2023

Responsible Care®

Environmental &Social Report

Sakai Chemical Industry Co., Ltd.
5-2 Ebisujima-cho, Sakai-ku, Sakai City, Osaka, 590-8502, Japan
Tel.: 81-72-223-4111 Fax: 81-72-223-8355

About the picture on the front cover
Depicted on the front cover is Cheetan, Sakai Chemical Industry’s mascot created in celebration of thecentenary of its founding. Named after titanium dioxide, commonly called “chitan” in Japanese, one of
the main products of the Company, he is a lively boy full of curiosity about everything. He is dressed
nicely in a beaker-shaped outfit, with hair styled like the Company’s logo. His bow tie with hexagonalends and his polka-dotted pants are inspired by powder processing technology, in which one of theCompany’s strengths lies.

Sakai Chemical Industry Co., Ltd.

Table of Contents

Basic Corporate Behavior Policy●

2

Editorial Policy and Company Profile

3

Message from Top Management

4

Materiality and Key Performance Indicators (KPIs) for
Sakai Chemical

6

Building a Transparent and Strong Management System

10

Commitment to Promoting Human Rights

12

Making People Happy

18

Response to Climate Change

20

Protecting the Global Environment

26

Solving Social Issues through Manufacturing

29

Financial Information

30

Find the Sakai Chemical Group in Your Daily LifeWe will contribute to a prosperous future for our customers by providing
high-value-added, socially beneficial products and services that meet the needs ofthe times while giving consideration to safety.
● For the benefit of wider society, we will comply with all laws and regulations andadhere to their spirit, have no relationships with antisocial forces, and strive to act
sensibly.
● For shareholders and investors, we will disclose company information in a timely
and fair manner, conduct sound and honest corporate management, and strive tocontinuously grow our business.
● For our business partners, we will build good partnerships and conduct soundand fair transactions in order to achieve mutually prosperous relationships.
● For local communities, we will prioritize environmental preservation and safety in all
aspects of our operations and aim to be a good corporate citizen that earns thetrust of the community by maintaining clean corporate behavior.
● For employees and others who work with us, we will aim to respect each other,promote diversity, and grow together in a safe and comfortable work environment.
● To protect the company’s assets, we will manage the intellectual property andimportant confidential information held by the company appropriately, in accordancewith our internal rules.

Editorial Policy

Scope of Reporting

This report explains to stakeholders how Sakai Chemical Industry
Co., Ltd. carries out its social responsibilities in order to fulfill its
management mission “Chemistry for a Friendly Future.” The reportfocuses on the environmental, social and governance initiatives theCompany implements with the aim of realizing a sustainable society.

This report mainly concerns the activities of Sakai Chemical Industry,
but also includes some activities conducted by the other Sakai
Chemical Group companies. In this report, “Sakai Chemical
Industry” and the “Sakai Chemical Group” are defined as follows:• Sakai Chemical Industry (or the “Company”) – Sakai Chemical
Industry Co., Ltd.
• Sakai Chemical Group (or Sakai Chemical) – Sakai Chemical
Industry Co., Ltd. and its consolidated subsidiaries
When the report mentions matters related to a particular portion of
the abovementioned scope of reporting, that portion is specified.

Period Covered
Fiscal year of 2022 (from April 1, 2022 to March 31, 2023)
Some events and activities outside the abovementioned period arealso included in this report.

Date of IssuanceAugust 2023

Management Mission:

Corporate
Philosophy

Chemistry for a Friendly Future

Creating materials that support the comfort and security of society
through compassion and technological innovation
Organizational Vision:

Exciting Company

We will build an exciting company together.

Company Profile (as of March 31, 2023)
Company Name: Sakai Chemical Industry Co., Ltd.
Founded: June 25, 1918
Incorporated: February 25, 1932
Head Office: 5-2 Ebisujima-cho, Sakai-ku, Sakai City, Osaka,590-8502, Japan
Paid-in Capital: 21,838 million yen
Number of Employees: 2,013 (consolidated);
769 (non-consolidated)
Production Bases: Sakai Manufacturing Site; Onahama
Manufacturing Site; Yumoto Factory;
Semboku Factory; Otsurugi Factory;
Matsubara Factory

Fields of Business
The history of Sakai Chemical Industry dates back to 1918, when it
succeeded in developing an improved method of manufacturing zincoxide. Since then, in accordance with changes in people’s lives andvalues, the Company has enhanced its core technologies forinorganic powder processing, organic synthesis, and pharmaceuticalmanufacturing, based on barium and titanium dioxide, thereby
commercializing products that can meet the needs of the times.
Today, the Company supports the most advanced manufacturing ofsmartphones, automobiles, cosmetics, and other products.

2 2023 Environmental & Social Report

Sakai Chemical Group Network
In Japan

Manufacturing

Sales

Sakai Chemical Industry Co., Ltd.; Kaigen PharmaCo., Ltd.; Osaki Industry Co., Ltd.; Resino Color
Industry Co., Ltd.; Kyodo Chemical Co., Ltd.; SC
Organic Chemical Co., Ltd.; Nippon Color Industry
Co., Ltd.; Katayama Seiyakusyo Co., Ltd.
Sakai Trading Co., Ltd.

Outside Japan

Manufacturing

Sales

Sakai Chemical (Vietnam) Co., Ltd.
Siam Stabilizers and Chemicals Co., Ltd.
PT. S&S Hygiene Solution
Sakai Trading New York Inc.
Sakai Australia Pty Ltd.
Sakai Trading (Shanghai) Co., Ltd.
Sakai Taiwan Co., Ltd.
Sakai Trading (Thailand) Co., Ltd.

Message fromTop Management
I would like to take advantage of the issuance of our Environmental and Social Report for FY2022 as an opportunity to give our stakeholders a message.
Sakai Chemical Industry originated from our predecessors’ efforts to commercialize zinc oxide with the aim of saving women and infants from leadpoisoning due to white powder. Since then, the Company has broadened the ranges of its products and their applications so widely that Sakai Chemicalmaterials currently support all aspects of human life. We believe that we can fulfill our mission “Chemistry for a Friendly Future” by solving social issues
through these various materials. As part of our efforts to achieve this, we have decided to certify materials that help solve social issues as “Smart Materials®.”
Meanwhile, the entire product supply process involves many steps, from procurement of raw materials and fuels, through manufacturing, to shipment anddelivery. Needless to say, these business activities themselves must be conducted in an environmentally friendly manner in people-friendly workplaceenvironments. The scope of such environmental and workplace measures has recently expanded to encompass the entire supply chain. In addition, there has
been growing public demand for companies to operate their businesses with a view to achieving harmonious co-existence and co-prosperity with society
while anticipating changes in their business environment and working to identify risks entailed by those changes and create new business opportunities.
Sakai Chemical has defined four themes for its business operations: “Make People Happy,” “Protect the Global Environment,” “Solve Social Issues through
Manufacturing,” and “Build a Transparent and Strong Management System.” Under these themes, we have identified a total of 11 issues of materiality and key
performance indicators (KPIs) relevant thereto. I will give you an overview of them below.
[Environment]
We are implementing various measures to achieve carbon neutrality
by 2050 in line with the public policy on response to climate change(based on the Task Force on Climate-Related Financial Disclosures[TCFD] Recommendations). As our first step, we have set a
medium-term target of reducing CO2 emissions by 30% (versus the
FY2013 level) by FY2030. In addition to CO2 emissions reduction, weare also working on waste reduction through the effective use ofresources. Against a backdrop of growing public awareness of the
impacts of CO2 emissions and waste on a company itself and its
entire supply chain, we will make steady forward steps from a
medium- to long-term perspective.
[Society]
In March this year, a fire occurred at a titanium dioxide factory at the
Onahama Manufacturing Site. I apologize for the concern andinconvenience this accident caused to those involved and all otherstakeholders. It is deeply regrettable that we allowed such an accident
to occur while we were working to improve our risk management andoccupational health and safety after the explosion at the Yumoto
Factory. Fortunately, the fire did not injure anyone, but it has reminded
us of the latent risk of accidents causing injuries to our employees. We
will adopt thorough measures to create a safe and secure workplace.
We will also provide our employees with greater occupational healthcare and support their health enhancement efforts.
Meanwhile, the ongoing diversification of work styles andwork-related values has increased the importance of a company’scommitment to enabling its employees to adopt flexible work styles,
thereby increasing their motivation for work and maintaining adiverse workforce. Two years have passed since Sakai Chemical
Industry introduced a new personnel system. Diverse employees’
efforts to increase their own skills and raise their levels of

performance will benefit both themselves and their company.
Therefore, we will devise and implement effective measures to
unlock the potential of individual employees, focusing on fostering a
corporate culture abundant in vitality and diversity.
[Corporate governance]
In the current age of upheaval, we are facing two important
governance challenges: reviewing our business portfolio anddeveloping management human resources. To address thebusiness-portfolio challenge, in FY2022 we divided our various
businesses into three categories: growth businesses, stablebusinesses, and businesses requiring streamlining measures. From
now on, we will have to achieve the desirable outcomes of ouroperation of these three categories of businesses. We also need todevelop management human resources who can review the portfolio
according to the times. We will make a serious commitment tosolving these important challenges while having close dialogue with
our stakeholders.
The ongoing war in Ukraine has reminded us of geopolitical risks,
while rapid situational changes, including more frequent extreme
weather events worldwide and the wider use of AI, have increased
the uncertainty of the future. Even under such circumstances, we willremain committed to our consistent business activities as a“company with deep chemistry” that continues to provide value tosociety while changing flexibly with the aim of realizing “Chemistry fora Friendly Future.”
We look forward to continued support and guidance from ourstakeholders.

Toshiyuki YAGURA
President and Representative Director

2023 Environmental & Social Report3Materiality and Key Performance Indicators(KPIs) for Sakai Chemical
Management Mission

Theme

Make People
Happy

Protect the Global
Environment

Solve Social Issues
through
Manufacturing

Build aTransparent andStrongManagement
System

4 2023 Environmental & Social Report

Chemistry for a Friendly Future—Creating materials that support the comfort and security ofsociety through compassion and technological innovation—

Issue of materiality

Our major initiatives(1) Foster human resources and create a
corporate culture where employees canfeel their growth

Organizational Vision

Social Issues

Key performance indicators (KPIs)
KPIs

Targets

Results

Building mechanisms to allow employees to take up new challenges
and act on their own initiative
Promoting diversity

Results of stress checks
Deviation value of the score for the evaluation item
“Consideration for employees’ career development”

Exceed the deviation value of chemical companies’ stress checkscores and aim to rank higher
Reach a deviation value of 50.4 in the chemical industry for FY2021(Sakai Chemical Industry’s actual deviation value for FY2021: 46.9)

Deviation value in the chemical industry for FY2022: 50.5
(Sakai Chemical Industry’s actual deviation value for
FY2022: 47.5)(2) Create a comfortable working
environment

Introducing a new personnel system
Improving the working environment (in terms of both time and space)
Making each workplace livelier

Frequency rate (number of occupational
fatalities and injuries per one million actual
working hours)
Severity rate (number of working days lost due
to accidents per 1,000 actual working hours)
Promotion of digital transformation (DX)

Create a safety-first workplace environment
Eclipse a frequency rate of 0.93 in the chemical industry for
FY2020 (Sakai Chemical Industry’s actual frequency rate for
FY2020: 0.70)
Eclipse a severity rate of 0.03 in the chemical industry for FY2020(Sakai Chemical Industry’s actual severity rate for FY2020: 0.00)
Continue to promote DX

Frequency rate in the chemical industry for FY2021: 1.07
(Sakai Chemical Industry’s actual frequency rate for
FY2021: 0.69)
Severity rate in the chemical industry for FY2021: 0.02
(Sakai Chemical Industry’s actual severity rate for
FY2021: 0.00)(3) Contribute to local communities

Having close dialogue with local communities
Supporting or participating in local associations

Number of opportunities for dialogue that Sakai Chemical Industry has withlocal communities through the Responsible Care® and other initiatives
Number of social contribution activities in which Sakai Chemical Industry
participates among those conducted by the local associations that theCompany supports or has a membership inHave one or more dialogue opportunities a year
Participate in one or more social contribution
activities a year

Had dialogue opportunities through the Watanabe
Shimomachi-ku Specialist Committee, the Shimogawa Studies
Group, the Izumi Furusato Festival, and the Sakai Festival
Participated in the Iwaki Sunshine Marathon, Sakai Science
Education Festa, etc.

(4) Manage chemical substances
appropriately, reduce environmental
impact, and implement measures toimprove product safety

Making a fuel switch from crude oil to LNG; replacing motors andlights with highly efficient motors and LED lights, respectively;
installing solar power panels; working to recover NH3, CO2, and H2;
raising levels of pollution prevention and chemicals management

CO2 emissions reduction rate (versus the
FY2013 level)
Number of serious environmental accidents

Achieve a 30% reduction by FY2030
Achieve zero accidents throughout the year

FY2021: Achieved a 14% reduction
FY2022: One incident occurred (a fire at the
Onahama Manufacturing Site)(5) Reduce industrial waste emissions

Promoting the 3Rs (“reduce,” “reuse” and “recycle”)
Reconsidering raw materials, fuels, and the manufacturing processes
Recycling industrial waste

Industrial waste reduction rate (versus the
FY2021 level)

Achieve a 25% reduction by FY2025(6) Give consideration to biodiversity

Continuing to conduct monitoring activities near disposal plants
Contributing to biodiversity using voluntary credits for carbon neutral
LNG (CNL)

Status of surveying animals, plants and ecosystems
as a post-assessment after an environmental impact
assessment
Introduction of CNL

Conduct a survey on the occasion of disposal
plant construction work
Continue to use CNL(7) Create products and services that help
solve environmental and social issues

Developing and/or manufacturing solid-state battery materials,
synthetic ammonia catalysts, substitute products for microplastic
beads, 5G-related (low-expansion, heat-radiating, low-dielectric-loss,
and/or flame-retardant) materials, carbon recycling catalysts, andantibacterial and antiviral materials

Number of developments certified as Smart
Material®

Launch five Smart Material® products by
FY2030(8) Promote responsible procurement

Providing information to suppliers and asking for their cooperation;
auditing business partners; etc.

