Message from the Executive Officer in Charge of Sustainability
Executive Officer
General Manager, the Corporate Social Responsibility Division

Michiko Seki
Tokuyama’s Views and System on Sustainability
Tokuyama has established the Tokuyama Group Sustainability
Principles in order to realize our Vision based on our mission “tocreate a bright future in harmony with the environment, in
collaboration with its customers, based on chemistry,” and wewill create new value in harmony with the environment by
supplying products that contribute to the solving of social
issues while minimizing the environmental burden caused byour business activities.
The figure below shows the overall picture of thesustainability-related meeting bodies, with the number of
meetings held in FY2023 noted in parentheses. The CSR
Promotion Council is chaired by the President and includes all
executive officers, and each committee is chaired by the
director in charge and consists of the heads of the relevant
Promotion System
on Sustainability
Board of Directors

departments. In promoting CSR management, decisions onimportant matters and matters for approval are supervised by
the Board of Directors.
Regarding efforts to address climate change and humanrights, a task force has been established under the
Sustainability Committee to bring together a wide range of
relevant divisions, consider the issues, and promote them as
Company-wide activities. In addition, we have also started
working on biodiversity by establishing a working group
under the Environment Committee, and in June 2024 weendorsed the philosophy of the Taskforce on Nature-related
Financial Disclosures (TNFD) and announced our participationin the TNFD Forum.

Expert Committees(Number of Meetings Held in FY2023)

Main Risks Managed

Financial Reporting Committee (8)Financial and accounting risks

Fair Trade and Competition Committee (1) Risk of violation of antitrust laws and unfair competition prevention laws
Security Trade Committee (1)Trade control risks (inadequate security trade control)

Information Security Committee (2)Information security risks (cyber attacks, information leaks, system failures, etc.)

Environment Committee (1)Environmental risks (hazardous pollutant spills, noise, odor, illegal dumping and disposalof waste, etc.)

CSR Promotion Council (1)Safety Committee (1)Accident risk (fire, explosion, chemical leak, etc.), industrial accident risk

Risk Management andCompliance Committee (2)Product Safety andQuality Assurance Committee (1)Quality risk (management of chemical substances contained in products, unfair anddeceptive representations, distribution accidents, etc.)

Sustainability Committee (2)Climate change risks, human rights risks, etc.

Executive Committee
Strategy Committee

President

Establishment of Sustainability Governance38

TOKUYAMA REPORT 2024

the People of Tomorrow,” and the desire to “be a company
that lasts into the future.” To this end, we intend to enhancethe evaluation by our stakeholders and corporate value
through effective Group-wide initiatives and disclosure.
Policies on Sustainability
Tokuyama’s Vision
Mission Vision and Values
April 1, 2024
Based on the Vision,
established the“philosophy” that
supports the strategy
and various policies interms of governance.

Corporate Governance Policy

Practicing socially responsible management is one of thehigh-profile issues in Medium-Term Management Plan 2025,
and we have clearly stated our attitude and approach tosustainability as the foundation of our policy, which ispracticed throughout the Group. In addition, KPIs formaterialities, which are priority CSR issues, are determined
and monitored by the CSR Promotion Council in order tostrengthen our initiatives. From FY2023, we will clarify the
responsibilities of all executive officers for addressing
materiality, and reflect the progress made in theirremuneration for the following fiscal year.
In order to further clarify the roles and responsibilities of
directors, we have established a Corporate Governance
Policy, which promotes efforts to address management
issues, including sustainability, from a governance
perspective, and establishes a system to further increase theeffectiveness of the execution of duties by Directors.
In response to the recent demands and expectations ofstakeholders as well as sustainability-related initiatives andinformation disclosures, it is important to respond on aGroup-wide basis. We will promote internal control,
improvement of whistleblowing systems, risk management,
non-financial information disclosure, response to climatechange, human rights, and human capital initiatives, all ofwhich are centered on Group management. Although thebusiness domains of each Group company are different,
I believe that they all share the same corporate slogan, “For

December 1, 2022
Established

Develop and systematize
sustainability policies
guided by Tokuyama’s
redefined Vision.
Prepare for non-financial
information disclosure

Sustainability
Principles

April 1, 2023
Established the
Tokuyama Group
Sustainability Principles

Code of Conduct

April 1, 2023
Revised the TokuyamaGroup Code of Conduct

Various Policies
Human Rights
PolicyHealthManagement
PolicySafetyManagement
PolicyQuality Policy

Environmental
PolicyBasic Purchasing
Human
Anti-Corruption
PolicyResources Policy
PolicyMateriality (CSR Priorities)
Helping tofight global
warming

Conserving theenvironment

Preventing
accidents andpreparing fordisasters

Engagingwith local
communities

PromotingCSR
procurement

Developing
human resources

Developing products Improved chemical
and technologies that management andaddress social issues product safety
Promotingdiversity andcareer fulfillment

Promotingphysical andmental healthTokuyama Value Creation

Management for Sustainable
GrowthProgress of Growth
Strategy

Value Creation Strategy

Corporate Data

Progress of Sustainability Initiatives in FY2023
To make a “Contribute to Mitigating Global Warming,” one ofthe priority issues in Medium-Term Management Plan 2025,
we have made progress in reducing GHG emissions (Scope
1 and 2) by 13% compared to our target of a 30% reduction
by FY2030 (compared with FY2019). Furthermore, we areworking toward the realization of carbon neutrality byaddressing both the risks related to climate change and thepotential new business opportunities in the environmental
field. This includes the impact of making visible the carbon
costs coming from the introduction of internal carbon pricing,addressing the impact of potential changes in customer
procurement policies, and identifying the impact on financing
from potential policy changes at financial and investmentcompanies.
Targets were previously established for Scope 1 and 2,
but we have also set a new emission reduction target for
Scope 3. Since categories 1, 3, and 4 account for more than
90% of the Group’s Scope 3 emissions, we aim to achieve a
10% reduction by FY2030 (compared to FY2022) relative tothe total amount in these three categories. In terms of ourperformance in FY2023, we were able to achieve a 5%
reduction in Scope 3 emissions compared to the baseline
year of FY2022. Going forward, we will embrace thechallenge of making the entire supply chain carbon neutral
and strengthen our supply chain engagement activities.
Also, we participated in the GX League promoted by the
Ministry of Economy, Trade and Industry. To participate in the
GX League, we are required to set GHG emission reduction
targets in accordance with the standards set by the GX
League, and we have set targets for Scope 1 and 2 on a
non-consolidated basis and for our consolidated
manufacturing subsidiaries in Japan, in addition to the GHG
emission reduction targets we have set in accordance with
the GHG Protocol. Although the GX League’s data differsfrom that established in accordance with the GHG Protocol interms of the baseline year and emissions calculation method,the original data is common and the reduction targets are
consistent. In FY2023, we were able to achieve an 11%
reduction compared to the baseline year of FY2021.

Medium- to Long-Term GHG Emissions Reduction Targets(Scope 1 and 2)

Medium- to Long-Term Supply Chain Emissions
Reduction Targets (Scope 3) (Categories 1, 3 and 4)(Ten thousand tonnes-CO2e)

800

Waste-derived
Raw materials-derived
Originating from fuels-derived

30% reduction compared
726

200

to FY2019

600

508

Achievementof carbon
neutrality by

to FY2022

167

FY2050

100

200

50

0

0

2030

10% reduction compared
186

150

400

2019 2020 2021 2022 2023

Category 4
Category 3
Category 1(Ten thousand tonnes-CO2e)

2050 (FY)

Base year

Challenge to
Caron
Neutrality by
FY2050

0

0

2022

2023

2030

2050 (FY)

Base year

What Needs to Be Addressed from Now
Toward the final year of Medium-Term Management Plan
2025, we will implement the PDCA cycle for each CSR issue
we have set as a target. For Practice socially responsible
management, I think the following three approaches arecommon for tackling any issue: (1) to address medium- andlong-term goals (Vision), and to incorporate them into effective
Group-wide initiatives, (2) to move forward while getting
stakeholders widely involved, and (3) to disclose information
externally and leverage feedback from stakeholders for the
next step. In particular, the external disclosure of non-financial
information will be essential for accountability in businessactivities and the transparency of our governance.
As was discussed in the evaluation of the effectiveness of
the Board of Directors, the scope and content ofsustainability-related considerations have expanded, and wefeel there is a need to review the positioning of meetingbodies and committees, as well as the members who
participate in them. We would also like to also rebuild theoverall structure so that discussions by the members involved
become more active.
For Tokuyama “to create a bright future” and besustainable, we will consider the sustainability that is now
required of a company in a timely manner, and disclose
information externally that is used for determining corporate
value, including the ESG, respond to stakeholders’ trust, andcontribute to more improvement of our corporate value.

TOKUYAMA REPORT 2024

39

Vision and Materiality

Achieving Our Vision through Socially Responsible (CSR) Management
To realize our mission “to create a bright future in harmony
with the environment, in collaboration with customers,
based on chemistry,” we must first correctly understand the
expectations and requirements of society, and then make surethat every person in the Group has a “vision” of what needs tobe done and a “sustainability perspective” in order to work
every day from a long-term perspective and to have anawareness of potential social issues. This attitude and thisbehavior are also important for us as we move from thetraditional business model and transform ourselves into avalue creating company. In other words, Tokuyama’s CSR
management covers the creation of new value for asustainable society and it should be promoted by theconcerted effort of all managers and all employees.
   The Tokuyama Vision has been developed so that we
can clearly visualize our future image in order to realize our
Mission. Materialities (material issues) refer to priority CSR
issues for CSR management that are used when formulating
an action plan for realizing our Vision.

