD. Sales

Date Established

October 20, 1936

U-BEST VIET NAM POLYMER INDUSTRY CO., LTD.

Representative

Yuji Ono, Representative Director and President

PT. AICA INDRIA Manufacture SalesPT AICA MUGI INDONESIA Manufacture Sales

Manufacture SalesNISHI TOKYO CHEMIX VIETNAM COMPANY LIMITED Sales

AICA Report 2021

Chemical Products Business
AICA NZ Limited Manufacture Sales

Data

AICA Asia Pacific Holding Pte. Ltd. Holding company

AICA Singapore Pte. Ltd. Manufacture Sales

65

Japan

0.7%

Capital9,891 million yen

Employees

Consolidated: 4,796 / Non-consolidated: 1,228

AICA Report 2021

66