Percentage of business partners whom we request
to conduct a customer satisfaction survey

100%

Started conducting the survey in FY2023(9) Increase the effectiveness of the Boardof Directors

Implementing an annual questionnaire to evaluate the effectiveness of
the Board of Directors
Making improvements based on the questionnaire results
Formulating plans to develop management human resources
Operating the Nomination and Compensation Committee

Following indicators based on the results of thequestionnaire on the effectiveness of the Board of Directors
1) Number of challenges identified
2) Number and total hours of discussion sessions on eachchallenge
3) Number of countermeasures devised4) Number of countermeasures implemented

Identify challenges based on the results of thequestionnaire on the effectiveness of the Board,and make necessary improvements

FY2022: Identified challenges based on thequestionnaire results and made necessary
improvements(10) Understand risks and takecountermeasures

Conducting risk and compliance education, training andawareness-raising activities
Operating committees and subcommittees effectively

Number of serious compliance violations
Ability to maintain a Company-wide risk
management system

Achieve zero serious compliance violations
throughout the year
Maintain the effectiveness of the system

FY2022: Achieved zero violations throughout
the year
FY2022: Maintained system effectiveness(11) Ensure timely and appropriate
information disclosure

Stimulating IR and PR activities; enhancing PR for crisis management

Compiling and providing an integrated report orinformation equivalent to the content of such areportProvide an integrated report or informationequivalent to the content of such a report fromFY2022

Planning to issue an integrated report for
FY2023 while abandoning the plan for a FY2022
reportFY2022: Continued to use CNL

2023 Environmental & Social Report5Building a Transparent and Strong
Management System

GovernanceCorporate GovernanceDirector skills matrix

Corporate governance structure
Sakai Chemical Industry has adopted a system for a company with a board of statutory auditors. The three members of the Board of Statutory Auditors,
including two permanent outside auditors, play their roles from a neutral and objective standpoint, based on their vast professional experience andextensive knowledge, by asking questions at meetings of the Board of Directors, giving advice to directors, and exchanging opinions with directors. They
also cooperate with the Company’s department in charge of internal audits and accounting auditors in ensuring that the auditing function is fulfilled
completely. In addition, on June 28, 2022, the Company appointed an auditor in reserve in case the number of the Statutory Auditors required by law is
no longer met, in order to achieve perfect operation of the system.
The Board of Directors comprises eight members (as of the end of June 2023). Three of them are outside directors, each of whom has worked in thefood industry, at a general electrical appliance manufacturer, or in the pharmaceutical industry and has extensive experience in corporate management.
To ensure that the Company will fulfill its mission “Chemistry for a Friendly Future,” the Board of Directors makes important decisions on business
management and supervises its members’ execution of duties. Since FY2021, the Company has adopted an executive officer system and clearly defined
the executive officers’ responsibility and authority for operational execution in order to make the Company’s management more agile and strengthen its
corporate governance. For the Basic Policy on Corporate Governance and the Corporate Governance Report, visit Sakai Chemical Industry’s website.

Appointment and dismissal

Board of Directors
Eight members
including threeoutside directors

AuditsBoard of
Statutory Auditors

Representative Director,
President and Executive Officer

AuditsReportingDirections
Reporting

Cooperation

Accounting
Auditors
Accounting
auditsCooperation

Management
Audit Department

Cooperation

Environmental Management
Committee

Executive Officers (business and corporate divisions)Group Companies

Board of Directors
The Board of Directors meets at least once amonth, in principle, with the attendance of thestatutory auditors. Throughout FY2022, 17 Boardof Directors meetings were held. The subjects andnumbers of resolutions adopted and reports
deliberated on at the Board meetings in FY2022
are as shown in the table on the right.

6 2023 Environmental & Social Report

R&D andproduction
technology

Business strategy
and marketing

Masaaki Yabe●●

Toshiyuki Yagura●●

Shinji Nakahara●●* Mitsunori Matsuda

Human resources
Legal affairs andand organizationalrisk managementadministration

ESG andthe SDGs
●

●

●

●

●

●

●
●

●

●
●

●
●
●

●

●

●
●

●

●

●

Definitions of skills
Field of skills
Corporate management

Definition of necessary skills
Skills in detecting current trends and implementing structural changes, including business reforms, business expansion, and theselling of businesses, based on one’s experience of serving as CEO of a Sakai Chemical Industry subsidiary or another company

R&D and production
technology

Skills in creating new businesses based on one’s mastery of R&D, manufacturing, quality control, etc.

Business strategy
and marketing

Skills in working as a person responsible for business strategy based on one’s mastery thereof
Skills in accurately assessing the Company’s business performance, making right investment decisions, and communicating effectively
with the capital market

Human resources andorganizational administration

Skills in organizational development and personnel management based on one’s mastery of human resources and organizational
administration

Legal affairs
and risk management

Skills in addressing obvious business and management risks based on one’s mastery of legal affairs concerning corporate activities

ESG and the SDGs

Skills in submitting proposals on sustainability-focused corporate management and performing such management based on
one’s understanding of the positioning and roles of the Company’s businesses in society

Assessment of the effectiveness of the Boardof Directors
Function of operational execution

Subjects and numbers of resolutions and deliberated reports recordedin the minutes of the Board of Directors meetings in FY2022
Resolutions

Deliberated
reports

Matters related to corporate management, the operation of the Board of Directors, and corporate governance

411

Matters related to research and development, production technology, and capital investment

41

Matters related to business strategy and marketing

1

6

Matters related to finance, accounting, and settlement of accounts

93

Matters related to human resources and organizational administration

7

1

Legal affairs and risk management

一5

ESG and the SDGs

3

2

Other

3

6

Subjects

Finance andaccounting●

Yasuhiro Okamoto

Finance andaccounting

Operational audits

Compliance and Risk
Management Committee

Quality Management Committee

Corporate
management* Outside director

Assessment

Management Council

Sustainability Committee

Gender* Hiromi Wada

Appointment
and dismissal

Appointment and dismissal

Three members
including two
outside auditors

Electionand dismissal

Director* Yoshikazu Ito

General meeting of shareholders

AdviceSkills matrix

Hiroyuki Hattori

Overview of Sakai Chemical’s corporate governance (as of the end of June 2023)

Nomination andCompensation
Committee

Embracing “Chemistry for a Friendly Future” as its mission, Sakai Chemical Industry aims to solve various social issues by leveraging the power ofchemistry. We have examined and defined the skills that directors and other management team members need to have to ensure that theCompany will completely execute its management plan by transforming into an “Exciting Company” that can not only achieve organizational
growth but also allow its employees to achieve personal growth and can share joy with its stakeholders. Below are the skills matrix for the current
directors and the definitions of skills necessary in each field.

As a measure for the Board of Directors’ self-evaluation, theCompany conducts an annual questionnaire survey on theeffectiveness of the Board of Directors with all members of the Boardof Directors and the Board of Statutory Auditors as respondents. To
clearly divide between responsibility for supervision and responsibility
for execution, the Company introduced an executive officer system in
FY2021. Under this system, executive officers who are not directors
also attend Board of Directors meetings once every three months toreceive reports on the status of business operations.
Based on the results of the FY2022 assessment of its
effectiveness, the Board of Directors will not only make improvementsin the fields where Board members assessed their own effectivenessas inadequate but also work to further increase its effectiveness in theother fields. By doing so, the Board aims to operate the Company
through more active and productive discussions.

Nomination and Compensation Committee
Sakai Chemical Industry has in place a Nomination and Compensation
Committee as a voluntary advisory body in order to ensure the fairness,
objectiveness and transparency of the Board of Directors’decision-making processes concerning the appointment of andcompensation for directors and other personnel. The Nomination andCompensation Committee comprises five members, three of whom are
independent members, to take independent, objective perspectives. This
committee deliberates on the appointment and dismissal of directors andother personnel, plans and training for management member
candidates, compensation for current directors and other personnel, andso on, and it reports the deliberation results to the Board of Directors.
In FY2022, the Nomination and Compensation Committee met fourtimes mainly to confirm progress in the development of managementhuman resources, discuss whether the current compensation systemfor directors, executive officers, etc. should be reviewed, and deliberateon the structure of the management team for the next fiscal year.
2023 Environmental & Social Report7Governance● Compliance awareness-raising activities

Risk Management
Compliance and risk management (CRM) system
Sakai Chemical Industry has formed a Compliance and Risk Management (CRM) Committee as an organization that facilitates both complianceand risk management activities, with the Compliance Promotion Subcommittee and the Risk Management Subcommittee under its umbrella.
Under this CRM system, the Company has designated risks that can have considerable impacts on the Group’s business operations as “significant
Group-wide risks” to devote united efforts to risk management.
Overview of the compliance and risk management promotion system

Management
Audit Department

President

Compliance and Risk Management(CRM) Committee

Compliance & Risk Management
Department

Contacts for whistleblowing

Compliance Promotion Subcommittee

Compliance awareness-raising
activities

Risk Management Subcommittee

Risk management activities

Sakai Chemical management
and employees

Board of Directors

Compliance promotion activities● Compliance Promotion Month

Compliance Handbook

Compliance slogan poster● Measures to address significant Group-wide risks
Sakai Chemical Industry has created a Company-wide risk map. Based on this map, the Company designates significant risks for every fiscal year
and devotes efforts to addressing them. The significant Group-wide risks designated as targets of our focused efforts in FY2022 were the risk of
information leakage, environmental risks (air and water pollution risks), and the risks of fires and explosions, all of which had been designated in
the previous fiscal year, plus cyber security risks, which were designated in response to a ransomware-based cyber attack on Kaigen Pharma Co.,
Ltd., a Sakai Chemical Group company, in FY2021. In the next fiscal year as well, we will implement comprehensive countermeasures against
various risks, including those that we are currently addressing. We will also identify new significant high-priority risks while updating theCompany-wide risk map in consideration of emergent risks in order to devote further efforts to addressing those risks.

● Risk management training
Enhancing the risk management system requires increasing each employee’s skills in implementing risk management measures (identifying risks,creating risk scenarios, assessing risks, creating risk maps, and devising countermeasures).
In FY2022, we identified problems and necessary improvements in the training on risk management methods provided for section managers in
FY2021 with the aim of improving that training. We then designed a new training program that reflects those improvements and provided it for awider range of trainees, including department managers and the heads of other in-house organizations. We also conducted a follow-up
questionnaire survey on the training contents. The survey results will be used to increase the effectiveness of risk management training. We willcontinue to provide risk management training while enhancing its contents with the aim of improving the accuracy of our risk assessment andbecoming able to identify more significant risks to the Company.

Sakai Chemical Industry has established a Company-wide information management system and formulated the following information-related rules:
Information Management Rules, which define the basic method of managing confidential corporate information; Information Security Rules, which
define the appropriate handling of electronic information assets; Rules on the Handling of Designated Personal Information, which define theappropriate handling of designated personal information concerning the Company’s employees and other people; and Rules on the Protection of
Personal Information, which are aimed at preventing the Company from losing corporate profits due to the leakage of personal information or otherinformation-related problems.
In FY2022, we mainly implemented information security measures on a regular basis, focusing on increasing employees’ skills: conducting drills
against targeted email attacks and providing information security education. We also used an external vulnerability diagnosis service to investigate
our network and the status of information leakage, thereby confirming that there was no major problem.

We will continue to implement technical, administrative, operational, and employee-focused measures to address diversifying information
security risks.

● Enhancement of systems and regulations

8 2023 Environmental & Social Report

Risk management activities

Information security

The Company has defined every October as “Compliance Promotion
Month,” during which various activities are conducted to raisecompliance awareness among employees, including holding
department-level case study workshops, administering mini-tests for
executives and managers, and calling for compliance slogans andsenryu poems. From among the submitted slogans, excellent entries
are selected and displayed on posters put up at each workplace.
The Company therefore strives to instill greater complianceawareness into every employee.

[Creation of a compliance manual]
1) Whistleblowing
In response to the revision of the Whistleblower Protection Act inJune 2022, the Company has revised its whistleblowing system. The
main feature of the revised system is the designation of contacts forwhistleblowing in the former system as “persons engaged in theactivity of dealing with whistleblowing disclosures” to ensure higher
importance being placed on the protection of whistleblowers in the
new system. In addition, the Company clearly explains about the
new whistleblowing system to all employees so that they areappropriately informed of and educated about the new system.
2) Handling of entertainment and gifts
To conduct business in a transparent manner and maintain soundand fair business transactions, the Company prohibits all
management members and employees from requesting
counterparties to offer entertainment or gifts, whether explicitly or
implicitly. Even if they are offered entertainment or gifts within thescope of generally accepted common practice, they are obligated toreport the fact to their superiors and keep records thereof in the
management register of the receipt of entertainment and gifts.
Through these thorough measures, we prevent corruption.