   We work on our initiatives to realize our Vision, whileconnecting materiality with the objectives of the divisions anddepartments. Every year, these are reported to the CSR
Promotion Council, and are shared with all executive officers.
The relevant materialities are also taken into account as a factor
in the calculation of executive officer compensation. We areworking hard to continually raise the level of CSR management
by following the Company-wide PDCA cycle that we use tocheck on progress and analyze current conditions.
   The Sustainability Committee, established in FY2022,
has begun to promote CSR procurement and information
disclosure based on the TCFD recommendations. In addition,
following the establishment of the Tokuyama Group Human
Rights Policy in December 2022, we have developed policies
such as establishing the Tokuyama Group Sustainability
Principles and revising the Tokuyama Group Code of Conduct
in April 2023.

Tokuyama’s Materiality
Material issues are used as guidelines to devise actionplans for realizing Tokuyama’s Vision. The table below
shows the aspirations and KPIs for each material issue aswell as results and the people and departments who areresponsible. Our actions for addressing materialities also
contribute to the realization of the UN’s SDGs. For
reference, our material issues and their main SDGs areshown in the table below.

Materiality KPIs and Results
Materiality
Relationship to SDGs

Helping to fightglobal warming

Our Vision•	Achieving carbon neutrality (CN)by FY2050

KPI / Target•	Reduction of Tokuyama’s GHG emissions by FY2030:- 30% reduction in Scope 1 and 2 (compared to FY2019)- 10% reduction in Scope 3 (categories 1, 3, and 4) (compared to FY2022)•	Active disclosure of climate-related information

Conserving theenvironment•	Promoting recycling andmaintaining zero landfill waste•	Maintaining low emissions ofenvironmental impact substances•	Complying with legal requirements
and other regulations, achievementof zero environmental accidents•	Contributing tobiodiversity conservation

Preventing accidents
and preparing
for disasters•	Accident prevention anddisaster preparation•	Improvements in process safety
management level•	Fostering and improving
the safety culture40

TOKUYAMA REPORT 2024

•	Complying with legal requirements and other regulations: achievement of zero violations•	Continued achievement of zero environmental accidents: zero accidents•	Reduced environmental impact:- Effective utilization rate for waste ≥94%
- Zero waste emission rate ≥99%
•	Enhancing dialog with stakeholders and information disclosure•	Contributing to biodiversity conservation: Responding to TNFD•	Effective use of water resources: Reduction of water consumption(excluding seawater) (below FY2019 standard)•	Zero accidents and zero lost time injuries•	Deepened risk assessment•	Promoting smart security

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data

Process of Identifying Materiality
In 2019, the Company identified nine material issues basedon important social factors, dialogs with stakeholders, andthird-party opinions from external experts. In 2021, after
reviewing these issues, in line with the new Medium-Term
Management Plan 2025, we increased the number ofmaterialities (material issues) to ten, then formulated targets
and KPIs for FY2025.

1

STEP

2

STEP

Extract and organize social issues fromthe social requirements and Tokuyama’s
business activities

Order of priority
Decide on the priority based on importanceto stakeholders and Tokuyama

Review by experts

3

Review priorities and quantifications (metrics)
based on feedback from outside experts

STEP

Commitment from management

4

CSR Promotion Council discusses suitabilityof material issues and approves them

Very
Important

Importance to Society and Stakeholders

STEP

Extract and organize issues   We are determined to always take action for building asustainable future with society, to contribute to resolvingsocial issues, and increase trust from diverse stakeholders, as
we aim to improve corporate value. Tokuyama will solidify
relationships of trust with society by strengthening initiatives
for dealing with material issues, while pursuing our own
unique approach to CSR management.

Important

For detailed information on our activities, please refer to the CSR
section of Tokuyama’s website.
https://www.tokuyama.co.jp/eng/csr/

FY2023 Results•	FY2023 GHG emissions:- 13% reduction in Scope 1 and 2- 5% reduction in Scope 3• Promoted coordination with regions, local governments, and within the industrial complex, aiming for CN• Considered the introduction of alternative fuels, such as biomass and ammonia• Disclosures based on TCFD recommendations• Submission of GHG emissions data for GX League baseline year
• CDP Climate Change Questionnaire score: A-

Helping to fightglobal warming

Conserving the environment
Preventing accidents andpreparing for disasters
Engaging with local
communities
Promoting CSR procurement

Developing products andtechnologies that addresssocial issues
Developing human resources
Promoting diversity andcareer fulfillment

Improved chemical
management andproduct safety

Promoting physical/
mental health

Very
Important

Importance to Tokuyama○: 95% or more △: 60% or more ×: less than 60%

Achievement
Level

Person Responsible*
Department Responsible
Director (President and Executive
Officer)
Carbon Neutral Strategy Division
Responsible CareManagement Department
Factory Planning and
Administration Department•	Achievement of zero violations of legal requirements, etc.
•	Zero environmental accidents•	Reduced environmental impact: Not achieved- Effective utilization rate for waste: 92%- Zero waste emission rate: 97%•	Raising awareness of biodiversity

Director (Chairperson of Environment
Committee)
Responsible CareManagement Department• Water usage reduction rate (compared to FY2019): -18.5%•	Zero serious accidents/disasters•	Identified risks through risk assessment and began mitigation•	Promoting smart security

Director (Chairperson of Safety
Committee)
Responsible CareManagement Department* Person responsible: Someone who serves as a director and chairperson of the committee/meeting body that he/she is in charge of

TOKUYAMA REPORT 2024

41

Vision and Materiality

Materiality
Relationship to SDGs

Developing products andtechnologies that
address social issues

Our Vision•	Increased development of products
and technologies that help toresolve social issues, focusing
on SDGs

KPI / Target•	Promoting the development of products and technologies that help to resolve
social issues, focusing on SDGs

• Transform business portfolio

Improving chemical
management andproduct safety

Engaging with local
communities•	Maintaining effective chemical
management and promoting
product safety within Tokuyama•	Harmoniously co-existing andcooperating with communities•	Contribution to communities

Promoting CSR
procurement• Management of supply chainsbased on CSR procurement
guidelines•	Complying with chemical laws and regulations in each country: Zero infractions ofchemical-related regulations•	Risk management of chemical products, including the whole Group: Zeroaccidents due to product safety•	Harmoniously co-existing and cooperating with communities•	Helping resolve community issues and contributing to sustainable development•	Improvement and execution of management and investigation of supply chainsbased on CSR procurement guidelines•	Creation of management processes

Developing humanresources

Improve employee value while
contributing to the realization of amanagement strategy•	Establishment of an incentive system to support productivity improvements1• Increase operational productivity•	Percentage of successor candidate positions filled for key management positions: 100%

• Provision of human resources togrowth areas and new projects• Recruitment and creation ofhuman resources to drive theCompany’s growth•	Percentage of positions filled relative to human resource plan: 100% ± 10% every year•	Number of NBL (Next Business Leader) training participants: A total of 100 by 20301•	Global human resources development training: 15 participants each fiscal year
until FY20251• Training highly skilled engineers to support business execution2•	Promotion of diversity and inclusion•	Percentage of women hired with a bachelor’s degree or higher: 20% or
higher every year2

Promoting diversity andcareer fulfillment• Responding to diversity of values
and ensuring fairness• Increasing engagement• Respect for human rights•	Percentage of managerial positions or higher held by women: 15% orhigher in FY2030•	Promotion of employment of persons with disabilities: Achievement oflegally mandated level1• Employee engagement: Ongoing improvement1• Promotion of work-life balance• Acquisition rate of men taking childcare leave ≥100%2• Percentage of annual paid leave taken: 75% every year2• Promotion of respect for human rights

Promoting physical/
mental health•	A state in which employees canwork vigorously and play an activerole through the cultivation of thephysical and mental health of
employees and their families, andthe creation of a work-friendly
environment

1. Non-consolidated   2. Non-consolidated and domestic consolidated subsidiaries

42

TOKUYAMA REPORT 2024

• ‌Enhanced individuals’ awareness of health1: Smoking rate <15%
• Maintaining and lowering percentage of findings1• Regular health consultation rate: 100%1• Re-examination rate: ≥90%1• Specific health guidance rate: ≥80%1• Lowering the leave rate: <0.5%1• Stress check examination rate: ≥95%1• Certification as a health and productivity enterprise: Obtain White 500 certification1

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data○: 95% or more △: 60% or more ×: less than 60%

