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