Sakai Chemical Industry provides compliance education for new employees, new managers, and mid-career hires. Specifically, we have them viewcompliance education videos, hold a department-level Compliance Handbook reading session every six months, and deliver weekly online reports
on compliance-related cases. Additionally, to raise compliance awareness among our employees, we provide them with training on the subjects
shown below. In FY2022 in particular, the training was aimed at preventing the leakage of trade secrets, whose importance as a social issue has
recently been increasing. We also broadened the scope of our awareness-raising activities to encompass our Group companies with the aim ofenhancing group governance. We will continue to constantly hold training sessions focusing on various applicable laws and regulations in order tofurther heighten compliance awareness among our employees.
1) Lecture on contract work (July 2022) 2) Seminars on the Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors(Subcontract Act) (July and August 2022) 3) Lecture on prevention of the leakage of trade secrets (November 2022) *Intended for managers
4) Briefing on contracts and lecture on the Subcontract Act (November and December 2022) *Intended for Group companies 5) Lecture on
the Antimonopoly Act (March 2023)[Operation of the whistleblowing system in FY2022]
In FY2022, six whistleblowing reports were submitted, andappropriate responses were made to all of them in line with theapplicable regulations. Those reports were all on harassment, withnone of them concerning serious compliance violations (serious
violations of the Act on Prohibition of Private Monopolization and
Maintenance of Fair Trade [Antimonopoly Act] or serious cases ofcorruption). If any case of a possible serious violation is detected in
the future, we will adopt necessary corrective measures and strive toprevent the occurrence of similar cases.

Basic Business Continuity Management (BCM) Policy
1. Always put the security of people’s lives first.
2. Strive to prevent secondary disasters so as not to inconvenience local communities.
3. In the event of a disaster, work for the recovery of affected areas in collaboration with local communities, local governments,
business partners, etc.
4. In the event of a disaster, reduce the risks of losing customers and market share, lowering corporate value, etc. by avoiding
suspending important operations or, even if business activities are suspended, by striving to resume the operations within thetarget recovery time.

Initiative to formulate and implement business continuity plans (BCPs)
Sakai Chemical Industry has formulated Rules on the Business Continuity Management System (BCMS Rules) and a business continuity plan
(BCP) for each of its major bases in Onahama, Sakai and Tokyo.
The Sakai Manufacturing Site in particular faces many potential disaster risks, including the risk of being affected by tsunamis caused by apossible Nankai megathrust earthquake, the risk of being flooded with water from the nearby Yamato-gawa River when it overflows, and the riskof being flooded by a typhoon-caused storm surge because the site is located near a port. The Company is currently adopting countermeasuresagainst these risks mainly in facility terms.
In FY2022, we conducted a drill in a simulation of the occurrence of a Nankai megathrust earthquake to train executives in initial emergency
responses.
2023 Environmental & Social Report9Commitment to Promoting Human Rights
To Fulfill Corporate Responsibility for Respecting Human Rights
Everyone has the right to assure their own safety, enjoy freedom, and lead a happy human life. However, it is unforgivable to sacrifice other people’s
happiness for the sake of one’s own happiness. We believe that this philosophy of respect for human rights is essential in our commitment tosolving social issues through our business activities. Therefore, we formulated the Sakai Chemical Group Basic Human Rights Policy on October
1, 2022.
This basic policy has undergone an external review by Baker & McKenzie (Gaikokuho Joint Enterprise), our corporate attorney.

The Sakai Chemical Group Basic Human Rights Policy
The Sakai Chemical Group has been engaged in businesses that have contributed to people’s safe and healthy lifestyles since its
foundation. Sakai Chemical Industry Co., Ltd., the core company, expresses the aspiration of the Sakai Chemical Group towards people
through its management philosophy “Creating a Friendly Future through Chemicals.” To realize this philosophy, we believe it is importantto respect the human rights of relevant stakeholders in all countries and regions in which we conduct our activities.
This Human Rights Policy promises that the Sakai Chemical Group will fulfill its responsibility to respect human rights based on its
management philosophy and international norms.

1. Basic principle
The Sakai Chemical Group will comply with laws and regulations governing the human rights norms applicable in countries and regions
where we conduct our businesses, and support and respect the norms of the international human rights. These include the United
Nations’ International Bill of Human Rights, which contains the “Universal Declaration of Human Rights,” the “International Covenant on
Civil and Political Rights” and “International Covenant on Economic, Social and Cultural Rights,” as well as “ILO Declaration on
Fundamental Principles and Rights at Work,” etc., which provides for the freedom of association and the right to negotiate, the prohibitionof forced labor, the effective abolition of child labor and the elimination of discrimination in employment and occupation. Furthermore, wewill be engaged with respect in human rights based on the “United Nations’ Guiding Principles on Business and Human Rights” and the
National Action Program on Business and Human Rights (NAP).

2. Scope
This Human Rights Policy will apply to all officers and employees of the Sakai Chemical Group (including all full-time, fixed term, temporary,dispatched, part-time, and other employees). We also encourage all business partners of the Sakai Chemical Group to understand andcomply with this Human Rights Policy.

3. Human rights due diligence
The Sakai Chemical Group will establish human rights due diligence system to identify negative impact against human rights, make efforts
to prevent the occurrence of such impact or reduce the risk of its occurrence.

4. Establishment of a remedy system
The Sakai Chemical Group will establish system to allow relevant stakeholders to report any human rights concerns. If any negative impact
against human rights is identified or is likely to be identified, we will make efforts with relevant stakeholders to reduce negative impact.

Human Rights Promotion
SystemOn October 1, 2022, Sakai Chemical Industry
established a Human Rights Subcommittee as anorganization that implements initiatives to addresshuman rights issues. Positioned under the
Sustainability Committee, which is responsible forachieving ESG management, the Human Rights
Subcommittee also works with the Company’ssustainability promotion system.
The Human Rights Subcommittee scopes
human rights issues that Sakai Chemical Groupshould address by priority in the future (scoping)with the aim of promoting Group-wide initiatives
to solve human rights issues.

Chart of the human rights promotion system
Board of Directors
President
Sustainability Committee
Management Council

Human Rights
Subcommittee

Compliance and Risk
Management Committee
Quality Management Committee
Environmental Management Committee

Departments engaged in operational execution and Group companies

Human Rights Education
Executive training
In December 2022, we provided executive training for the directors andexecutive officers of all Sakai Chemical Group companies in Japan and abroadwith the aim of ensuring that corporate responsibility for respecting humanrights would be reflected in management plans in a more effective manner.
We invited Ms. Emi Omura, an attorney-at-law (Japan and NY) and ahuman rights expert who serves as a Steering Committee Officer of theBusiness and Human Rights Lawyers Network Japan, to give a lecture on thetheme “Responsibility for Respecting Human Rights as a Compliance Issue.”

Scene from an executive training session

Employee training
From November 2022 to February 2023, we provided employee training for all
employees of all Sakai Chemical Group companies in Japan and abroad sothat every employee engaged in business activities would be able to carry out
the Group’s Basic Human Rights Policy in their own work.
Focusing on providing training tailored to the Sakai Chemical Group’sbusinesses, we built a system whereby all employees could attend the training
by adopting such measures as making archived training videos available
online for later use.
Scene from an employee training session at an overseas subsidiary

5. Dialogue
The Sakai Chemical Group will recognize the importance of dialogue with relevant stakeholders to identify negative impact against humanrights, and make efforts to engage in timely dialogue to understand, reduce and resolve human rights issues.

Establishment of a Remedy System

6. Employee training

Joining JaCER, an organization that redresses
grievances about human rights infringement

The Sakai Chemical Group will provide the necessary training to ensure that this Human Rights Policy permeates throughout the Groupand that all officers and employees have proper understanding of human rights and can effectively reflect the understanding in theirbusiness activities.

7. Information disclosure
The Sakai Chemical Group will disclose information about its human rights efforts through its website and various reports, as appropriate.
This Human Rights Policy was approved by the Board of Directors of Sakai Chemical Industry Co., Ltd. on September 26, 2022.

10 2023 Environmental & Social Report

In November 2022, we gained a full membership in the Japan Center for
Engagement and Remedy on Business and Human Rights (JaCER) with theaim of establishing a remedy system as envisioned in the Sakai ChemicalGroup Basic Human Rights Policy.
JaCER is an organization that aims to build a non-judicial platform for
redressing grievances and to act in a professional capacity to support andpromote redress of grievances by member companies based on the United
Nations Guiding Principles on Business and Human Rights. We will devote
serious efforts to establishing an effective remedy system by adopting suchmeasures as utilizing a contact for grievance filing provided by JaCER.
2023 Environmental & Social Report11Making People Happy

Together with Employees
Creating a Comfortable Working Environment
Diversity initiatives

Aiming to Become an “Exciting Company”

Management
missionOrganizational
vision● Promotion of diversity
Sakai Chemical Industry has established a Diversity Working Groupto raise diversity awareness among employees. In FY2022, theCompany had employees respond to a diversity-awarenessquestionnaire twice.
1st questionnaire survey conducted in May 2022: 350 respondents
2nd questionnaire survey conducted in February 2023: 461 respondents
The number of respondents who answered “I understand diversity
well/roughly” has increased approximately 2.5-fold over the past year.

Chemistry for a Friendly Future
Creating materials that support the comfort
and security of society through compassion
and technological innovation

Exciting Company
We will build an exciting company together.

Permeation level of diversity awareness（%）

May 2022

February 2023

80

Exciting Action Plan

«Vision of the ideal employee behavior»

Employees

Sharing the same goal to foster a sense of unity
Promoting innovations that change the world➡ Act in line with the mission and vision

Taking on new challenges to be true to our word

Always think and act from the perspectives of others
Take the initiative in doing or producing a first-ever thing
Continue to tackle challenges without imposing any
limitations on one’s own action
Always value words of gratitude and grievances

Valuing words of gratitude as a source of pride in our work

67
60

49
40

27

32
24

20

Corporate culture, systems,
and mechanisms

Personnel system (including salaries, evaluation, and employee welfare)

We are working to create a comfortable working environment through the measures described below so that our employees can feel proudof, confident in, and satisfied with their own work, which means that they can work with excitement.

Foster Human Resources and Create a Corporate
Culture Where Employees Can Feel Their Growth
Basic Human Resources Development Policy
1. Enhance commercialization awareness through active work-related communication with internal and external parties
2. Develop a flexible environment where diverse personnel can work in good health
3. Systematically implement hiring and training to ensure diversity
4. Encourage self-development and the acquisition of official qualifications
5. Implement measures to support employees’ understanding and action regarding the realization of a sustainable society● Career development support● Development of management human resources

Sakai Chemical Industry has all employees submit a self-assessment
sheet every year. They review their own personal growth over the
past year, set their own action goal to advance to the next step, andhave a career interview with the manager of the organization towhich they belong. Aside from the personnel evaluation results, they
confirm their own achievements to date, based on which they set
their goal for the next term.
Nevertheless, Sakai Chemical Industry’s deviation value in the
FY2022 engagement survey result was 47.5, while that in the entire
chemical industry was 50.5. This figure suggests that the Company
should solve the challenge of adopting measures to allow employees
to readily accept the personnel evaluation results and feel their own
growth, including creating such an environment. We will work on
human resources development so that the growth of our employees
will lead to the growth and development of the Company.

To develop the next generation of management talent, Sakai Chemical
Industry provides education for candidates for next-generation
executives selected from among a range of managerial staff, fromnewly appointed ones to department managers.
The executive officer in charge of each candidate formulates andimplements an annual development plan, which includes external
training for corporate executives, so that the candidate can have thekind of experience that allows him or her to outgrow his/herself
through his/her work. The progress of the development plan for eachcandidate is reported to and deliberated and verified by the Council
for the Development of Management Human Resources, which
comprises the president and other executive officers, and theNomination and Compensation Committee at the interim reportmeeting in November and the final report meeting in March. From
now on, we will increase our pool of human resources by adopting
such measures as improving system operations and broadening thescope of candidates.

12 2023 Environmental & Social Report20“I understand diversity
well/roughly”“I have heard/
read about diversity”“Diversity is none of my business,”“I have never heard of diversity,”or other answers

In FY2022, we also held three events focusing on unconscious biases,
including a seminar and workshop-style lectures (“Majikira-kai”). The
email magazine Diversity Report, published once every three weeks,features interviews with employees about their unconscious biases thatthey are aware of. As a result, unconscious biases have become a hot
topic in daily workplace conversations in such a form as “That’s anunconscious bias, isn’t it?”● Support for the career development of female employees
Sakai Chemical Industry devotes active efforts to promoting the
career development of female employees and aims to achieve thetarget of raising the ratio of female managers to 10% or higher andthat of female core human resources to 20% or higher by 2030.
Currently, women account for 1.4% of all managers and for 7.9% of
all core human resources. Creating diverse value urgently requires us
to increase the proportion of women among core human resources
so that more women can grasp opportunities that match theirabilities. From now on, we will make further efforts for more proactive
recruitment and human resource development.