FY2023 Results•	Electronics: Accelerate efforts to commercialize customer-driven products by strengthening
marketing functions, with some themes moving into the commercialization phase•	Healthcare: Accelerate development by narrowing down commercialization themes andconcentrating resources•	Environment: Move several themes into the commercialization phase. Promote new carbon neutral
related themes.
•	Traditional business areas: Develop and launch products that address environmental issues, anddevelop process technologies•	Other: Grants for academic and research purposes•	Zero infractions of chemical-related regulations•	61 product reviews (second and third rounds); 787 labeling reviews•	Understood and responded to domestic and overseas regulatory trends•	Promoted the management system for chemicals contained in products•	Provided education to departments and Group companies involved in chemical productmanagement and conducted regular inspections and interviews on their state of management•	Dialog with community: Community dialog, roundtable meetings, factory tours, etc.
•	Social contributions: Volunteer activities, educational support to neighboring schools, anddonations to contribute to the local community•	Contributions through business: Specified supply of power to Shunan City•	Raised awareness of the CSR procurement guidelines that were revised in December 2022
Requested written consent from companies with a transaction value of ¥30 million or more
Collected from 310 out of 323 companies1•	Implemented supplier assessments for companies with a transaction value of ¥100 million or moreby using the SAQ published by GCNJ Collected from 173 out of 181 companies1•	Analyzed SAQ collection results and conducted engagement with 5 high risk companies1•	Establishment of incentive system: Preparation of system design1•	Percentage of positions filled relative to the human resource plan: Implementation of target setting(no actual values as this is an indicator to be measured starting in FY2024)•	Percentage of successor candidate positions filled for key management positions: Implementationof target setting (no actual values as this is an indicator to be measured starting in FY2024)•	Implemented NBL training: Attended by 30 select employees (cumulative total of 67)1•	Implemented global human resource development: Attended by 16 employees1•	Training highly skilled engineers to support business execution2•	Implemented DX workplace leader training and data engineer training•	Implemented DX literacy training (e-learning): Attended by 1,400 employees

•	Promotion of diversity and inclusion•	Percentage of women hired with a bachelor’s degree or higher: 30.1%2•	Percentage of female managers: 8.2%
•	Percentage of people with disabilities: 2.29%1• Conducted employee engagement survey: 94.7% response rate, visualized priority issues1•	Promotion of work-life balance•	Acquisition rate of men taking childcare leave: 47.3%2•	Percentage of annual leave taken: 76.5%2•	Implementation of human rights due diligence, etc.

•	Promotion of anti-smoking measures1
・Smoking rate: 17.8%
・Establishment of smoking-free zones
・Implemented anti-smoking campaign•	Health guidance and measures after health diagnosis1
・Regular health consultation rate: 100%
・Re-examination rate: 87.4%
・Specific health guidance rate: 93.0%•	Mental health care support1
・Leave rate: 0.69%
・Stress check examination rate: 97.7%
・Implementation of mental health training and e-learning•	Selected as a Health and Productivity Stock and obtained certification as a health and productivity
enterprise (White 500) in FY20241

Achievement
Level

Person Responsible*
Department Responsible

Director (in charge of Research &Development)
Research & Development Division

Director (Chairperson of Product
Safety and Quality AssuranceCommittee)
Responsible CareManagement Department

Director (in charge of CSR, andGeneral Affairs and Human
Resource)
General Affairs Department
Environment & Safety Department
Factory Planning and
Administration Department

Director (Chairperson of Sustainability
Committee)
Procurement Department
Logistics Department

Director (in charge of General Affairs
and Human Resources)
Human Resources Department

Director (in charge of General Affairs
and Human Resources)
Human Resources Department

Director (in charge of General Affairs
and Human Resources)
Health Care Center* Person responsible: Someone who serves as a director and chairperson of the committee/meeting body that he/she is in charge of

TOKUYAMA REPORT 2024

43

Disclosures Based on TCFD Recommendations

The Tokuyama Group supports the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD)
and has conducted repeated investigations into climatechange risks and opportunities based on the TCFD
recommendations. In FY2023, we further expandeddisclosure information in accordance with the framework of“Governance,” “Strategy,” “Risk Management,” and “Metrics
and Targets,” recommended by TCFD and set and disclosed
reduction targets for Scope 3 emissions in order to take on
the challenge of reducing GHG emissions in our supply chain.
See Disclosures Based on TCFD Recommendations(Tokuyama TCFD Report, or TCFD Report) for more details.

Disclosures Based on TCFD Recommendations (TCFD Report)
https://www.tokuyama.co.jp/eng/csr/global_warming.html#section2

1 Governance
The Tokuyama Group has identified climate change as one of themost significant management risks. Accordingly, contributing to
mitigating and preventing global warming is one of the priority
issues under Medium-Term Management Plan 2025. The
Sustainability Committee, which is positioned under the CSR
Promotion Council, has established a system to identify andevaluate important risks and opportunities related to sustainability

across the organization. Items of special importance are
discussed by the CSR Promotion Council, and reported to andoverseen by the Board of Directors. Since April 2023, Tokuyama
has been accelerating efforts by establishing the Carbon Neutral
Strategy Division, which operates independently. The TCFD
Report provides more details, including supervision by the Boardof Directors and the role of the management team.

System to Promote Carbon Neutrality Achievement
Consistency with Group-wide Policy

Sustainability Committee

Board of Directors

ReportCSR Promotion
CouncilPresident andall Executive Officers

Environment Committee• Ascertaining GHG emissions and implementing energy-saving measures• Corporate Social Responsibility Div., Tokuyama Factory, Kashima
Factory, and business divisions

Measure proposal
Supervise

President
ReportDecisions andoversight

Resolutions
and Report

Carbon Neutral Strategy Division• Reporting and investigating on decarbonization initiatives

Guidance
Support
Requests

Divisions and group companies

Supervise• Examination of cross-organizational issues related to sustainability,
including climate change• Corporate Planning Div., Carbon Neutral Strategy Div., Corporate Social
Responsibility Div., General Affairs & Human Resources Div., and anyother divisions specified by the chairperson

Measure implementation

Executive
Committee
President andall Executive Officers

Division meetings• Deliberation on important matters and investment for
decarbonization initiatives

2 Strategies and Risks
Medium-Term Management Plan 2025 incorporates both therisks and business opportunities that arise in society as it
moves toward decarbonization. In addition, our aim is tomonetize promising business opportunities while reducing
climate change risks by shifting our business portfolio fromenergy-intensive to value-creating companies based on
analysis using international risk scenarios. Tokuyama positions
climate change risk as the most important risk. Given the44

TOKUYAMA REPORT 2024

accelerating global trend toward decarbonization, we havedecided that we must shift away from our energy-intensive
business structure, which has been our strength up to thispoint. “Contribute to Mitigation of Global Warming” has been
set as one of the priority issues of Medium Term Management
Plan 2025, and we are pursuing Group-wide initiatives toachieve this. The TCFD report provides a detailed report ofthese strategies and risks.

Tokuyama Value Creation

Value Creation Strategy

Management for Sustainable
GrowthProgress of Growth
Strategy

Risks Posed by Climate Change (Scenario Analysis)
Scenario

Risk
category

Target of risk
assessment

Potential impact on the Group(Financial) (Identified risks)• Increase in operating costs due toexpanded carbon pricing

Government
policy andregulations

Technology

Green processadoption measures

Short term: by FY2025, medium term: by FY2030, long term: by FY2050
Financial
impactTiming of risk Impact onmaterialization businessMedium tolong term

Large

High

Large

Medium tolong term

Large

High

• Increased green energy production
and procurement costs

Large

Medium term

Large

High

• Increased costs for green material
procurement and green process
conversion due to lack of technology
and market maturity

Large

Medium tolong term

Large

High

Large

Medium tolong term

Evaluation bystakeholders•D ecline in market value and increase infinancing costs due to a poor evaluationof carbon neutrality initiatives• Risk of litigation by local residents
demanding shutdown or decommissioningof coal-fired power plants•S ustainability risks for biomass fuelPenetration ofgreen procurement
by customers•R ejection of products by the market
based on large carbon-footprint
evaluation• Deterioration of profits due to an inability
to recover green initiative costs byraising prices

Large

Medium tolong term

Lost opportunities
due to a failure tokeep up with green
market expansion•O pportunity loss due to delays inbuilding a green supply chain• Lost opportunities due to insufficient
efforts for entering the circular economy
and the carbon recycling fieldLarge

Physicalrisks(Acute)More frequent
extreme weather
events and rising
sea levels•W ind and flood damage to production
plants; production plan delays andincreased costs due to supply chain
disruptions, etc.

Physicalrisks(Chronic)

Long-term
intensification of
extreme weather
events and rising
sea levels•D ecrease in production capacity due
to insufficient factory cooling capacity
caused by rising average temperatures•P roduction halts due to storm surges
caused by rising sea levels

1.5°C
Evaluation

Market4°C

Scenario

Market1.5°C

Resourceuse
efficiency

Opportunity
assessment target

Response measures• Initiatives to reduce GHG emissions
through fuel conversion (biomass andammonia)• Promoting GHG emission reduction
measures by adopting internal carbon
pricing• Enhancing initiatives to help promote
green transformation by participatingin the GX League• Investigation of ammonia supply
chain establishment at the Shunan
petrochemical complex• Ensuring stable procurement ofcertified biomass fuel by building
relationships with suppliers• Development of black pellets• Calculation of product carbon
footprint (CFP)High• Improving information disclosureand steadily working to reduce GHG
emissions• Dialogue with the local community• Business portfolio transformation• Procurement of certified biomass fuel

Large

High

• Steadily reducing GHG emissions
through energy conservation and fuelconversion, etc.
• Consideration of obtaining massbalance certification• Enhancing supply chain cooperation
for green market formation• Construction of a carbon footprint
evaluation system

Medium tolong term

Large

High

• Prompt implementation of measures

Moderate

Long term

Moderate

Moderate• Enhanced business continuity
plan measures

MinimalLong term

MinimalLow• Maintaining capacity throughequipment modifications, etc.