Work-life balance● Obtaining the right to carry the “Kurumin” certification logo
In September 2022, Sakai Chemical Industry obtained “Kurumin”
certification, which the Japanese Ministry of Health, Labour andWelfare grants to companies that support employees’ childcare. The
Company has now adopted the following measures and systems topromote activities toward a good work-life balance.
(1) Improving the working environment to help parenting workers
achieve a good balance between their work and family lifea) Introducing a general childcare leave system and a paternity
leave system for male employees with newborn babies andencouraging the use of these systemsb) Broadening the scope of application of the system of reduced working
hours and imposing limitations on or giving exemption from overtime work

We have extended the period during which the system of reduced
working hours is available from the period until the child’s enrollment
in elementary school to the period until the end of the child’s firstacademic year at elementary school. We also ensure that
employees who want to avoid overtime work despite not needing to
use the system of reduced working hours can use the system oflimitations on or exemption from overtime work by prior application.
c) Measures to help employees on leave to return to work
The Company utilizes the employee welfare website “Future Concierge
for Parenting Workers.” We provide employees on maternity, paternity
or childcare leave with useful information about childcare andshort-term day care and promote the use of company-led childcare
facilities in order to help employees on leave to return to work.
(2) Creating working conditions that allow diverse work styles,
thereby contributing to work style reformsa) System for enabling employees to select from global andlimited-area careers
During their entire career, workers may sometimes wish toconcentrate on career development, and at other times, they may
wish to focus on looking after their children or other family members.
We have adopted a system whereby employees can select fromwork styles in geographical terms according to their current life stage,
being ready to be transferred between different operational locations
or limiting the location of their work to a particular area.
We are also implementing other measures for work stylereforms, including adopting a telework system, defining No
Overtime Days, and encouraging paid leave uptake.

● Promoting paternity leave uptake
To make it easier for male employees to take childcare leave, in
October 2022 Sakai Chemical Industry established a new paternity
leave system for male employees with newborn babies. This systemallows eligible male employees to take paternity leave for up to fourweeks (28 days).
In FY2022, we held a Paternity Leave Roundtable, where
employees of both genders who had childcare leave exchanged
views with those who had not. The details of the discussions werelater shared with all employees in the email magazine Diversity Report.
These initiatives resulted in a paternity leave uptake rate of 32.1% for
FY2022, an increase of more than 20 percentage points year on year.
We will continue our efforts toappropriately operate this system
so that our employees can leadfulfilling lives both at work and at
home. (We have set a target of
raising the paternity leave uptake
rate to 50% or higher by FY2025.)
Paternity leave uptake rate
Uptake rate

（％）

60
50

FY2025 target

40

32.1

30
20

10.5
10
0

3.7
2020

2021

2022 (Fiscal year)

2023 Environmental & Social Report13Together with Employees
Occupational accident in FY2022
In FY2022, a lost-time accident occurred, with an
employee falling and having to take leave. To prevent
employees from falling, we have included fall prevention
activities in our monthly priority activities. We are
therefore actively committed to preventing therecurrence of similar accidents under the leadership ofthe Health and Safety Committees.

For the Health and Safety of Employees

Fiscal year

Under the strong leadership of top management and supervisors, all of us will work together to achieve the goal of “zeroaccidents and zero illnesses.”[Health and Safety Action Guidelines]
1. We will comply with health and safety laws and regulations and promote health and safety activities.
2. We will strive to create a safe workplace by conducting risk assessments.
3. We will prevent occupational accidents by implementing measures for handling near misses, danger prediction, and pointing
and calling.
4. We will raise safety awareness through training and information sharing for safety and health.
5. We will work to promote mental and physical health by carrying out health maintenance and promotion activities.

Occupational health and safety initiatives
Sakai Chemical Industry has in place the Basic Occupational Health and Safety
Policy and the Health and Safety Action Guidelines. Under the policy andguidelines, the Company holds joint health and safety meetings, where
Company-wide health and safety activities are mainly discussed. At eachbusiness location, a health and safety plan is formulated based on the
deliberations at the Company-wide meetings, and its progress is managed under
the leadership of the Health and Safety Committee of the business location.
In our safety activities, focus is basically placed on steady efforts to addressnear misses, predict danger, and ensure the practice of pointing and calling.
We also work to prevent occupational accidents through risk assessments
conducted at each workplace. To prevent the Yumoto Factory explosion
accident, which we must never forget, from fading into oblivion, we deliver amessage from the president titled “Pledge to Ensure Safety” on May 11, theanniversary of the accident, every year. We also hold a Safety Session at eachbusiness site every July, where the relevant Health and Safety Supervisor gives
a lecture on the accident.
Our occupational health activities include having the industrial health staff
provide health information on food and other topics, offering follow-up support
to employees under a high level of mental stress, and utilizing health-related
services provided by external organizations. We therefore continue to work to
help our employees enhance their mental and physical health.

Organizational structure for health and safety
management (as of the end of March 2023)
Company-wide Healthand Safety Supervisor
Kansai-Area Health and
Safety Supervisor
Tokyo-Area Health and Safety
Supervisory Promoter
Onahama-Area Health and
Safety Supervisor

Joint Health and
Safety Meeting

2020

1

1

2021
1

2022
1

Average in the Japanese chemical industry
Sakai Chemical Industry

1.50

1.07

1.20

0.90
0.90

0.94

0.93

0.73

0.70

1.16

0.10
0.08

0.06
0.69

0.70

0.04

0.30

0.02

2018

0.06

0.03
0.02
0

0

0.06

0.06

0.60

0.00

Average in the Japanese chemical industry
Sakai Chemical Industry(Lost working days
per 1,000 actual
working hours)

0.02

0

0

2020

2021

0

0.00
2019

2020

2021

2022 (Fiscal year)

2018

2019

2022 (Fiscal year)

Safety promotion activities incorporating external perspectives
To have our workplace health and safety activities reviewed from external perspectives, in FY2022 we hired safety consultants to provide safety
diagnoses to our business locations in the Kansai area. On the advice of the consultants, we are implementing improvement measures, including
clearly zoning footpaths to completely separate them from roadways at our factory sites and adopting heatwave countermeasures. We areplanning to receive a safety diagnosis for the Onahama Manufacturing Site in FY2023. We also hold safety education seminars and lectures fromexternal perspectives with the aim of achieving zero accidents.

● Chemical substance risk assessment seminars● Lecture on fires and explosions

We held seminars using the Ministry of Health, Labour and Welfare(MHLW)’s on-site support program for chemical substance risk
assessment. The seminars were aimed at giving attendees an outlineof the revised provisions for the autonomous management of chemical
substances in the Ordinance on Industrial Safety and Health and otherrelated laws and regulations, thereby raising employee awareness of
the importance of chemical substance risk assessment.

To prevent the Yumoto Factory explosion accident on May 11, 2021
from fading into oblivion, on May 11, 2023, the second anniversaryof the accident, we held a lecture on combustion phenomena in fires
and explosions, with Professor Ritsu Dobashi at the University ofTokyo, who had served as a member of the investigation committee
for the accident, invited as a guest speaker. This lecture was also
open to attendees from Sakai Chemical Group companies as aGroup-wide activity aimed atpreventing fires or explosions.

Health managers
Sakai Manufacturing Site Healthand Safety Committee
Semboku Factory Health and
Safety Committee
Tokyo Office Health and
Safety Committee
Onahama Manufacturing Site
Health and Safety Committee
Otsurugi Factory Health and
Safety Committee

Industrial physician

In FY2022, the Onahama Manufacturing Site was designated as a business site that needs special guidance on safety management. In responseto this designation, we formulated a health and safety improvement plan, which includes conducting thorough risk assessments and providing
employees with education focusing on fires and explosions. Based on this plan, we not only continuously engaged in the conventional kinds ofhealth and safety activities but also implemented measures to raise employee awareness of health and safety activities, such as holding risk
assessment training sessions, where occupational safety consultants gave instructions from external perspectives, and providing health and safety
education for managers. The progress of the plan was officially confirmed through monthly reports submitted to the Iwaki Labor Standards
Inspection Office and four on-site inspections conducted by the authorities (in May, September, November, and February). On the authorities’ advice
given during the inspections, we made several on-site improvements, including those to speed limit signs for forklifts, and shared the advice withour business locations in the Kansai area. On March
31, 2023, after one year of our serious improvement
efforts, the Onahama Manufacturing Site’s FY2022
designation as a business site that needs special
guidance on safety management was removed. We
will leverage this experience in our future health andSpeed limit sign (at Plant F of the
Risk assessment training session
Safety education session forsafety activities with the aim of making our
Otsurugi Factory) improved onheld on July 22, 2022
safety managers held on Marchadvice given during the on-site
28, 2023
manufacturing sites and factories even safer.

14 2023 Environmental & Social Report

0

2019

Number of working days lost due to accidents
per 1,000 actual working hours. A higher valuemeans greater severity.

Safety managers

Removal of the Onahama Manufacturing Site’s designation as a business site that needs special
guidance on safety management

inspection on September 9, 2022

Number ofaccidents

2018

Severity rate

Number of occupational fatalities and injuries
involving leave of one day or more, per one
million actual working hours. A higher valuemeans greater frequency.
(Fatalities and injuries
per one million actual
working hours)

Number of lost-time accidents

Basic Occupational Health and Safety Policy

Frequency rate

Seminar held in the Kansai area on
February 17, 2023 using the MHLW’s
on-site support program

Seminar held in the Onahama area on
February 24, 2023 using the MHLW’s
on-site support program

Safety lecture held on May 11, 2023

Encouraging Group companies to promote health and safety activities
Every quarter, Sakai Chemical Industry analyzes occupational accidents at each Sakai Chemical Group company and commuting accidents in whichGroup company employees are involved. Information about those accidents and analysis results are shared throughout the Group. The Company also
holds Sakai Chemical Group Safety Meetings twice a year. At the FY2022 meetings, attendees exchanged opinions on chemical burns, the mostfrequent kind of occupational accident in the Group, and shared with each other information about the revised provisions for the autonomous
management of chemical substances in the Ordinance on Industrial Safety and Health and other related laws and regulations.
Moreover, Sakai Chemical Industry sends staff to each Group company in Japan to conduct safety patrols. In FY2022, the staff confirmed theprogress of measures to prevent the recurrence of occupational accidents of the kind that had occurred in the past, as well as the level of compliancewith the Act on Comprehensively Advancing Labor Measures, Stabilizing the Employment of Workers, and Enriching Workers’ Vocational Lives (theso-called “Power Harassment Prevention Act”) and the status of use of personal protective equipment. In addition, at Group companies handling
substances that might cause dust explosions, the staff sent by the Company confirmed that necessary measures had been adopted, including having
workers wear antistatic shoes. We will continue this initiative in the future in order to improve the Group-wide level of occupational health and safety.

Various disaster drills
Sakai Chemical Industry conducts regular disaster drills at each manufacturing site so that all
those involved will be prepared to take prompt responses in the event of an emergency.
At the Sakai Manufacturing Site, an evacuation drill is conducted on the occasion of theannual Osaka 8.8-million Drill. This evacuation drill includes travel to an evacuation site, thetrial use of a personal safety confirmation system, and checks on whether emergency
internet protocol (IP) radios are in working order.
At the Onahama Manufacturing Site as well, evacuation drills are conducted in a simulationof the issuance of a tsunami warning.
Each workplace also conducts an annual disaster drill according to schedule to enable
employees to learn how to act on-site in the event of an accident or disaster and how topractice first-aid fire fighting using fire extinguishing equipment.
2023 Environmental & Social Report15

Together with Employees
Voice

Health checkups and related initiatives

Mental health care initiatives● Enhancing optional items in health checkups andsharing the checkup results● Mental health education for employees

Since FY2021, the Company has added tumor markers to its regular
health checkup and has also introduced optional checkup items,
such as ultrasonic diagnosis. In addition, since FY2023, we haveenabled female employees to have a health checkup for women,allowing them to select optional items related to diseases specific towomen. We therefore work to provide our employees with theopportunity to have further enhanced health checkups according totheir needs. Furthermore, in accordance with the applicable laws
and regulations, the Company gives a special health checkup to all
employees who handle organic solvents or specified chemical
substances at work to prevent and detect at an early stage healthdamage on the occasion of the health checkup.
We also operate a system for sharing the health checkup results
across the Company and managing them in a unified manner so that
employees can continue to receive consistent health guidance fromthe health staff of each area no matter where they are transferred. By
doing so, we aim to visualize the health condition of the entire
workforce of the Company or each area, identify challenges basedon the visualized data, and make our health guidance more
appropriate, thereby helping our employees enhance their health.

Health activities utilizing external organizations● Utilizing counseling services

Sakai Chemical Industry has established a system for its collaboration
with external organizations in allowing its employees to receive advice
from outside experts. Our use of external organization has enabled
employees to consult not only about their work and workplace but
also about their private lives and has allowed even their family
members to seek consultation services, thereby contributing to theavailability of both mental and physical health support.

● Cooperation with the Osaka Yakugyo Health
Insurance Society
Sakai Chemical Industry has regular contact with the Osaka Yakugyo
Health Insurance Society, to which it belongs, and cooperates withthe society, through a clear allocation of roles, in specific healthguidance and the “Data Health” (data-based healthcare) project inorder to enhance employees’ health. Through this cooperation, we
perform comprehensive employee health management, includingorganizing health seminars taught by external guest instructors(FY2022 seminar topics: self-care training, training in “line care”[mental health care for workers on the same reporting or productionline], and harassment prevention training), monitoring the healthcondition of the entire workforce of each business site based on dataon hospital visits, and enhancing health guidance accordingly.

● Utilizing the results of the Survey on Health andProductivity Management
Sakai Chemical Industry is continuously responding to the Survey on
Health and Productivity Management conducted by the Japanese
Ministry of Economy, Trade and Industry (METI). We share with those
involved the METI’s feedback on the survey results and provide therelevant health information for Health and Safety Committee
members as a reference source. We therefore utilize the survey
results to formulate an employee health enhancement plan.