Climate Change Opportunities (Scenario Analysis)
Opportunity
type

Priority
level

Large

Carbon pricing andenergy procurement• Increase in costs for mitigation initiatives
costs
due to tightening of the GHG emission
regulations

Corporate Data

Large

Short term: by FY2025, medium term: by FY2030, long term: by FY2050

Impact on Tokuyama Group

Impactlevel

TermPriority
Level

Expanding demandin the environmental
market•E
 xpansion of businesses offering waste disposal,
effective utilization of resources, and measures tocombat global warming

Large

Medium tolong term

High•C ommercialization of renewable resourcesand energy

Shift to carbon
neutrality by regions
and industrial
complexes• Enhancing site competitiveness by promoting
large-scale green supply chains for energy
and materials

Large

Medium tolong termHigh• Green supply chain construction conducted
and promoting green technology development
through the Shunan Industrial Complex
Decarbonization Promotion Council

Requests for CCUrelated products andservices•E ntering new business fields by establishing acarbon recycling system

Large

Medium term

High

•A
 ccelerating R&D, demonstration projects,
and actual green technology adoption inbusiness operations

Response measures

3 Metrics and Targets
We are aiming to reduce fuel-derived GHG emissions bypromoting energy-saving measures and switching to non-fossil
fuels, and to reduce raw materials-derived GHG emissions by
reducing the use of limestone as a raw material. While thesteady reduction of GHG emissions is our responsibility as acompany, we also recognize that reducing GHG emissions
caused by our products is important (see page 46). In FY2023,
we promoted fuel conversion initiatives and initiatives with local

governments and companies in the industrial complex. In
addition, we have implemented initiatives towards
opportunities, such as promoting the water electrolysis
business. The TCFD Report provides details of climate-related
metrics, Scope 1, Scope 2, and Scope 3 GHG emissions, aswell as the targets and performance against the targets, andthe specific approach aimed at a decarbonized society.

TOKUYAMA REPORT 2024

45

Disclosures Based on TCFD Recommendations

Initiatives to Achieve Carbon Neutrality by FY2050

Fuels-derived(Ten thousand tonnes-CO2e)

800

Materials-derived

Waste-derived

726

Compared to
FY2019

700

632

30 %
reduction❶ Fuels-derived

600❸ Waste-derived

500· Co-firing of biomass/ammonia· Effective use of local energy· Energy conservation, process
improvement, and equipment upgrades· Transform the business portfolio❷· Suspension of one cement kiln line,
increase volume of small amount of
mixed ingredients❸· Thermal recycling❹· Increase percentage of co-firing of
biomass/ammonia and progress tomonofuel combustion· Use of renewable energy· Transform the business portfolio· More effective use of local energy· Energy conservation, process
improvement, and equipment upgrades· Improve the energy efficiency of theindustrial complex❺· Ca recycling· Offer low-GHG-emission cement/concrete· Transform business portfolio❻· Thermal recycling❼· Conversion to innovative manufacturingmethods❽· Introduction of negative emission
technology (CCUS)· Offsets (J credits, etc.)

508 ❹ Fuels-derived❷ Materials-derived

400

❶

300
❻ Waste-derived

200❺ Materials-derived❼ Innovative technologies

100

0
2019
Base year

2023

2030

2050
FY2050(FY)❽ Carbon offsets

Achievement of carbon neutrality

4 Initiatives to Address Climate Change
Improve the energy efficiency of theindustrial complex
Introduction of negative emission
technology (CCUS)

Reduction of emissions
from fuels
Carbon offsets- Shunan Industrial Complex Decarbonization Promotion Council The Shunan Industrial Complex Decarbonization Promotion Council wasestablished by Shunan City, the Society for Chemical Engineers, Japan,
and companies in Shunan Industrial Complex (Idemitsu Kosan Co., Ltd,NIPPON STEEL Stainless Steel Corporation, Zeon Corporation, Tosoh
Corporation and Tokuyama) in order to share the new challenge of
maintaining and strengthening the competitiveness of Shunan Industrial
Complex companies and to contribute to the realization of carbon
neutrality by drawing up a future vision for decarbonization andpromoting social implementation initiatives, including technology
development, evaluation, demonstration, and policy recommendations.
Discussions began in February 2022 and a grand design for the Shunan
Industrial Complex in 2050 was announced in May 2023. In FY2023,
subcommittees set up within the Council having been proceeding withthe examination of each of these themes.

Structure of the Council

Members

Observers

46

TOKUYAMA REPORT 2024

▶Society of Chemical Engineers, Japan ▶Shunan City
▶Five companies at the Shunan Industrial Complex
・Idemitsu Kosan ・NIPPON STEEL Stainless Steel・Tokuyama ・Tosoh ・Zeon▶Ministry of Economy, Trade and Industry▶Ministry of Land, Infrastructure, Transport and Tourism▶Ministry of the Environment▶Yamaguchi Prefecture▶Yamaguchi University

Development of alkaline
water electrolyzers

Business Opportunities

Tokuyama and Nippon Shokubai Co., Ltd. are conducting the Projectfor Developing Large Alkaline Water Electrolyzers and Separators
Suited for High-pressure Electrolysis as a project commissioned by
NEDO under the framework of the Collaborative Industry-AcademiaGovernment R&D Project for Solving Common Challenges Toward
Dramatically Expanded Use of Fuel Cells and Related Equipment as
Technology Development for Diversifying Fuel Cell Use.
  A high-pressure alkaline water electrolyzer (high-pressure AWE)
is a device that produces hydrogen and oxygen by supplying an
alkaline solution to cells separated by separators and passing
electricity through them. Hydrogen is attracting attention as anext-generation energy source, and there are high expectations
worldwide for low-carbon hydrogen produced with electricity derived
from renewable energy sources.
  This project aims to develop a world-class competitive highpressure AWE by combining the development of a large separator
suitable for high-pressure systems by Nippon Shokubai and thedevelopment of the internal structure of the electrolyzer thatmaximizes the performance of the separator by Tokuyama. The
separator developed by Nippon Shokubai is being incorporated intoa pilot facility for a high-pressure AWE developed by Tokuyama to
conduct research and development.
  In addition to utilizing the original technology related toelectrolyzers that we have developed over many years in the salt
electrolysis business, we will work to develop and demonstrate ahigh-pressure AWE, which enables lower prices, and will makeefforts to promote the spread of next-generation energy.

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data

Compliance

Basic Stance and System
For Tokuyama, the word compliance has a broad meaning,
including not only complying with laws and internal rules but
also behaving sensibly in a way that conforms with corporate
ethics to meet social expectations. To communicate andspread awareness of compliance throughout the Group, theCompany distributes a leaflet that includes the TokuyamaGroup Code of Conduct to all Group officers and employees.
In addition, we conduct regular educational activities oncompliance through collective education, e-learning, andinformation distribution. Furthermore, we also conductengagement through regular meetings with management andpersonnel in charge of compliance at Group companies.

Whistle-blowing System
A whistle-blowing helpline has been established to enable
safe, anonymous reporting and consultations on complianceviolations involving the Tokuyama Group (including potential
violations) without fear of retaliation. Reporting andconsultations can be carried out by postal mail, e-mail, or
telephone. The helpline is operated in a way that protects
whistle-blowers. Employees can use the helpline without
disclosing to the Company their name or department, and afemale attorney is available for consultations. In FY2023, weestablished a system that allows locally hired employees atoverseas Group companies to file reports in their native
language, and this entered into operation in April 2024. We
are working to expand our whistle-blowing systems not onlyin terms of compliance, but also in terms of the grievancemechanism for responding to human rights.
   The number of reports has increased due to theestablishment of these whistle-blowing systems and thepenetration of ongoing harassment prevention activities since
FY2021. Meanwhile, there were no occurrences of serious
noncompliance in FY2023.

Number of reports

FY2019FY2020

FY2021

FY2022

FY2023

29

24

34

29

44

Note: Including contact points for Harassment Desk

Including contact points for whistle-blowing system for subsidiaries (including
domestic only until FY2022, overseas as of FY2023)

Stakeholder Engagement
Stakeholder Engagement
Stakeholders
Customers
Business Partners
Employees

Key Engagement Methods• Sales activities (as needed) • Factory tours (as needed) • Exhibitions (as needed)• Business partner surveys (approximately 200 companies; once every 3 years) • Joint health and safety meetings (once per year)• Employee surveys and harassment surveys (once per year each) • In-house newsletters (4 times per year) • Intranet (as needed)• Labor-Management Council meetings (once per month) • Health and Safety Committee meetings (once per month per site covered)

Shareholders andInvestors• Financial Results Briefing (Institutional: each time a financial statement is issued) • IR seminars for individual investors• Various reports (annual securities reports, consolidated reports, corporate governance reports)

Local Communities
and Society• Security and disaster prevention • Regional dialog and event sponsorship • Regional volunteers• Subsidies for next-generation training (accepting interns, donating books, traveling classrooms)• Subsidies for the promotion of science and technology (donations)

Environment• Efforts to reduce GHG and save energy • Acceptance and appropriate processing of waste • Initiatives to address biodiversity

Evaluation by Society (Excerpt)
Category
ESG Investment
Health Management

Item• FTSE Blossom Japan Sector Relative Index• FTSE Blossom Japan Index• White 500 Health and Productivity Management Organization (Large Enterprise Category) • 2024 Health and Productivity StockDX• DX certified business operator

Work-life Balance• Platinum Kurumin Certification

Participation in Initiatives (Excerpt)
For more information on social
recognition, please visit theCompany’s website.
https://www.tokuyama.co.jp/eng/
csr/evaluation.html
United Nations Global
Compact

GX League

TCFD Consortium

TNFD ForumTOKUYAMA REPORT 2024

47

Dialogue with External Directors

Taking on the challenge of building transparent
governance while fulfilling management checks andadvisory functions
Naoki Kondo

Hiraku Ishizuka

External Director
Audit & Supervisory Committee Member

External Director
Audit & Supervisory Committee Member

External Directors’ Perspective and Evaluation of Tokuyama’s Governance
Ishizuka I joined The Sanwa Bank, Ltd. (currently MUFG Bank,Ltd.) in 1984. After serving as an executive officer of Mitsubishi
UFJ Financial Group, I went on to serve as vice president andpresident of Mitsubishi UFJ NICOS Co., Ltd., and am currently
chairman of the board. I became an External Director (Audit &Supervisory Committee Member) of Tokuyama in June 2023. My
advisory activities are focused on the adequacy of the decisionmaking process. All of Tokuyama’s directors, both internal andexternal, think sincerely about the Company’s current status andfuture, and express their opinions frankly, and I believe that theeffectiveness of governance is fully ensured.

Kondo I registered as an attorney-at-law in 2000, I served as
an Assistant Counselor in the Trade Policy Bureau of the Ministryof Economy, Trade and Industry, and I have been a partner at
Oh-Ebashi LPC & Partners since 2016. I was appointed as anExternal Director (Audit & Supervisory Committee Member) of
Tokuyama in June 2023, the same month as Director Ishizuka,
and perform my duties while keeping in mind the perspective ofshareholder interests. Tokuyama has passed on a corporate
culture of integrity since its founding, and I feel that this is directlyreflected in its current governance structure, which is transparent
and fair.

Strengths of Tokuyama’s Governance
Ishizuka In the just over a year since I was appointed as adirector of Tokuyama, I have been very impressed with thethorough prior explanation and information sharing of importantmatters to the external directors. Of course, discussions by the
Board of Directors are important, but time is limited and there is

no room for rumination. Detailed explanations from President
Yokota and the executive officers deepen my understanding ofmatters and issues, and allow me ample time to think about
them, which makes discussions at meetings of the Board of
Directors more fruitful. I believe it is worth mentioning that we arealso given the authority to audit operations.
Kondo I also highly rate the sharing of management information
and awareness of issues in Tokuyama’s governance. For example,
the Board of Directors regularly reports on the execution ofbusiness operations. Executive officers spend as much as one
hour per area explaining the current status of business execution
and issues, providing a valuable opportunity for external directors
to gain a deeper understanding of the business.

48

TOKUYAMA REPORT 2024

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data

Roles and Functions to Be Fulfilled by External Directors (Audit Committee Members)
Ishizuka External directors have the dual functions ofchecking and advising management, but it is not easy to fulfill
the checking function in a closed corporate culture. In thisrespect, Tokuyama has inherited a traditionally free and open
corporate culture, and it is safe to say that there are no
obstacles to the exercise of the checking and monitoring
functions. Meanwhile, as for the advisory function, since I do
not have the knowledge to provide expert advice on
Tokuyama’s technologies and businesses, my task is to
examine whether top management’s business decisions andexecutive officers’ execution of strategies and measures areappropriate with regard to important themes that will
determine Tokuyama's future, such as technology
development, overseas expansion, new investments, andtransforming the business portfolio. President Yokota and theother directors and executive officers take the opinions andrecommendations of our external directors seriously, and I
believe that the effectiveness of governance is fully ensured.

Kondo One of the characteristics of our Board of Directors thatmakes governance sufficiently effective may be the diversity of
its human resources. Members of the Board of Directors include
those who concurrently serve as both directors and executive
officers, as well as the one who concurrently serves as bothinternal director and chair of the Audit & Supervisory Committee,
and the external directors are also composed of unique individuals
with different backgrounds. Of the nine directors, four are external
directors and one is a woman, which we believe is in keepingwith our diversity philosophy.

Focusing on Achieving the Goals of Medium-Term Management Plan 2025
Ishizuka Tokuyama’s Medium-Term Management Plan 2025
includes three themes, one of which is “Practice socially
responsible management,” which includes materialities related
to human capital such as “Developing human resource” and“Promotion of diversity and career fulfillment.” I believe thatefforts to strengthen our human resources and organizational
capabilities will be the key to Tokuyama’s future. A new jobbased personnel system for managers was launched in April of
this year, but the issue is how to manage the new system andbring it to fruition in strengthening the human resource base.
As someone who was present during Tokuyama’s period oftransformation, I will closely monitor the progress of MediumTerm Management Plan 2025 and materiality.

Kondo Director Ishizuka constantly stresses the importanceof balancing risk and opportunity. I concur, and believe that inorder to achieve the various goals of Medium-Term Management
Plan 2025, it is important to determine how to face new business
opportunities based on a thorough analysis of the potential
risks. I feel that it is also an important duty as an external
director and Audit & Supervisory Committee Member to makerecommendations to the executive side on whether or not it isappropriate to take risks and how to control such risks.

Future Outlook and Issues to Be Addressed
Ishizuka One of Tokuyama’s strengths is its sincere andpositive employees. Although the issues to be addressed arepiling up, such as strengthening relationships with stakeholders
and developing market-oriented technologies, I believe that
Tokuyama will surely reach the next stage of growth if
management and Group employees work together to promote
the initiatives of Medium-Term Management Plan 2025. For thisreason, it is important for the Board of Directors, eachcommittee, and the Audit & Supervisory Committee, which has
an advanced advisory function, to work together in an organic
manner. We, the external directors, will also support Tokuyama’s
efforts aimed at sustainable growth by utilizing the knowledge
and expertise that we have accumulated over the years.

Kondo Tokuyama is continuing to transform and take onchallenges in order to realize its mission “To create a bright futurein harmony with the environment, in collaboration withcustomers, based on chemistry.” However, there are a number
of issues that need to be addressed, such as the somewhat lackof discussion on the future vision at meetings of the Board of
Directors. I look forward to working with other directors andexecutive officers to help Tokuyama grow under the strong
leadership of President Yokota.

TOKUYAMA REPORT 2024

49

Management Team

(Back row from left) Nobuko Mizumoto, Naoki Kondo, Tomohiro Inoue, Fumiaki Iwasaki, Hiraku Ishizuka, Youji Miyamoto(Front row from left) Yuzo Kawamori, Hiroshi Yokota, Hideo Sugimura

Name and Position

50

Number of Company Shares
Owned, Tenure as Director

Hiroshi Yokota

Representative Director, President & Executive Officer
In charge of Chemicals, Cement, Electronic & Advanced Materials, Auditing Office37,300 shares / 9 years

Hideo Sugimura

Representative Director, Senior Managing Executive Officer, Assistant to the President
In charge of General Affairs & Human Resources, Procurement & Logistics, Secretarial Department,
Digital Administration & Planning

8,503 shares / 7 years

Fumiaki Iwasaki

Director, Senior Managing Executive Officer, General Manager, Research & Development
Division and Life Science Business Division
In charge of Life Science, New Business, Research & Development, Environment & Safety ofKashima Factory, Center for Commercialization of Advanced Technology

2,942 shares / 4 years

Tomohiro Inoue

Director, Managing Executive Officer, General Manager, Corporate Planning Division
In charge of Corporate Planning, Corporate Social Responsibility, Eco Business, Tokuyama Factory,
Carbon Neutral Strategy

1,900 shares / 1 year

Youji Miyamoto

Director, Audit & Supervisory Committee Chair

2,600 shares / 7years

Yuzo Kawamori

External Director, Audit & Supervisory Committee Member

2,500 shares / 5 years

Nobuko Mizumoto

External Director, Audit & Supervisory Committee Member

800 shares / 3 years

Hiraku Ishizuka

External Director, Audit & Supervisory Committee Member

0 shares / 1 year

Naoki Kondo

External Director, Audit & Supervisory Committee Member

400 shares / 1 year

TOKUYAMA REPORT 2024

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data

Corporate Governance Structure

Number of Audit & Supervisory
Number of Directors

5 internal■ 4 externalCommittee Members■
GenderComposition

1 internal■ 4 external■
GenderComposition

4 males
1 female

8 males
1 female(As of June 26, 2024)
Reason for Appointment

Attendance
Board of Directors

Audit & Supervisory Committee

Based on his extensive experience in personnel and labor issues, traditional businesses and advanced materials
businesses, he is actively working to realize the current Medium-Term Management Plan, such as in terms of transforming
the business portfolio, carbon neutrality, and implementing CSR management.

19/19(100%)—

Based on his extensive business experience in the introduction of an information system, management of an overseas
subsidiary, reconstruction of a domestic subsidiary, and serving as general manager of corporate planning departments,
he is actively working on a wide range of business activities in general.

17/19
(89%)

—

Based on his extensive experience in the fields of R&D and manufacturing technology, he is actively engaged inpromoting new research and development and creating new businesses.

19/19(100%)—

Based on his extensive experience in overseas operations, the Recycling & Environment Promotion Department, theCement Production Department, and the Eco Business Division, he is actively involved in planning and implementing
growth strategies for the Group, such as carbon neutrality and strengthening the functions of the Tokuyama Factory.