16 2023 Environmental & Social Report

Sakai Chemical Industry provides a wide variety of mental healtheducation programs for its employees, including self-care education
provided to new employees as part of induction education. In linewith recent trends toward the diversification of society, the Company
is seriously committed to raising itself into an organization where noone suffers mental health problems. The specific measures that theCompany is implementing for that purpose include providing
e-learning programs focusing on harassment prevention, online
seminars taught by health staff, and “line care” training for managers.

Aiming to be a healthy “Exciting Company”

The ability to maintain good physical and mental health underpins the improvement of work performance. Sakai
Chemical Industry has three industrial health staff members, including myself, in charge of providing healthsupport for employees at each business site.
I am in charge of the Kansai area and plan and manage various seminars and health events to increase thehealth literacy of staff members. I help them maintain healthy lifestyles on their own by providing them with theopportunity to gain knowledge about health through seminars and encouraging them to continue healthimprovement activities through events.
I have recently focused particularly on health support for female employees. Last fiscal year, I began to holdseminars for female employees on health issues unique to women, such as menstrual abnormalities,
menopause, breast cancer, and uterine cancer, to spread health knowledge and awareness among them. Last
year, I also organized an event where participants had simulated experience of being a pregnant woman withthe aim of making the Company more friendly to pregnant women.
I will continue to implement various initiatives so that many more employees can work healthily with excitement.

● Support provided by industrial health staff andmental health specialists
Sakai Chemical Industry has full-time industrial health staff in addition to
health managers and has in place a system whereby employees canconsult those staff about their own mental and physical health without
hesitation. The consulted industrial health staff cooperate with industrial
physicians and supervisors in providing prompt support to employees
suffering mental health problems, for example, by introducing to them
medical institutions specializing in mental health as needed. We focus
particularly on constantly interviewing employees at turning points intheir careers, such as transfer to a business location in another area,rise in status, promotion, and employment (in the case of
new-graduate and mid-career hires), with the aim of preventing mental
health problems among them.
We also open a general mental health clinic on a regular basis tohave mental health specialists provide consultation services at therequest of employees. The clinic also provides consultation services
online so that employees can have expert interviews no matter
where they are working. This system also offers the opportunity touse consultation services to employees who have mental healthconcerns but are hesitant to visit the hospital.

● Workplace improvement initiatives based on stresscheck results
The results of annual stress checks are shared with department
general managers and higher ranked management, including
management team members. The results for each organization are
analyzed, and each organization (department) utilizes the analysis
results to devise and implement workplace improvement measures.
Employees judged to be under high stress are interviewed
individually by industrial health staff or mental health specialists withfull consideration paid to their privacy.

In this way, we leverage the stress check results to encourageboth individual employees and their organizations to make bothwork-related and life-related improvements with the aim ofpreventing mental health problems.

Akiko Hase
Public health nurse
Safety & Health Section
Operation Management Department,
Sakai Manufacturing Site

Harmony with Local Communities
Communication with Local Communities
Support for local events● Head Office and Sakai Manufacturing Site

The Sakai Festival, one of the main events in Sakai, was held for the firsttime in three years. In addition to supporting the event, Sakai Chemical
Industry also called for volunteers from among its employees, with a
total of 23 volunteers helping collect waste and serving as guides during
the festival. This initiative
embodies our gratitude to
local people, which wehave few opportunities toexpress in our daily
activities, and our hopes of
helping further revitalize
Sakai, the place of origin of
Sakai Chemical.

● Onahama Manufacturing Site

We supported the Izumi Furusato Festival Gotcha Market in Iwaki
City, where the Onahama Manufacturing Site, our main manufacturing facility, is located. We also set up a booth at the festival. This
event was also held for the first time in two years due to the
COVID-19 pandemic.
In addition to the festival,
Sakai Chemical employees
also participated in the Iwaki
Sunshine Marathon, which
was held for the first time in five
years due to bad weather andthe pandemic, with the aim ofrevitalizing the event andinteracting with local residents.

Engagement with children● Support for career education for elementary school students

We supported the publication of a supplementary reader used in
career education for third and fourth graders at all elementary schools
in Sakai City, where our Head Office is located. The reader introduces
local businesses in a variety of industries. It explains the roles of ourmaterial products in relation to smartphones, games, and cars to
inspire children’s imagination more effectively. The reader emphasizes
that the entire material production process comprises various kinds ofwork, including procurement, manufacturing, analysis, and shipment.

● Exhibition at Sakai Science Education Festa

Sakai Chemical Industry participated in this event with the aim ofallowing visitors to enjoy using image generation technology,
focusing on AI as a recently high-profile topic. Held for the first timein about two and a half years due to the pandemic, the event bustledwith many children and their parents. We were able to interact withlocal children through AI-assisted image generation, for the first timein a long period. We hope to continue to share the joy of science withchildren through this kind of event.

Encouraging Group companies to promotehealth activities
To raise health awareness among employees throughout the Sakai
Chemical Group and enhance their physical and mental health, we
encourage Group companies to promote health activities. For
example, since FY2023, we have upgraded health lectures, whichwere previously provided only to health and safety personnel, tohealth and safety seminars and broadened the scope of theiraudience to encompass all Group company employees.
2023 Environmental & Social Report17Response to Climate Change(Disclosures in Line with the TCFD Recommendations)

History of Sakai Chemical’s initiatives to combat climate change throughits products and businesses
Period
1970s

1990s

Initiatives

Subject

Started operating a DeNOx catalyst factory

2010s

2020s

1

Started operating an electronic material factory

Contributed to energy conservation by enhancing the efficiency ofelectronic parts

Started operating a cosmetic material factory

Contributes to protecting human skin from increasing UV rays

Formulated a Basic Environmental Policy

Obtained ISO 14001 certification for the Otsurugi Factory

Switched from crude oil to LNG

Made the fuel switch at the Sakai Manufacturing Site

Switched from crude oil to LNG

Made the fuel switch at the Onahama Manufacturing Site

Developed substitute products for microplastic beads(MPB)

Developed the SciqasTM series (spherical silica), LPZINC-S(large-particle spherical zinc oxide), CalmaruTM (spherical calcium
carbonate), and BarimaruTM (spherical barium sulfate)

Formulated a Basic Procurement Policy
Started using carbon neutral LNG
Introduced solar power generation

Scope: Sakai Chemical (2020) → Scheduled to apply to all Sakai
Chemical Group companies from 2023
At the Matsubara Factory in 2021 and at the Otsurugi Factory in 2023
At the Otsurugi Factory in 2023

GovernanceIn response to environmental changes that can pose risks to our corporate management, including climate change, we assess the levels of risks
and opportunities, discuss appropriate countermeasures, and decide to implement such countermeasures under the oversight of the Board of
Directors.
To mitigate impacts on environmental issues, including climate change, and contribute to solutions to social issues, the Sustainability
Committee, chaired by the Representative Director, meets at least twice a year to deliberate on targets and strategies related to climate change
while taking into consideration our business strategies to manage the progress of our initiatives.

2

Strategy (short term: shorter than one year; medium term: one to five years; long term: five to 30 years)

scenario: Low-carbon, decarbonization, and carbon-recycling technologies will be used widely, and demand for❶ 2°C
sustainable products will grow.
TypeTransition
Risks

Business
Opportunities

Environmental Changes

Expected Situations

Term
LengthCO2 emission
regulations

Growing need for fuel decarbonization
Cost increase due to a switch to
low-carbon emissions materials andprocesses

Mediumterm

Switch to low-carbon
emissions products

Decline in demand for fossil fuel andpetrochemical products (such as plastic
products)

Short
term

Changes in customer
behavior

Increase in demand for low-carbon
emissions products within the supply chain

Long
term

Increased demandfor products that
help mitigate climatechangeGrowing demand for carbon recycling,carbon-free fuel, carbon-absorbent
products, and products related to power
generation and storage

Long
term

Development of
next-generation
technologies

Electrification of mobility
Use of hydrogen and ammonia as energy
sources

Mediumterm

18 2023 Environmental & Social ReportType

Expected Situations

Greater severity of
extreme weather
eventsHeavier wind and flood damage to our
production bases
Droughts and health damage in thesummer, which can lead to suspension of
production activities, delayed or disrupted
logistics, and consequently massive
damage to corporate activities in general

Rise in averagetemperatures

Increase in the cost of countermeasuresagainst heatstroke and air-conditioning
Decline in labor productivity in the event ofa lack of appropriate countermeasures

Growing demand for
products that help
adapt to climatechangeIncreased demand for healthcare products
Increased demand for heat-insulating andheat-barrier products
Wider spread of remote work
Increased demand for antibacterial andantiviral materials

Diversification of raw
material suppliersGreater opportunity of replacement
demand due to BCP measures

Major Countermeasures• Using LNG combined with carbon credits• Further enhancing the efficiency of energy use• Introducing renewable energy more widely• Introducing carbon-recycling technology more
widely• Reconsidering the business portfolio andmanufacturing processes with a view to
reducing environmentally harmful emissions
from the manufacturing processes

Physical
Risks

Business
Opportunities

3

Term
LengthEnvironmental Changes

Contributed to rendering harmless nitrogen oxides, which could
cause photochemical smog and acid rain

Joined the Japan Responsible Care Council
2000s

scenario: Low-carbon, decarbonization, and carbon-recycling technologies will not advance, thereby heightening❷ 4°C
the physical risks of the greater severity of extreme weather events and a rise in average temperatures.

Short
term

Long
term

Short
term

Long
term

Major Countermeasures• Formulating a business continuity plan (BCP)
for each production base in line with thescenario• Considering optimal locations for production
and diversifying raw material suppliers• Enhancing measures to reduce health damage(such as heatstroke)• Introducing unmanned operations byaccelerating robotization and automation• Boosting sales of skincare products, including
sunscreen• Developing heat-insulating and heat-barriermaterials• Boosting sales of antibacterial and antiviralmaterials• Boosting sales of 5G- and 6G-compatible
products• Developing materials related to wastewater
and water purification

Risk Management

Sakai Chemical has identified issues of ESG materiality and manages risks through Group-wide materiality management. We recognize responses
to climate change as an extremely important issue from both our stakeholders’ and our own perspectives, and the Sustainability Committee
deliberates on them. We take the initiative in climate-related risk management, which we believe is a fundamental requirement for the existence
and activities of our Group.

4

Metrics and Targets

Sakai Chemical has set a long-term
CO2 emissions reduction target with aview to achieving carbon neutrality by
2050. To achieve the target, we use
the CO2 emissions reduction rate as a
KPI and implement short-, mediumand long-term reduction measures,
including promoting energy-saving
activities and introducing renewableenergy sources.
* This CO2 emissions reduction roadmap
is based on the actual and estimatednon-consolidated Scope 1 and 2
emissions of Sakai Chemical Industry.

Vision for Sakai Chemical’s transition to carbon neutrality
We tackle the challenge of achieving carbon neutrality by 2050 by accelerating decarbonization in linewith progress in innovation.
（%）

CO2 emissions versus the FY2013 level as 100 (%)

100

Fuel switch from crude oil to LNG
90

Yield improvement and the promotion of the 3Rs

Establishment of optimal manufacturing processes

80
70
60
50
40

• Developing decarbonization products(secondary battery materials, materials forwater electrolyzers, carbon-absorbent
materials, carbon recycling catalysts, andsynthetic ammonia catalysts)• Enhancing the functions of electronic andenergy materials(small-size, minute-particles [for higher durability]
materials with uniform granularity distribution)■ Solar power generation■ Next-generation energy sources(New technologies using methanation,hydrogen, ammonia, etc.)■ Carbon neutral LNG and non-fossil energy
sources■ Indirect emissions from the use of fossil fueland electricity

30
20
10
0
2013

2019

2025

2030

2035

2040

2045

2050 (Year)2023 Environmental & Social Report19Protecting the Global Environment

Environmental Commitment
FY2022 targets and results
Sakai Chemical Industry set environmental targets for FY2022 to contribute to the development of a sustainable society by reducing both
environmentally hazardous substances used in its business activities and environmental risks entailed thereby. The FY2022 results of our efforts toachieve those targets are as follows:

Environmental Management○: Target achieved ×: Target not achieved
Type

Basic Environmental Policy
1. We comply with laws and regulations related to the environment as well as other requirements to which we have agreed.
2. In consideration of our business activities, we will focus on the following items.
1) We will develop and manufacture environmentally friendly products and procure environmentally friendly raw materials.
2) We will improve our environment-related technologies and know-how.
3) We will sell products that help our customers reduce their environmental impact and prevent pollution.
3. We will strive to conserve resources and energy and reduce industrial waste from a life cycle perspective at all stages of ourbusiness activities.
4. We will establish an environmental management system and plan for continuous improvement and pollution prevention.
5. We will set environmental targets and review them regularly.
6. We will ensure that all employees and related parties are made aware of this Basic Environmental Policy and promote educationand dissemination activities to ensure that everyone can understand and act on it.
7. This Basic Environmental Policy will be made available to the general public as necessary.

Environmental management system (EMS)

Environmental risk and compliance management

Sakai Chemical Industry has created an Environmental Manual in linewith ISO 14001 to clarify its environmental measures and promote
environmental conservation activities effectively with the aim of
reducing the environmental impact of our business activities,
preventing pollution, and proactively conducting environmentallyfriendly business activities.