15/15*(100%)—

With a high degree of expertise in finance and accounting gained through many years of accounting operations, he has
been supervising management as an Audit & Supervisory Board member since 2013, and as a director who is an Audit &Supervisory Committee member since 2017.
* Principal concurrent positions: Auditor, ASTOM; Auditor, Tokuyama Dental; Auditor, A&T

19/19(100%)

24/24(100%)

Possessing extensive experience and broad insight as a corporate manager in the manufacturing industry, he has beensupervising the management of the Company as an external director who is an Audit & Supervisory Committee member
since 2019.

19/19(100%)

24/24(100%)She has extensive and rich experience in the manufacturing industry, first as a researcher and then as a corporate
manager through key posts in headquarter divisions. She has been supervising management of the Company as anexternal director who has been an Audit & Supervisory Committee member since 2021.
* Principal concurrent positions: Outside Director, Okamura Corporation

19/19(100%)

24/24(100%)

Possessing extensive experience and broad insight as a corporate manager in financial institutions, he has beensupervising management of the Company as an external director who has been an Audit & Supervisory Committee
member since 2023.
* Principal concurrent positions: Representative Director & Chairman, Mitsubishi UFJ NICOS Co., Ltd.

14/15*(93%)

18/18*(100%)

Based on his specialist perspective and rich experience as a lawyer, he has been supervising the management of theCompany as an external director who is an Audit & Supervisory Committee member since 2023.
* Principal concurrent positions: Partner, Oh-Ebashi LPC & Partners
Outside Director (Audit & Supervisory Committee Member), ibis inc.
Outside Auditor, A&D HOLON Holdings Company, Limited

15/15*(100%)

18/18*(100%)* Attendance after appointment and assumption of office at the Ordinary General Meeting of Shareholders for the fiscal year ended March 31, 2023.

TOKUYAMA REPORT 2024

51

Corporate Governance

Basic StanceAmid the major transformations taking place throughout
society, Tokuyama, in line with the business environment
we face today, has defined the corporate Mission as “To
create a bright future in harmony with the environment, in
collaboration with customers, based on chemistry.” Thisdefinition incorporates the Company’s desire to contributeto a sustainable society by pursuing business in harmony
with the environment and working to create the future
together with customers. This is only possible with thetrust and support of shareholders, customers, suppliers,
employees, local communities, and all other stakeholders,which the Company believes will fuel sustainable growthand greater corporate value over the medium to long term.
   Corporate governance is an important management
issue in order to achieve this, and we recognize that it isvital to improve and constantly enhance the function of
governance itself by responding to the various
expectations, requirements, and requests of our
stakeholders.
   We newly established the Corporate Governance
Policy in 2024, and have explicitly stated our philosophy
on governance, such as that we will respect the rights andequality of shareholders, cooperate effectively with all
stakeholders, achieve the disclosure of information andtransparency, maintain the independence of the Board of
Directors and improve the Board’s oversight, accelerate
decision-making, clarify responsibility, and strive forconstructive dialog with shareholders.

Corporate Governance Reporthttps://www.tokuyama.co.jp/eng/company/
pdf/20240626_CGHoukokusyo_en.pdf

Steps to Strengthen Our Governance Structure• Evaluation of effectiveness of Boardof Directors conducted by externalorganization (conducted annually
after that date)• Introduction of performance-linked
share-based remuneration plan

FY2018•A nnouncement of Tokuyama’s
New Vision•D ecision to abolish anti-takeovermeasures

FY2019FY2020• Revision to “Basic Policy on
Establishing the Internal Control
System” (revision to a policy focusedon Group management)

FY2021

FY2022

FY2023

FY2024• Enhance policies, such as
establishing the Tokuyama Group
Sustainability Principles and therevision of the Tokuyama Group
Code of Conduct•O ne external director added
(to strengthen diversity of Board of
Directors)• Revision of criteria for determining
independence of external directors• Establishment of Corporate
Governance Policy

Corporate Governance Structure
Shareholders’ Meeting
Appoint/dismiss

Nomination and Remuneration
Advisory Committee

ReportBoard of Directors
Audit, etc.
ReportAppoint/dismiss

Appoint/dismiss

Audit & Supervisory
Committee

Audit

Whistle-blowing System

AssistAudit

Decide/supervise

Cooperate

Audit & Supervisory
Committee OfficeBusiness Operations
Executive
Committee
Strategy
Committee

Accounting Auditors

Helpline

ReportPresident

Helpline Committee

CSR Promotion Council
Risk Management and Compliance
Committee

Auditing Dept.
Internal audit

Business Divisions, etc.
Group Companies

52

TOKUYAMA REPORT 2024

Guidance
Support
Requests

Management
Divisions

Corporate Social
Responsibility DivisionCorporate Planning Division, etc.

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data

Meeting Bodies on Governance and Main Content of Deliberation
Overview

Board of Directors

The Board of Directors deliberates and decides on statutory matters and important matters related to business execution, and supervises the status ofbusiness execution by directors and executive officers to whom the execution of business is delegated. The Company is oriented toward a hybrid Boardof Directors that both makes decisions on business execution and supervises the execution of business by directors and executive officers. This function
includes advising the executive management team on its resolute efforts to enhance corporate value over the medium to long term. In light of this, theBoard of Directors is chaired by an executive director or a director with executive experience. At least one-third of the Board of Directors are independent
external directors in order to enhance the effectiveness of decision-making from a broader perspective as well as the supervision of business execution.
In principle, meetings are held regularly once a month, and extraordinary meetings are held as needed.
The Board of Directors deliberated and decided on matters related to corporate accounting, such as financial statements, matters related to dividends,
important personnel and organizational matters, and important matters related to business execution, and also actively exchanged opinions on
management issues and other important topics.
•	Meetings of the Board of Directors held in FY2023: 19
Resolutions in writing: 5 times (pursuant to Article 370 of the Companies Act and Article 29 of the Company’s Articles of Incorporation)

Audit & Supervisory
Committee

The Company has chosen the format of a company with audit and supervisory committee as its institutional design under the Companies Act in order tostrengthen the auditing and supervisory functions of the directors’ execution of their duties and to facilitate prompt decision-making, with the aim ofachieving open management with an emphasis on governance and customer-oriented management. The Audit & Supervisory Committee consists of
non-executive directors, and Directors who are Audit & Supervisory Committee members (hereinafter referred to as “Audit & Supervisory Committee
members”); members monitor the status of business execution through meetings of the Board of Directors and other important internal meetings, andaudit the execution of business by executive directors.
The committee conducts hearings on the status of business execution from the heads of business divisions and functional divisions, exchanges
opinions with representative directors, examines the status of operations at plants and major business offices, and communicates and exchanges
information with the auditors of subsidiaries. It also holds regular meetings with the Accounting Auditor to confirm reports on the status and results ofaudits and to exchange opinions on key audit matters (KAMs).
• Number of meetings held in FY2023: 24

Nomination andRemuneration Advisory
Committee

Based on the Company's basic philosophy on corporate governance, and in order to achieve more transparent and objective management, the Company
has established the Nomination and Remuneration Advisory Committee, whose duty is to deliberate on personnel matters and remuneration for directors(excluding Audit & Supervisory Committee Members), executive officers, and other persons treated as executives, and to report or make proposals to theBoard of Directors (In addition, the President Nomination Committee, which is separately established as a subordinate organization of the Nomination andRemuneration Advisory Committee, is responsible for deliberations on the succession plan for the President). The Nomination and Remuneration Advisory
Committee shall consist of a majority of independent external directors, and the term of office of its members shall be one year.
In the area of human resources, the main topics of discussion included the selection of candidates for directors, the selection of representative
directors, the selection of executive officers, the determination of their responsibilities, and the skill matrix for directors. In the area of remuneration, themain topics of discussion included the introduction of a bonus system for directors, the calculation of monetary remuneration by the president, andstrengthening the relationship between remuneration and materiality for the next and subsequent years.
•	Number of meetings held in FY2023 Nomination and Remuneration Advisory Committee: 9, President Nomination Committee: 1)

Executive Committee

The Executive Committee is a decision-making body whose members are selected by the president and executive officer (hereinafter referred to as “thepresident”) from among the Company’s other executive officers. In principle, the committee meets two times each month. Based on the approval-related
rules determined by the Board of Directors, the Executive Committee deliberates on and makes decisions on strategies and other important matters.

Strategy Committee

The Strategy Committee is an advisory body to the president made up of members are selected by the president from among the Company’s otherexecutive officers. The committee meets once a month and serves , and in addition to deliberating on the direction of business execution, it works to
confirm the allocation of management resources with the aim of evaluating conditions relating to business execution in respect to important mattersrequiring approval. It also sets the direction of policies related to business execution with regard to specific projects.

CSR Promotion Council

Chaired by the president, the CSR Promotion Council includes all executive officers. The committee sets CSR (sustainability) policies and goals, while alsoenabling initiatives to achieve those goals. In addition to sustainability issues, important internal control issues are also discussed by the committee.

Risk Management andCompliance Committee

Tokuyama’s Risk Management and Compliance Committee, chaired by the director in charge of corporate social responsibility, has been establishedunder the CSR Promotion Council to handle risk management and compliance.

Expert Committees

Separately from the Risk Management and Compliance Committee, under the CSR Promotion Council, Tokuyama operates various committees (Financial
Reporting Committee, Fair Trade and Competition Committee, Security Trade Committee, Information Security Committee, Environment Committee, Safety
Committee, and Product Safety and Quality Assurance Committee, and Sustainability Committee) focused on risk management and compliance in criticaland specialized areas.

Helpline Committee

The Helpline Committee is responsible for the administration of Tokuyama’s helpline (whistle-blowing) system for the internal reporting of legally questionableactions and behavior by Group executives and employees.

Analysis and Evaluation of Overall Effectiveness of the Board of Directors
We regard corporate governance as an important management
issue, and as part of this, we conduct an evaluation of theeffectiveness of the Board of Directors every year.
   In the FY2023, the Company engaged an externalorganization to conduct a questionnaire survey and interviews of
all the directors, and analyzed their responses. The results were
submitted to the Board of Directors for review and discussion.
   The results of the analysis and evaluation revealed thatthe effectiveness of the Board of Directors is generally being
ensured. In particular, the culture of respecting free andvigorous discussion is fostered and maintained, andinformation is shared through various channels, among otherstrengths. In addition, it was confirmed that sufficient andeffective efforts were made to substantiate the businessexecution reports and to provide opportunities for focused
discussion of management issues, which were issues
identified in previous years. Meanwhile, issues emerged interms of the ongoing improvement of the Board of Directors’
operations and its contribution to the realization of the Vision
set forth in Medium-Term Management Plan 2025.
   The Company’s Board of Directors will further strengthen
its supervisory function by encouraging active involvement,
especially by external directors, in the continuous improvementof operations. In relation to Medium-Term Management Plan
2025, the Board of Directors will also deepen discussions withthe executive management team in order to function as acatalyst for the realization of our Vision.

Evaluation Process
Determine assessment
items based on
the issues and responses ofthe previous year

Conduct surveys, holdinterviews and discussions

Identify issues based on
evaluations by externalorganizations

Implement response
measures and improvement
measuresTOKUYAMA REPORT 2024

53

Corporate Governance

Skills Matrix in the Board of Directors
areas in which it is expected that directors will contribute areindicated below. By ensuring an overall balance of skills
among the Board of Directors and ensuring the board iscomprised of diverse members, the Company aims to further
bolster the effectiveness of governance.

In order for the Board of Directors to hold effective discussions
and properly perform the required supervisory functions overdecision-making and business execution in consideration of
the vision, management policies, and business development
pursued by the Company, important skills identified from the
SkillsDefinition of skill and reason for selection

Management planning andstrategy

The Company considers that having one or more directors with extensive management experience and broad insights in this area is indispensable
when determining management plans and strategic policies, including portfolio management, in order for the Company to achieve sustainable growth.

Sales and marketing

Based on the value of “Commitment to customer satisfaction as a profit source,” the Company considers that having one or more directors withextensive experience and broad insights in this area is necessary for marketing, building businesses and creating profits based on an accurate
understanding of the business environment.

R&D, production technology andengineering

As a comprehensive chemical manufacturer, the Company considers that having a director with a track record of promoting various innovations andextensive experience and broad insights in R&D, production technology and engineering is necessary in order to create new business opportunities
based on proprietary technologies.

Finance and accounting

The Company considers that, both for accurate financial reporting and the formulation of a financial strategy that facilitates both investment forsustainable growth and shareholder returns while building a strong financial foundation, having one or more directors with extensive experience andbroad insights in this area is necessary.

Governance,
Risk Management

The Company considers that the establishment of an appropriate governance system is the foundation for all corporate activities and that having one
or more directors with extensive experience and broad insights in areas such as corporate governance, risk management, legal affairs and complianceis necessary in order to improve the effectiveness of management and supervision by the Board of Directors.

Sustainability

In order to contribute to solving various social issues through its business and to be a company that is both trusted and needed by society, and giventhat this requires expertise from a sustainability management perspective pertaining to the environment and society, the Company considers thathaving one or more directors with extensive experience and broad insights in this area is necessary.

Human Capital

The Company recognizes human resources as being the most critically important management capital for sustainable growth, and considers thathaving one or more directors with extensive experience and broad insights in this area is necessary in order to build a human resources strategy that is
linked to our business strategy and to be a company where diverse human resources can harness their respective skills to the maximum extent.

DX

The Company considers that, since the promotion of fundamental business reforms through DX, rather than merely seeking to improve operational
efficiency and productivity through IT, is indispensable for the Company’s continued sustainable growth and medium- to long-term improvement ofcorporate value, having one or more directors with extensive experience and broad insights in this area is necessary.

Global Business

Given that the acceleration of overseas business is essential for transforming the business portfolio, which is part of the Company’s medium- tolong-term strategy, the Company considers that having a director with extensive experience and broad insights in global business, such as overseas
management experience and business development, is necessary.

Management
Planning,
Strategy

Sales,
Marketing

R&D,
Production
Technology,
Engineering

Finance,
Accounting

Governance,
Risk
Sustainability
Management

Human
CapitalDX

GlobalBusiness

Hiroshi Yokota (Representative Director,
President and Executive Officer)
Hideo Sugimura (Representative Director,
Senior Managing Executive Officer)
Internal

Fumiaki Iwasaki (Director, Senior
Managing Executive Officer)
Tomohiro Inoue (Director, Managing
Executive Officer)
Youji Miyamoto (Director, Audit &Supervisory Committee Chair)
Yuzo Kawamori (External Director, Audit& Supervisory Committee Member)

External

Nobuko Mizumoto (External Director,
Audit & Supervisory Committee Member)
Hiraku Ishizuka (External Director, Audit& Supervisory Committee Member)
Naoki Kondo (External Director, Audit &Supervisory Committee Member)

Note: Skills, career, and expertise considered necessary for the Board of Directors are reviewed in accordance with changes in the business environment and management
policies. The skill matrix indicates the fields that each respective Director is expected to contribute to in the supervision of management, but does not represent all skills,
career, and expertise that each Director possesses.

Response to Chief Executive Officer Succession Plan
The Company has established a President Nomination Committee
within the Nomination and Remuneration Advisory Committee,
which has the function of formulating and implementing a
succession plan for the Chief Executive Officer (President andExecutive Officer), deliberating on selection and dismissal, andmaking reports and recommendations to the Nomination andRemuneration Advisory Committee. The President Nomination
Committee is chaired by an independent external director, with
the President as the only internal director and a majority of themembers being independent external directors.
54

TOKUYAMA REPORT 2024   The Board of Directors deliberates on and appropriately
supervises the activities of the President Nomination
Committee with respect to regular reports through theNomination and Remuneration Advisory Committee to ensurethat the Company’s management philosophy (Vision) andmanagement strategy are taken into account and thatsufficient time and resources are being systematicallyallocated to the development of potential successors.

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data

Director Training
Newly appointed directors and newly appointed executive
officers, who will be candidates for directors, are required toparticipate in external executive training. The content of the
training program can be selected based on the experienceand knowledge of the individual, but with corporate
governance in mind, the required content includes legal affairs
and corporate governance as well as accounting and finance.
The Company also allows participants to attend externalseminars related to their corporate responsibilities on theirown. External directors are given the opportunity to visit
factories and to learn about the Company when they takeoffice, so that they can understand the current condition of
the Company’s businesses and operations. Finally, theCompany also holds study sessions, when needed, in order
for all directors to gain a better understanding of domestic
and international economic conditions, legal revisions, andnew systems.

Director Remuneration
For details of the Company’s policy for determining thecontent of remuneration, etc. of individual directors(excluding Audit & Supervisory Committee Members),
please refer to the Corporate Governance Policy [Appendix
4] “Policy on Determining Director Remuneration on an
Individual Basis (excluding those who serve on the Audit
and Supervisory Committee).” The amount of remuneration
is calculated in accordance with this policy and isdetermined by the Board of Directors after deliberation by
the Nomination and Remuneration Advisory Committee.

Method for Determining Remuneration(1) The final annual amount of basic remuneration for each individual iscalculated and determined by the Representative Director, President andExecutive Officer, having received authorization to do so from the Board of
Directors, based on a standard amount predetermined for each position.
(2) Bonuses are determined by the Representative Director, President andExecutive Officer, having received authorization to do so from the Board of
Directors, based on performance for the target fiscal year after first
determining the payment percentage in accordance with the standard
bonus amounts for each position, the performance targets for the target
fiscal year, and the achievement level against those targets.
(3) For performance-linked share-based remuneration, the number of shares
granted is calculated by multiplying the performance-linked coefficient(ranging from 0% to 150%) set according to the degree of target
achievement.

Basic Policy
The remuneration plan for the Company’s directors is based on the following
perspectives:(a) Ensures that directors contribute to sustainable growth for corporate
performance and corporate value based on the Tokuyama Vision(b) Provides a level of remuneration that secures and retains human resourcesthat can support the Company’s management(c) Considers the performance of the Company(d) Employs a highly transparent, objective remuneration decision making
process

Amount of Remuneration Paid to Directors and Audit &Supervisory Committee Members (FY2023)

Overview of the Remuneration System
The Company’s remuneration for directors consists of basic remuneration andbonuses,1 which are monetary remuneration, and performance-linked
share-based remuneration,2 which is non-monetary remuneration, and themethod of determining each has been prescribed.

1. Recipients are executive directors
2. Recipients are directors excluding directors who are Audit & Supervisory Committee
Members, non-executive directors, external directors and non-residents of Japan

Category

Number ofPeopleRemuneration
Amount5¥155 million

1¥29 million

6¥56 million

Directors (excluding directors who are Audit& Supervisory Committee members)
Audit & Supervisory Committee members(excluding external directors)
External Director

Note: 1. The above includes three directors who retired during the current fiscal year.
2. The above includes ¥8 million of performance-linked share-based compensation
expense recorded during the current fiscal year.
3. The figures above do not include the employee salary portion for directors also
serving in employee positions.