Business activities must not involve any legal violations. In FY2022,
the EMS Committee discussed how to manage the list ofenvironmental laws and regulations and launched an initiative toimprove it. In addition, each department identifies and assesses
environmental risks and strives to reduce those risks by working toachieve environmental targets set based on high-priority challenges.
We will prevent the unintended discharge of environmentallyhazardous substances and environmental accidents byimplementing environmental risks and compliance management
initiatives.

● Acquisition of ISO 14001 certification

The Otsurugi Factory has ISO 14001:2015 certification and passed
a renewal audit on August 1, 2023. We are also scaling out similar
initiatives throughout the Company.

Assessment

FY2023 target

CO2
emissions
reduction

Reducing CO2 emissions by 30%(versus the FY2013 level) by FY2030

23% reduction—

Continuing to strive for the sametargetEnergyconservation

Reducing energy intensity by 1%
year on year

4% increase×

Continuing to strive for the sametargetResource recycling
initiatives

Reducing industrial waste by 25%(versus the FY2021 level) by FY2025

16% reduction—

Continuing to strive for the sametargetInitiatives to prevent
pollution and reduce
environmentallyhazardous substances

Meeting numerical regulation
standards

Minor and temporary
exceedance of standard
values (in one indicator)×

Continuing to strive for the sametargetBiodiversity initiatives

Conducting environmental impact
post-assessment (animal, plant, andecosystem assessment) on theoccasion of the construction of an
in-house disposal site
Continuing to use CNL

Applied for permission tochange (expand) the sizeof the disposal site
Continued to use CNL(Matsubara Factory)○

Conducting environmental impact
post-assessment on the occasionof construction after acquiring
permission at the end of 2023
Continuing to use CNL andincreasing its use

Zero serious environmental accidents

One serious
environmental accident:
Fire at the Onahama
Manufacturing Site×

Continuing to strive for the sametargetInitiatives
to mitigate
climatechangeEnvironmental complianceinitiatives* This assessment is based on values calculated in accordance with the Act on Rationalizing Energy Use and the Act on Promotion of Global Warming Countermeasures.

FY2022 environmental performance
Our business activities involves heavy consumption of energy, chemicals, water resources, etc. The environmental impact of our business activities
for FY2022 was as follows:

Sustainability Committee

Raw materials
Unit
Promotion system

EnergyFY2021

FY2022297

249

1,000 tons

Unit
1,000 kLWater

FY2021

FY2022

71

62

Unit
1,000 m3

FY2021

FY202233,75733,859President

Company-wide
Environmental Supervisor

Sakai Manufacturing SiteOUTPUT

Semboku Factory site
EMS Committee
Members selected fromeach site (manufacturingsite or factory)

Onahama Manufacturing Site
Otsurugi Factory site

Promotion of education
Aiming to spread environmental conservation activities throughout the Company and upgrade them, Sakai Chemical Industry provides in-housee-learning and allows employees to attend an ISO 14001 internal auditor training course run by an external organization.

20 2023 Environmental & Social Report

Results

INPUT

Promotion system
The EMS Committee shares information about
and discusses risks and issues identified at eachsite based on the deliberations of the
Sustainability Committee in order to facilitate
Company-wide efforts to achieve environmental
targets and solve environmental issues.
Moreover, EMS-related executive responsibility
and authority at each site has been delegated to
the Site Environmental Supervisor so thatenvironmental conservation activities can bepromoted effectively at each site.

Targets

Products
Unit
1,000 tons

FY2021
74

Emissions to the atmosphere
FY202263

Unit
FY20211,000 tons
134
Tons
53
Tons
59
Pollutant Release andkg
43Transfer Register
CO₂
SOx
NOx

(PRTR)-listed substances

FY2022
119
31
34
22

Discharges to water bodies

Waste

Unit

Unit

FY2021 FY2022

Water discharge 1,000 m

FY2021 FY2022

33,76533,844In-house disposal 1,000 tons

48

COD

Tons

164

221

External disposal 1,000 tons

2

2

Total nitrogen

Tons

1,119

710

351

280

PRTR-listed
substances

Tons

290

261

3

PRTR-listed
substancestransferred

Tons

40

* The amount of energy is a conversion of the total usage of various fuels and electricity at the Company’s factories into the amount of crude oil based on the Act on Rationalizing Energy Use.
* “Water” above includes supply water, ground water, industrial water, and seawater.
* CO2 emissions are calculated in accordance with the Act on Rationalizing Energy Use and the Act on Promotion of Global Warming Countermeasures.
* The value of the chemical oxygen demand (COD) includes an equal conversion of the biochemical oxygen demand (BOD) of rivers.
* The value for “Products” in the OUTPUT table is the value of production volume used in the periodical report that the Company has submitted in line with the provisions of the Act on Rationalizing
Energy Use. (It does not include by-products.)

2023 Environmental & Social Report21For Our Planet
Resource recycling initiatives

Initiatives to Reduce Environmental Impacts

As one of its medium- to long-term materiality targets, Sakai Chemical Industry has set a target of reducing industrial waste by 25% versus the
FY2021 level by FY2025. We will promote the 3Rs (“reduce,” “reuse” and “recycle”) and work to reduce industrial waste through overall waste
management measures.

Initiatives to mitigate climate change● Industrial waste

In line with the public policy on response to climate change (based on the Task Force on Climate-Related Financial Disclosures [TCFD]
Recommendations), Sakai Chemical Industry has set a medium-term target of reducing CO2 emissions by 30% versus the FY2013 level by
FY2030. We will consider the introduction of renewable energy sources, strongly promote energy conservation activities, and continue to tackle
the challenge of achieving carbon neutrality by 2050.

● CO2 emissions reduction and energy conservation activities

In FY2022, CO2 emissions from our business activities decreased
partly due to a decrease in production. Meanwhile, our energy
intensity for FY2022 increased by 4% year on year.
This means that we failed to achieve our target of reducing energy
intensity by 1% or more year on year despite our proactive measures
to reduce steam loss, improve the efficiency of equipment operation,and replace conventional equipment with energy-saving equipment.
We recognize that the main factors behind the deterioration of energy
intensity include an increase in the proportion of high-value-added
products, which use a large amount of energy.
Materiality target achievement level（％）

FY2030 target

CO₂ emissions reduction rate (versus the FY2013 level)

30

23

23

25

Energy consumption (crude oil equivalent) and energy intensity
Energy consumption(1,000 kL)

100
80

891
73

938

969

952

989

62

60

10

14

12
6

5
0

2018

2019

2020

2021

2022 (Fiscal year)

CO₂ emissions
CO₂ emissions(1,000 tons)

150

CO₂ emissions offset

3
3

3

100

146

137

117

131

116

50

0

2018

2019

2020

2021

22 2023 Environmental & Social Report

Recycling

818.0

1.9

Volume reduction
and others

131.1

0.3

In-house

40,390.5

94.8

External

1,286.3

3.0

42,625.9

100.0

Landfill
Total

Industrial waste
600
400

40

Amount of industrial waste entrusted to external parties for recycling(1,000 tons)

60(Tons)

59

200

40

0

0

30

1,000

51

50

50

20

800

43

42

895
788

923
818

741

600
2018

2019

2020

2021

Reduction target for FY2025

2022 (Fiscal year)* Calculated in accordance with the Act on Rationalizing Energy Use* Starting with the Environmental and Social Report for FY2022, the new calculation
method for energy intensity has been adopted.
The data for the past five years are also calculated using the new method.
(Approved by the Kinki Bureau of Economy, Trade and Industry on January 23, 2023)

400

20
200

10
0

2018

2019

2020

2021

2022 (Fiscal year)

0

2018

2019

2020

2021

2022 (Fiscal year)

Initiatives to introduce renewable energy● Management system for in-house industrial waste disposal sites● Installing solar panels at the Otsurugi Factory

The Company possesses a managed final disposal site in Iwaki City and operates and manages it on its own responsibility. Furthermore, at the
Watanabe final disposal site, we have set up a specialist committee with local residents to promote activities to conserve the abundant naturalenvironment of the area around the disposal site while deepening mutual communication with local residents.

With the aim of reducing greenhouse gas emissions and conserving
energy, we concluded a basic agreement on energy services with
Tokyo Gas Co., Ltd. in June 2022 and installed solar power generationequipment using the power purchase agreement (PPA) model* at the
Otsurugi Factory at the Onahama Manufacturing Site.
The equipment began to work in late June 2023, with anestimated power generation capacity of 1,411 MWh. This capacity
accounts for approximately 17% of the Otsurugi Factory’s electricity
consumption in FY2022, with an expected CO2 reduction of
approximately 680 tons. This equipment will also enable us to moreeasily secure communication infrastructure and power necessary forthe resumption of operations in the event of a large-scale disasterand the resulting malfunctioning of infrastructure. We will consider
scaling out this initiative to other factories and work to achieve morewidespread use of renewable energy.

● Plastic waste
In FY2022, we recycled 77% of plastic waste. We will ensure thecomplete separation and thorough management of plastic waste
and carefully select a contract waste plastic disposal service
provider in order to increase the percentage of plastic waste recycled
or used for thermal recycling.
Plastic waste disposal (FY2022)

Recycling

Quantity (t)Proportion (%)

309.9

77.2

Recycling

293.1

73.0

Thermal recycling

16.7

4.2

Intermediate processing

32.7

8.2

Incineration (without thermal recycling)

29.0

7.2

Landfill

29.7

7.4

Total

401.3

100

2022 (Fiscal year)* “Recycling” includes recycling into solid fuel.

● Disposal of polychlorinated biphenyl (PCB) waste

Reduction

CO2±0

Proportion (%)(L/ton)* Calculated in accordance with the Act on Rationalizing Energy Use and the Act on
Promotion of Global Warming Countermeasures* Since FY2020, we have been using carbon neutral LNG at the Matsubara Factory,
which manufactures cosmetic materials at the Onahama Manufacturing Site.
* Carbon neutral LNG is natural gas from which the entirety of CO2 emissions,
ranging from those from gas exploitation to those from gas combustion, aredeemed to be completely offset by a CO2 emissions reduction achieved byforestation and other projects.

Emissions

methods

1,000

20
15

Disposal

Quantity (t)

800

71

69

60

Energy intensity

Details of industrial waste disposal (FY2022)

Industrial waste from our business activities decreased by 8,000
tons year on year partly due to a decrease in production. More than
90% of waste is disposed of in landfills at our in-house disposal site,and most of it is waste sludge derived from titanium dioxide
discharged during production. We are currently considering thepossibility of reducing waste sludge derived from titanium dioxide toachieve the relevant target for FY2025. (See “Voice” below.)* The power purchase agreement (PPA) model is a business model in which a PPA
operator installs solar power generation equipment at its own cost on the premises ofa counterpart company, which purchases the generated electricity.

With the aim of completing the disposal of flow-concentration PCB
waste as early as possible, we are working to recover and restore thewaste appropriately while managing progress at each site.

Voice

New waste reduction initiative—Toward effective use of sludge—

We manufacture titanium dioxide products usingiron-containing ores as raw materials. The iron and titanium
dioxide residue after production form sludge. To reduce thiskind of industrial waste, we are working to optimize theconditions for iron separation, improve product yield, andeffectively use the iron residue. To effectively use the ironresidue, we convert it into iron sulfate and further process ironsulfate into polyferric sulfate (Polytetsu®) to distribute ironsulfateandpolyferricsulfate as products. In
addition, last fiscal year,
we started working out a
new method of utilizing theiron residue as the key towaste reduction. We willcontinue our efforts toachieveourwaste Masayuki Asada
Production Technology Department,
reduction targets.
Onahama Manufacturing Site

* Polytetsu® is the product name of an iron-based inorganic flocculant trademarked by Nittetsu Mining Co., Ltd.

2023 Environmental & Social Report23For Our Planet
Relationships with Business Partners
Basic Quality Policy
Initiatives to prevent pollution and reduce environmentally hazardous substances
Environmentally harmful substances must not be discharged into the external environment. Sakai Chemical Industry will continue its efforts toenhance the system for monitoring these kinds of substances.

● Air pollutant emissions

NOx emissions

SOx emissions(Tons)(Tons)

100

100

80

70

68

60

Quality management activities

80

61

66

59

60

40

54

53

47

40

34

20

31

20

0

2018

2019

2020

2021

2022 (Fiscal year)

0

2018

2019

2020

2021

2022 (Fiscal year)* The number of relevant facilities has decreased due to the disuse of some of them and the revised Order for Enforcementof the Air Pollution Control Act, which came into effect on October 1, 2022.

● Water pollutant discharges

Compared with FY2021, the total nitrogen
discharge for FY2022 decreased, while the
COD for the same year increased. We willcontinue to strive to keep our waterpollutant discharges lower than theregulation limit values by establishing andenhancing our wastewater monitoring
system in order to control, maintain andmanage water pollutants discharged inwastewater, such as nitrogen, as well as
the values of indicators for the level of waterpollution, including the COD.

Total nitrogen discharge

COD(Tons)(Tons)

1,500

300

1,200
900

920
787

217

710

221

197

200

875

164

150

600

100

300
0

225

50
2018

2019

2020

2021

2022 (Fiscal year)

0

2018

2019

2020

2021

2022 (Fiscal year)● Pollutant Release and Transfer Register (PRTR)-listed substances emitted and transferred

For FY2022, the amounts of PRTR-listed substances emitted into the air and discharged into water bodies, as well as PRTR-listed substancestransferred, all decreased. We will continue to work to reduce PRTR-listed substance emissions and discharges by improving our production
processes and enhancing the yield.

(Unit: tons)

Emissions

PRTR-listed substances

FY2020

Amount transferred

FY2021

FY2022

FY2020

FY2021

FY2022Emissions to
the atmosphere

Discharges towater bodies

Emissions to
the atmosphere

Discharges towater bodies

Emissions to
the atmosphere

Discharges towater bodies

Waste

Waste

Waste

Water-soluble zinc compounds

0.00

0.50

0.00

0.030

0.00

0.030

0.00

0.00

0.00

Antimony and its compounds

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Calcium cyanamide

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Cobalt and its compounds

0.00

0.00

0.00

0.040

0.00

0.00

0.00

0.00

0.00

2.6-di-tert-butyl-4-cresol

―

―

0.00

0.00

0.00

0.00

0.00

0.00

―

―

0.00

0.00

0.00

0.00

―

0.00

0.00

Organic tin―

Thiourea

0.00

136.8

0.00

249.8

0.00

218.8

28.2

35.4

30.6

―

―

―

―

0.00

0.00

―

―

0.00

Lead compounds (specific class 1 designated substance)

0.00

0.00

0.00

0.00

0.00

0.00

3.8

2.7

3.1

Zirconium dichloride

0.00

0.00

0.00

0.00

0.00

0.00

2.4

0.92

2.3

Nickel compounds (specific class 1 designated substance)

0.00

0.18

0.00

0.65

0.00

0.45

3.5

14.2

12.6

Vanadium compounds

0.00

0.00

0.00

0.00

0.00

0.00

0.13

0.20

0.17

Boron and its compounds

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Manganese and its compounds

0.00

23.6

0.00

35.1

0.00

37.0

273.3

297.0

230.2

Methylnaphthalene

0.048

0.00

0.043

0.00

0.022

0.00

0.00

0.00

0.00

Molybdenum and its compounds

0.00

2.7

0.00

3.9

0.00

5.0

0.15

0.73

0.74

―

―

0.00

0.00

0.00

0.00

―

0.00

0.00

0.048

163.7

0.043

289.6

0.022

261.3

311.4

351.1

279.8

Copper water soluble salt

Phthalic anhydride
Total

24 2023 Environmental & Social Report

President
Company-wide QMS Supervisor
Company-wide QMS Manager
Sakai
Manufacturing Site

OnahamaManufacturing Site

Research & Development Division

Sales & Marketing
Division• Each factory• Quality
Assurance
Department• Each factory• Quality
Assurance
Department• Corporate
Research
Laboratories• OnahamaMaterials
Development
Department• Each sales
department• Departments incharge ofprocurement• Departments incharge oflogistics

Initiatives for greater customer satisfaction

Initiatives to manage chemicals contained in products

The Quality Assurance Department, established at both the Sakai
Manufacturing Site and the Onahama Manufacturing Site on April 1,
2022, utilizes the Company-wide system for issuing test records, which
was introduced around the same time, to increase the reliability of
product quality and more effectively prevent the release of nonconforming products due to misjudgments on test results or falsification of
product test data.
In addition, the Quality, Environment and Health & Safety
Management Department hosts regular meetings with the department
in charge of quality assurance of each division or manufacturing site to
identify and resolve issues in order to improve the Company-wide QMS.
In FY2022, we focused mainly on the following:
Since the criteria for treating customer inquiries as grievances orcomplaints against our products had been slightly vague,decision-making on the necessity of corrective measures and theprocessing of related documents had sometimes needed much time.
To resolve this problem, we adopted clearer criteria and began to
manage the inquiry treatment process through regular meetings. As aresult, the speed of our response to grievances and complaints against
our products has been improved.
We have also established the rule to issue a change application
before changing manufacturing processes, raw materials, etc. Thoseapplications for changes are approved after being verified and deliberated on by the relevant departments. Our previous rules permitted theomission of application for low-risk changes, but we have revised therules so that the omission will be permitted only if approved by the
person in charge. We have also added new entry items to the change
application form, including initial flow management measures to be
implemented at the planning stage and a list of customers expected tobe affected by the change, so that all necessary issues will be thoroughly examined. Furthermore, we have enhanced change management bystandardizing change notification forms to be submitted to customers.

To ensure that customers can use our products safely, we prepare
safety data sheets (SDSs) in accordance with the applicablestandards issued by Japanese Industrial Standards (JIS Z
7253:2019) to inform customers about the hazards and damage
that chemicals contained in our products can cause. The SDS
preparation task is concentrated in the Quality Assurance
Department at the Sakai Manufacturing Site and the Onahama
Manufacturing Site. We have also introduced an SDS creation
support tool to streamline SDS creation and management.
Additionally, we are devising a new method of providing SDSs witha view to beginning to use it within FY2023 so that we will be able toconstantly provide the latest information.

● Enhancing the quality assurance system

250

1,119

Sakai Chemical Industry operates a quality management system(QMS) and is certified to meet ISO 9001, an international QMS
standard.
The 8th ISO 9001 renewal audit conducted in December 2022
confirmed that our QMS was maintained appropriately, with nononconformities or minor defects.
We are striving to provide greater customer satisfaction by
managing our entire supply chain—from the procurement of raw
materials through production to the delivery of products tocustomers—for quality assurance.

Organizational chart of the QMS functions (as of April 2023)

Quality, Environment and
Health & Safety
Management Department

Compared with FY2021, both NOx andSOx emissions for FY2022 decreased.
We believe this is due to a decrease inproduction volume in addition to thedisuse of the relevant equipment. We willcontinue to tightly manage these air
pollutants on our own through suchmeasuresasinspecting
exhaustgas-emitting facilities to not only comply
with applicable laws and regulations but
also reduce pollutant emissions.

We will contribute to society by continuously improving the effectiveness of our quality management system, emphasizing productsafety, and achieving stable, high-quality supply at low cost in order to improve customer satisfaction.

● Creation and issuance of safety data sheets (SDSs)●chemSHERPA

We provide customers with information on chemical substances
contained in products using chemSHERPA, a system developed andpromoted for that purpose by the Japanese Ministry of Economy,
Trade and Industry.

● Responses to laws and regulations

Sakai Chemical Industry regularly collects information about
applicable laws and regulations and shares it with all Sakai Chemical
Industry staff and all Sakai Chemical Group companies. We willcontinue this initiative in order to perform chemical substanceinformation management appropriately.

● Chemical substance management education

We provide employee education using an e-learning system with theaim of improving their understanding of laws and regulations related
to chemical substances. We will continue our efforts to enhance thiskind of education to ensure Company-wide commitment toappropriate chemical substance management.

Initiatives for safe logistics
To ensure the safe transportation of products, the Company holds quality safety meetings with logistics companies, clearly informs those involved
in logistics about rules applicable at the manufacturing sites, and patrols those sites. The Company also holds regular safety seminars intended forlogistics companies to secure their cooperation in maintaining the safety of logistics. Moreover, in anticipation of accidents in the process oftransporting chemicals, we have created an emergency contact card (“Yellow Card”), which carries information about what the driver, firefighters,
the police, and other persons involved must do in the event of an accident. Copies of the card have been distributed to logistics companies.
2023 Environmental & Social Report25

Solving Social Issues through Manufacturing
To Promote Responsible Procurement
Sakai Chemical Industry aims to promote responsible procurement in line with the Basic Procurement Policy and believes that the key to suchprocurement is to obtain its business partners’ good understanding of that and related policies. Therefore, we are striving to build good
relationships based on mutual understanding with our business partners.

Basic Procurement Policy
1. Compliance with Laws and Regulations
We will comply with all relevant laws and regulations in our procurement processes. In addition, we will renounce any acts or ideasthat are contrary to our corporate ethics.
2. Consideration for the Environment, Quality and Safety• We will give serious consideration to the environment and conservation in accordance with our Basic Environmental Policy.
• We will strive to balance economic efficiency with environmental considerations in our procurement.
• We will contribute to society by prioritizing product safety and achieving stable, high-quality supply at low cost, in accordancewith our Basic Quality Policy.
• With our corporate social responsibility always in mind, we will carry out our duties with the aim of creating a sustainable society
while giving consideration to the issues of environmental pollution, resource protection, safety, and human rights.
3. Fairness and Impartiality• Our Purchasing Department will carry out its duties with its doors open wide to all suppliers.
• In the selection of suppliers, we will strive to make fair and impartial judgments and act with integrity.
• We will also deepen mutual understanding and build relationships of trust with our suppliers.

Relationships with Business Partners

Promoting the procurement of environmentally friendly materials and fuels
To contribute to the realization of a carbon neutral society by 2050,
Sakai Chemical Industry started procuring carbon neutral LNG (CNL)
through Tokyo Gas Co., Ltd. in April 2020. The Company also
participated in the establishment of the Carbon Neutral LNG Buyers
Alliance together with other 14 companies, including Tokyo Gas, inMarch 2021. To realize a sustainable society, we are seriously
committed to ensuring more widespread use of CNL and improving thevalue of its use.
Carbon neutral LNG (CNL) is natural gas from which the entirety of
CO2 emissions, ranging from those from gas exploitation to those fromgas combustion, are deemed to be completely offset by a CO2
emissions reduction achieved by forestation and other projects.
Our initiative to introduce CNL was launched at the Matsubara
Factory, which manufactures cosmetic materials at the Onahama
Manufacturing Site. Since April 2023, we have scaled out this initiative
to the Otsurugi Factory, our main electronic material factory at the
Onahama Manufacturing Site. We are thus making steady steps toward
CO2 emissions reduction.

Acquisition of Certification from the Roundtable on Sustainable
Palm Oil (RSPO) for a Cosmetic Material Product
Importance of ouracquisition of RSPO
certification

In addition, we have shared with our business partners a list of the following nine requests in order to seek their understanding and cooperation.
• Do not engage in unfair discrimination on the basis of race, gender, ethnicity, religion, nationality, or age or for any other reason.
• Do not engage in any form of forced labor or child labor. Do not allow unfairly low-wage labor or be complicit in human rights violations.
• Work to reduce environmental impacts and protect the environment, including ecosystems.
• Have no relationship with anti-social forces or organizations.
• Build good partnerships and conduct sound and fair transactions in order to achieve mutually prosperous relationships.
• For local communities, prioritize environmental preservation and safety in all aspects of operations.
• Ensure appropriate management of customers’ important confidential information.
• Ensure the quality and safety of products and services and pursue customer satisfaction.
• Promote and manage responsible procurement in compliance with conflict mineral regulations and other applicable rules.

Supplier audits

Initiatives for responsible mineral sourcing

To build and cement relationships of trust with our suppliers andenhance the quality and safety of raw and subsidiary materials, we
audit our suppliers in cooperation with them. In FY2022, 13 of our
suppliers underwent on-site audits, a significant increase in thenumber from FY2021 (three subject to on-site audits and three todocument-based audits) due to the reduced impact of COVID-19
activity restrictions. The audit process mainly comprises checks on
the quality control system and responses to various regulations
based on a Supplier Audit Checklist. We also request our suppliers
to fully understand our requirements for the quality of raw materials

There has been serious global concern about conflict minerals,
which are likely to be a source of funds for armed groups committing
inhumane acts. To prevent conflict minerals from being included in
the materials we procure, we send the Supplier Audit Checklist, theConflict Minerals Reporting Template (CMRT),* or the Extended
Minerals Reporting Template (EMRT)* to our suppliers and request
them to answer the questions and guarantee that their products areconflict-free.
Relevant substances procured by Sakai Chemical Industry:Tungsten, tin, tantalum, gold, cobalt, and mica
* The CMRT and the EMRT are provided by the Responsible Minerals Initiative (RMI).

On-site audit

13 suppliers

Document-based audit

46 suppliers

26 2023 Environmental & Social Report

We recognize that, in recent years, the meaning of “responsible
mineral sourcing” has been broadening to include action against not
only risks related to conflict minerals and armed groups but also risks
related to child labor and environmental destruction. From now on,
we will work to formulate a Responsible Mineral Sourcing Policy,
share it with our business partners, and seek their understanding.

Nowadays, public attention has focused on the reduction of not only
Scope 1 and Scope 2 emissions directly from companies’ businessactivities but also CO2 emissions throughout the entire supply chain.
The initiative to introduce CNL also contributes to reducing Scope 3
emissions on the users’ side.
The cosmetic materials business and the electronic materials
business are both growth businesses of Sakai Chemical Industry. We
believe that not only the competitiveness of our products themselves
but also the environmental procurement of energy, which is directly
connected to the manufacturing of those products, will become evenmore important in the future. In considerationof economic aspects, we will start byincreasing our CNL procurement andsourcing other raw materials and fuels that
contribute to carbon neutrality in order toachieve our CO2 emissions reduction target
for 2030, one of our in-house KPI targets.

In 2022, Sakai Chemical Industry obtained certification from theRoundtable on Sustainable Palm Oil (RSPO) for ultrafine titanium
dioxide, a cosmetic material product that uses additives derived
from palm oil. Our support for RSPO and acquisition of RSPO
certification for relevant products will enable us to promoteresponsible procurement, which is one of our issues of materiality.
Rather than simply procuring raw materials and using them tomanufacture and ship our products, we must carefully monitor the
production processes of those raw materials in order to be a
responsible manufacturer.
Specifically, the thorough traceability of palm oil—where it isproduced, how it reaches us, which of our products uses it, andwhich users we ship the product to—will not only enable us to be
responsible for palm oil sourcing but also bring the users peace ofmind and help them to be responsible for materials sourcing.
In this way, we will leverage RSPO certification to continue topromote responsible procurement that is friendly to both theenvironment and human rights with the aim of ensuring transparency
throughout our supply chain and helping solve social issues.