Corporate Governance Policy
https://www.tokuyama.co.jp/eng/csr/pdf/
corporate_governance_policy_e.pdf

Policy on Holding Listed Shares for Purposes Other Than Pure Investment
The Company holds shares of publicly listed companies
for strategic reasons in accordance with the requirements
for business activities as part of the overall management
strategy. This includes the need to maintain and bolstertransactions, raise funds, and consistently procure raw
materials. As far as the strategic holding of shares inpublicly listed companies is concerned, the Company will
limit holdings to the minimum level possible, taking into
consideration the need to ensure efficient corporate
management. In addition, the Board of Directors takes
steps to verify the economic rationality of holding shares inpublicly listed companies by comparing capital costs thatfactor in associated risks with accrued benefits, while
confirming the propriety of holdings based on a future
outlook each year. The Company held shares in a total of
20 listed companies as of March 31, 2024. Efforts will bemade to reduce the number of shares by around 10
companies in FY2024. The Company exercises voting
rights in shares based on the contribution to corporate
value for both the Company and the investment target
company.

TOKUYAMA REPORT 2024

55

Risk Management

Strengthening Our Risk Management System
Tokuyama has established the Risk Management andCompliance Committee under the CSR Promotion Council aspart of our Company-wide risk management system, as
outlined on p. 38: Sustainability-related Meeting Bodies. The
Risk Management and Compliance Committee considers
events and issues that have recently emerged or that haveundergone a change in the degree of impact, by monitoringsocial conditions and coordinating with other committees. This
committee then assesses whether or not these are real risks
and meets with expert committees to develop a response.
   The Risk Management and Compliance Committee
performs group-wide enterprise risk management by making
visible and mapping risk levels both quantitatively andqualitatively from several perspectives: impact (monetary loss,
decrease in market share, and scale of impact, etc.); occurrence
frequency and probability; and Company’s vulnerability.

   The expert committees examine and determine mitigation
policies for the risks they are responsible for (including risk
reduction, avoidance, transfer, and retention). Based on thepolicies that are developed, the Group plans and implement
ways to manage risks and also conducts periodic reviews tocheck on the performance of the risk management system.
   For instance, we are working to mitigate compliance risk
by setting up management systems for understanding thelaws and regulations that cover business execution. As well,
we are tracking trends in amendments to those laws andregulations in Japan and overseas. The Risk Management
and Compliance Committee also discusses the establishmentof systems and business continuity plans in the event of acrisis involving business continuity, such as a catastrophe.

Process of Identifying Significant Risks
Board of Directors
Executive Committee

President

CSR Promotion Council
Risk Management and Compliance Committee
Identification of risks: Consideration of events and factors
Analysis of risks: Analysis of importanceClassification of risks: Determination of expert committees in charge

Expert Committees
Response to risks: Implementation of policies and measures
Evaluation of risk responses: Review of measures

Direction of risk responses: Management review of significant risks

Business Divisions, Group Companies/
Management Divisions

Market risks

Serious productdefects or quality risks

Natural disasters

Country risks

Business and human rights

Accidents or breakdowns

Business risks

Financial risks

Manufacturing risks

Serious environmental risks

Human resource risks

Definition of Scale of Damage and Impact

Globaldecarbonization risks

Large

Damage that threatens the survival of the company, as well as
substantial damage such as loss of assets

Moderate

Significant decrease of profits, or minor loss of assets

MinimalLittle impact on corporate profits and assets

Definition of Occurrence Frequency and Probability
Information security
risks
Legal andcompliance risksHigh

Occurs more than once a year; will almost certainly occur in thenear future

ModerateOccurs several times a decade

Low

Occurs once every decade or longer

Definition of Vulnerability
Pandemic disease

Small

Scale of damage/impact

Large

Mapping of Significant Enterprise Risks

High

Mitigation measures have not been implemented or are completely
inadequate

Moderate

Some measures have been implemented, but they are still insufficient

Low

Low

56

Occurrence frequency and probability

TOKUYAMA REPORT 2024High

Effective measures have been implemented and a management
cycle is in place

Tokuyama Value Creation

Value Creation Strategy

Progress of Growth
StrategyManagement for Sustainable
GrowthCorporate Data

List of Significant Risks (FY2024)
Hazard risk (external environment risk)

Risks posed by the external environment and potential events

Moderate category
Natural disasters
Accidents or breakdowns

Minimal category

Relevant committee

Earthquake, tsunami, weather-related disaster, abnormal weather event (typhoon, storm surge, heavy
rains, etc.)
Fire, explosion, chemical leak, equipment or device damage or failure, utility supply interruption,
accident with aircraft, ship or railway

Risk Management and Compliance
Committee

Pandemic disease

Widespread outbreak of COVID-19 or another endemic infectious disease

Country risks

War, conflict, terrorism incident, riot, unlawful political change, or economic crisis

Information security risks

Cyberattack, virus infection, information leaks, failure of system facilities/equipment, system failure

Safety Committee
Risk Management and Compliance
Committee
Risk Management and Compliance
Committee
Information Security Committee

Business risk (strategic risk) R isks posed by the quality and accuracy of corporate strategies that affect performance andcorporate value
Moderate category

Minimal category

Global decarbonization risks

Carbon pricing and energy costs, green process adoption measures, customer penetration of green
procurement, stakeholder assessment, extreme weather, increasingly extreme weather in the longterm, and lost opportunity of expansion into the green market

Market risks
Human resource risks
Financial risks

Changes in market needs, marketing failures or deficiencies, emergence of new competitors, productdevelopment failures or obsolescence, delays in responding to rapid technological innovations, anddelays or barriers to overseas expansion
Mass turnover, difficulty in securing human resources, workforce aging, distorted human resource pyramid, human resource development and technology transfer (including workers from overseas),failure
to adopt new work styles, and human resource mismatch due to business transitions
Funding plan or financing failure, paid capital increase, suspension of financial support, interest rate or
foreign exchange rate fluctuation risk, and stock price decline

Relevant committee
Sustainability Committee(Executive Committee)(Executive Committee)(Executive Committee)

Operational risk (business process risk) 
Risks arising from deficiencies in internal processes related to business execution, or frominadequate functions
Moderate category
Minimal category
Relevant committee
Manufacturing risks
Business risks
Serious product defects or
quality risks
Serious environmental risks

Equipment or machine stoppages or accidents due to operating errors, industrial accidents, and aging
equipment or machinery
Soaring raw material or fuel prices, failed pricing policies, declining price competitiveness, dependence
on a small number of suppliers, and dependence on a small number of customers
Quality defects, voluntary recalls, product liability accidents, deficiencies in chemical safety
management when exported, management of chemical substances contained in products, andmislabeling or counterfeit labeling
Release of hazardous pollutants, contamination of soil and groundwater, complaints from local
residents regarding noise and odors, illegal dumping and improper disposal of waste, water risks,and biodiversity

Safety Committee(Executive Committee)
Product Safety and Quality
Assurance Committee
Environment Committee

Business and human rights

Human rights violations in supply chains, boycotts, and consumer movements

Sustainability Committee

Legal and compliance risks

Non-performing loans/bad debts, intellectual property rights infringement and violation, inventioncompensation disputes, antimonopoly law violation, Unfair Competition Prevention Act violation(bribery), improper contract signing, insider trading, inadequate management of licenses and permits,misconduct involving executives or employees, ties to antisocial forces, and intimidation

Fair Trade and Competition
Committee
Risk Management and Compliance
Committee

Notes: 1. The chairperson of each committee is a director who is responsible for the relevant risks.
2. Not all risks in the Group are covered, and there may be risks that could affect business activities in addition to those listed.

Information Security Initiatives
In order to preserve information assets such as customer
information and to continue appropriate corporate operations, theCompany has established an Information Security Committee,
which deliberates on policies, plans, the identification of risks aswell as the effectiveness and appropriateness of response plans
and measures, and is proceeding with the necessary measures.
We have established an Information Security Policy that covers theentire group, and have a security risk management system inplace. The status of the system is regularly evaluated and security
risk measures are implemented in a timely and appropriatemanner. In order to maintain and improve risk levels, we regularly
conduct information security self-inspection checks, internal
audits, and e-learning programs to raise awareness.
   As laws concerning the protection of personal information
are being developed in countries (regions) around the world,and compliance with laws and regulations is required not onlyin Japan but also globally, we have established the Basic
Privacy Policy as we regard the protection of the rights andinterests of individuals throughout the Group with respect to theproper handling of personal information to be an important
issue. In our Privacy Policy, we have also reviewed the contents

related to GDPR compliance and contacts for personal
information inquiries.
   In addition, we introduced a marketing automation tool tocollect and analyze information on website visitors for the
purpose of cultivating new customers, etc. With its introduction,
we established a Cookie Policy as a statement to inform visitors
about the use of cookie information, since cookie information
can be linked to other information to identify individuals.
   Cybersecurity is becoming increasingly important year by
year. We recognize that protecting the Company’s information
assets from external attacks is necessary not only for ourcompany's operations, but also to protect the stable operationsof our customers. The entire Group is taking action in order tobe fully equipped to serve as a part of the customer’s supply
chain. This year, we also received requests from importantcustomers, and we checked each group company, including
overseas, about the possibility of an incident occurring, and weare taking steps to identify and address the issues.
   As a result of these activities, in FY2023, there were no
significant incidents involving information security or personal
information.
TOKUYAMA REPORT 202457