❶ Environmental conservation
Preventing excessive deforestation and reducing the resulting negative impact on biodiversity, thereby achieving
4-1392-21-100-00
sustainable palm oil production❷ Social responsibility
Providing indirect support for manufacturing, such as
respect for the human rights of local workers involved inpalm oil production and the improvement of their working
environments❸ Sense of security for users and establishment of asustainable supply chain
Realizing the traceability of raw materials used based on❶ and ❷, thereby not only ensuring sustainability but also
providing users with a peace of mind that comes from ouruse of highly transparent raw materials in the cosmetic
materials business, which we position as our growthbusiness, as well as building a sustainable supply chain
based on their choice of our products2023 Environmental & Social Report27

Financial Information Fiscal year 2022 (from April 1, 2022 to March 31, 2023)

Together with Customers and Business Partners

Utilization of the ESG information sharing platforms
Sakai Chemical Industry has registered with Sedex and EcoVadis,
external evaluation platforms, to seek annual external evaluation ofenvironmental initiatives, labor practices, respect for human rights,
corporate ethics, and procurement, all of which are rapidly becoming
more important in our business activities.
As a result of the latest EcoVadis evaluation, the Company
achieved a “Silver” sustainability rating for its Sakai Manufacturing Site
and a “Gold” sustainability rating for its Onahama Manufacturing Site.
The Company has been using this evaluation service since 2020and has scored as shown in the table below over the past three years.
Although the rating for the Sakai Manufacturing Site has changed
from “Gold” to “Silver,” this does not mean a decline in the quality of
its ESG initiatives, as shown by the trend of the specific scores.
Recently, an increasing number of users of this platform haverequested that our scores be shared with them. This fact has reminded

us that we are more strictly required to pay full consideration to thesustainability of the global environment and society as a whole invarious aspects of our business operations, in parallel with conducting
appropriate business activities in our main businesses. Therefore, as amanufacturer, we must not only provide products but also respond to
all risks and opportunities associated with manufacturing. If the
purpose of our efforts to improve our internal initiatives were raising ourratings in external evaluation, it would mean that we are mistaking themeans for the end. We hope to utilize such objective evaluation toenhance our daily operations.

FY2020Period of status

FY2021

Labor and
Assessment Overall score Environment human rights

Gold

67

70

70

Ethics

60

50

Gold

71

80

70

Ethics60

Ordinary profit

Profit attributable to owners of parent

83.8 billion yen

4.4 billion yen

4.8 billion yen(increased by 4.6%
year on year)(decreased by 41.2%
year on year)(decreased by 45.1%
year on year)

2.3 billion yen

2.6 billion yen
ROE:

Depreciation:

2.9％

Net sales
100

50

FY2021

FY2022

Gold

68

70

70

60

60

Gold

72

80

70

60

60

FY2022

FY2023

Silver

68

70

70

60

60

Gold

72

80

70

60

60

89.5

87.1

84.9

80

8

60

6

4.9

40

4

4.4

20

2

2020.32021.32022.302023.3

Profit attributable to owners of parent

7.5

ROE

8.7

（％）

10.0

6.0

8.0

4.5

6.0

4.6
3.3

3.0
1.5

3.6

2.9

2.5

6.7

2.3

4.0
2.0

-2.0

-3.6
2019.32020.3-4.0
2021.32022.32023.3

Capital investment and depreciation

The future society we envision can be described as a “healthy andcomfortable society where abundant nature and convenienttechnology are in harmony.” We will work to solve problems in thefollowing three fields in order to “Solve Social Issues through
Manufacturing,” one of our issues of materiality we have identified
toward the fulfillment of our future vision.
1) Life science and healthcare (including the food and waterbusinesses)
2) Environment and energy3) Electronic materials and information communication network
We have defined the Smart Material® initiative as making a positive
contribution to these three fields through products and services andpowder processing technology. Based on this definition, theSustainability Committee examines and assesses each product andtechnology in terms of its level of contribution and certifies those thatmeet the criteria as “Smart Material®.” The Smart Material®
assessment is conducted through comprehensive comparison withconventional products or technologies from two perspectives:contribution to the fulfillment of our future vision and contribution to
our technology. Importance is placed not only on contribution to the
pursuit of profitability but also on contribution to solutions toenvironmental and energy issues and the reduction of

28 2023 Environmental & Social Report

5.3

6.0

4.3

4.4

4.0
2.0

2019.32020.32021.32022.32023.30Total assets and equity ratio
Total assets

Equity ratio

150

90

（％）

100

120.0

121.6

123.0

64.3

64.4

61.6

123.9

63.6

128.0
80

62.9

60

60

40

30

20

10

0

2019.32020.32021.32022.32023.30

Shareholder return (dividend per share and dividend payout ratio)
Capital investment(Billion yen)

Depreciation

Dividend payout ratio （％）

Dividend per share

(Yen)

100

9.5

51.8

8.4
8

80

60
48

6.8
5.9

6
4

3.1

3.6

4.2

60

4.4

4.3

0

36

23.8

26.5

40

24

17.2

2.6

2

The development of
Smart Materials® will lead
to Chemistry for a
Friendly Future ! Let s
create an Exciting
Company together!

4.0

5.1

0

-3.0

Cheetan, tell me what “Smart Materials ” are!

4.6

(Billion yen)120®

Simply put, “Smart Materials ” embody
Sakai Chemical’s development policy.

8.0

7.4

2019.3

10.0

9.4

83.8

80.1

-2.8

manufacturing-involved energy consumption and waste. The
certification criteria will be revised as needed according to changes
in our management strategy and the external environment. In
FY2023, we will initiate preliminary screening of pre-launch R&D
products to discover candidates for Smart Materials®.
Through Smart Materials®, we hope to contribute to solutions to
issues in the three fields, thereby realizing both Sakai Chemical’s
corporate growth and our future vision.

Operating profit margin （％）

Operating profit

10

-1.5

®

128.0 billion yen

51.8％(Billion yen)

0

Voice

Total assets:(decreased by 65.2%
year on year)

Operating profit and operating profit margin(Billion yen)(Billion yen)

Sustainable material
sourcing

4.4 billion yen

Dividend payout ratio:

Profit attributable to owners of parent and ROE

Onahama Manufacturing Site
Sustainable material
Labor and
Assessment Overall score Environment human rights
sourcing

Operating profit

Capital investment:

0

Sakai Manufacturing Site
Period ofevaluation work

Net sales

20

2019.32020.32021.32022.32023.3

0

12

50

40

15

70

75

2019.32020.32021.32022.32023.30* The dividend per share for FY2018 includes 10 yen added to celebrate thecentenary of Sakai Chemical Industry’s founding.
* For FY2020, only an interim dividend per share of 15 yen was paid.

Fire accident at the Onahama Manufacturing Site
On March 30, 2023, we caused a fire at the titanium dioxide manufacturing factory of our Onahama Manufacturing Site (Iwaki City, Fukushima
Prefecture). We would like to sincerely apologize for the accident.
The fire broke out in a wet dust collector (mist Cottrell), which processes combustion exhaust gas, in the factory. However, the equipment wascompletely destroyed by fire, so the direct cause has not yet been determined. From the operating conditions at the time, we infer that the insideof the mist Cottrell had dried out, thereby producing sparks.
The accident occurred when we were implementing safety measures based on the lessons from the Yumoto Factory explosion two years ago.
We have renewed our determination to devote all-out efforts to implementing and enhancing our safety measures with a sense of tension.

2023 Environmental & Social Report29Find the Sakai Chemical Groupin Your Daily Life

Environment-friendly

Our products support your life in every corner.

879People-friendly

1 House6 Cosmetics● Ultra-weather-resistant titanium dioxide for exterior walls● UV-ray-blocking materials for building material coatings● Various stabilizers for PVC window frames, guttersand downspouts● Various stabilizers for wallpaper and flooring materials● Titanium dioxide and zinc oxide for sunscreen● Flake-shaped barium sulfate for foundation● Fluorescent ingredients for cosmetics

1 Home medicines and health food

● Barium X-ray contrast agents● Peptic ulcer agents● Endoscope sterilizers● Active pharmaceutical ingredients andintermediates● Cold medicines● Digestive medicines● Health food (such as designated health food andcough drops)

2 Disposable diapers andhygiene materials

1● Nonwoven fabric● Breathable film
● Highly absorbent plastic● Nickel catalysts for adhesive production

63

7 Hospital

8 Waste incineration facility● DeNOx catalysts (NOx removal catalysts)● Dioxin decomposition catalysts

3 Bath salts
92

4

4 Food11● UV-ray-blocking materials for food packages

5 Eyeglasses● Zirconia-based dispersing elements for optical materials● Materials for plastic lenses

Electronic materials● Dielectric materials for multilayer ceramic capacitors● Plastic flame retardants● Silica for semiconductor sealing materials and functional film
● Ink materials for printed circuit boards● Zirconia-based dispersing elements for optical materials● Adhesives for flexible printed circuit boards● Materials for LCD film

10 Automobile● Titanium dioxide and barium sulfate for coatings● Zinc oxide for tires (rubber)● Barium sulfate for brake friction pads
● Dielectric materials for multilayer ceramic capacitors● Lubricating oil additives● Adhesives for flexible printed circuit boards● Masterbatch for headlight extensions● Dispersing elements for bath salts

1059 Digital devices and home
appliances, such as computers,
mobile devices (smartphones, mobile
phones, etc.), and flat-screen TVs● Road marking
materials● Braille sheets forpeople with visual
impairments

Organic chemicals

Catalysts

Sakai Chemical Industry was founded as a manufacturer of zincoxide, which was a material for white powder. After that, in
pursuit of quality white pigment, our predecessors reachedtitanium dioxide. This substance is now used as the most stable
pigment in a wide variety of applications, including paint, ink andfiber, and supports people’s lives in many aspects. We focus
especially on the manufacture of cosmetic materials, which was
Sakai Chemical Industry’s initial business. Microfine titanium
dioxide and ultrafine zinc oxide produced through ourproprietary powder processing technology block harmful UV
rays and help make your skin more beautiful and healthier.

β-Mercaptopropionic acid, an organic sulfur compound that
only Sakai Chemical Industry manufactures in Japan, is used toincrease the refractive indices of plastic eyeglasses, nowadays
contributing to improving the vision of people in emerging
countries. We are also engaged in the contract-based
manufacturing and development of active pharmaceuticalingredients and intermediates according to the client company’s
development stage, from process development to commercial
production, to help provide patients with reliable drugs as earlyas possible.

DeNOx catalysts contribute to protecting the global environment
by removing nitrogen oxides (NOx) emitted from waste
incineration facilities and thermal power plants. Processcatalysts (nickel catalysts) are used for petroleum resinhydrogeneration in the process of manufacturing optical film andadhesives for disposable diapers. We are also working todevelop heavy-metal-free polyester polymerization catalysts andother novel catalysts that help resolve energy issues.

Plastic additives

Hygiene materials

Healthcare

PVC stabilizers are used in a wide variety of products, such as
pipes, window frames, and insulating coatings for wires, to make
PVC easier to shape and process and prevent it fromdeteriorating. These days, environment- and health-friendly
non-lead stabilizers contribute to improving the lives of people inemerging economies in Southeast Asia and other regions, where
the construction of infrastructure, including water supply andsewerage systems, is in progress.

The use of disposable diapers has now spread widely in parallelwith the economic growth of developing countries and theprogress of population aging, and demand for them is growing
globally. We manufacture breathable film used in disposable
diapers and sanitary napkins and sell a wide lineup of hygienematerials, including nonwoven fabric.

In the healthcare area in general, our strength lies in the digestive
field. We have long provided barium X-ray contrast agents, inwhich we have a large share of the market, as well as ulcer
agents. We also sell endoscope sterilizers, thereby supporting
the medical field. To capture needs in an age of self-medication
while providing OTC drugs, including the Kaigen cold remedy
and health food, we have recently been entering into new fields,
including the joint production of fillers for artificial bones, the fieldof cosmetic medicine (supplements and sunscreen), and clinicalcancer examinations based on blood and saliva.

The multilayer ceramic capacitor is an indispensable part ofelectronic devices, such as smartphones. Barium titanate andhigh-purity barium carbonate are used in the capacitor to enable
the part to store and discharge a larger amount of electricity. Our
high-quality, minute products help capacitors be not only of large
capacity but also highly reliable (trouble-free), as required amid
the recent development of electric vehicles, the IoT and 5G.*
* IoT: Internet of things
5G: 5th-generation mobile communication system

30 2023 Environmental & Social Report

Titanium dioxide and zinc oxide products

11 RoadResearch and development
By leveraging our proprietary inorganic powder technology andorganic synthesis technology, we have been developing
materials that society needs.
We will continue to take on the challenge of developing highly
functional materials and composite technologies, thereby
contributing to the fulfilling and secure lives of people in a wide rangeof fields, including automobiles, electronic devices, and cosmetics.
Furthermore, in preparation for the arrival of a hydrogen society, atheme related to the SDGs, we are developing technologies forlowering the cost of hydrogen and carbon neutral technologies,
which will help solve energy and global warming issues. By doing
so, we aim to contribute to the creation of a sustainable society.
2023 Environmental & Social Report31