Sustainability Report2022

T.HASEGAWA CO.,LTD. SUSTAINABILITY REPORT 2022
TABLE OF CONTENT

Sustainability at T. Hasegawa .................................................................................................................3
Message from the President ..............................................................................................................3
Our purpose .......................................................................................................................................5
Our value creation process .................................................................................................................6
Achieving sustainable growth ............................................................................................................7
T. Hasegawa Sustainability Promotion Structure ................................................................................8
Stakeholder Engagement ................................................................................................................. 12Groups and initiatives we support and engage with ......................................................................... 13
T. Hasegawa Corporate Code of Conduct .......................................................................................... 15
Sustainability Initiatives ....................................................................................................................... 17
CSR Policy 1: Procurement ............................................................................................................... 17
CSR Policy 2: Environment ................................................................................................................ 20
CSR Policy 3: Human Rights and Labor ............................................................................................. 31
CSR Policy 4: Quality and Safety ....................................................................................................... 40
CSR Policy 5: Governance Fair Corporate Activities .......................................................................... 47
CSR Policy 6: Innovation ................................................................................................................... 61

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Copyright© T.HASEGAWA CO., LTD. All rights reservedEditorial Policy

The purpose of this report is to communicate the relationship between the Group and its stakeholders andour creation of value as well as to report on our most important initiatives based on the Company’s CSR
Policy. We will tie this report into strengthening relationships with stakeholders, creating value, andadvancing our sustainability initiatives.
In principle, we publish our Sustainability Report once a year in April. This report is disclosed following
approval at a strategic meeting consisting of the representative director and executive officers appointed by
the representative director. We have also disclosed the 2022 ESG Data Book, which focuses on ESG data,
and the GRI Standards Index as supplementary material for the report.

• Referenced guidelines: GRI Standards. This report has been prepared referencing the GRI Standards.
• Organization covered by report: In principle, the subject of this report is T.HASEGAWA CO.,LTD. “T.
Hasegawa” and “the Group” refer to the Company and its subsidiaries.
• Period covered by report: Fiscal 2021 (October 1, 2020 to September 30, 2021). Some fiscal 2022
initiatives are also disclosed. The fiscal years in the 2022 ESG Data Book refer to October 1 of theprevious year to September 30 of the year in question.
• Inquiries concerning this report:

CSR Division, T.HASEGAWA CO.,LTD.
E-mail: eco@t-hasegawa.co.jp• Next publication: April 2023
• Previous publication: April 30, 2021

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Sustainability at T. Hasegawa
Message from the President
Awareness of business environment
The COVID-19 pandemic has had a prolonged
and profound effect on people’s lives and socialand economic activity around the world. Healthcare systems have been pushed to their limits by
the emergence of variants, so balancing theprevention of infection with economic activities
remains a significant challenge.
In addition, urgent action is required on climatechange and other social issues. Not only will
abnormal weather caused by climate change
result in lower yields and quality of natural raw
materials, equipment damaged by natural
disasters, disruption of business activities due to
T.HASEGAWA CO.,LTD.
supply chain interruptions, and higher
President & CEO
temperatures, which will bring about changes in
Takao Umino
customer needs and consumer behavior, but it isalso likely to have a long-term impact on water resources. Furthermore, changes in the demographic structuresuch as the low birthrate, aging of society, and depopulation will have a far-reaching impact that includes labor
shortages and shrinking of the consumer market.
The Group is aware of these social issues that must be addressed and will identify latent needs andopportunities to tie into business growth. For example, the new lifestyles brought about by the COVID-19
pandemic have given rise to new consumer and customer needs. Furthermore, as the international community
pursues carbon neutrality, demand for alternative ingredients and natural raw materials has increased. Healthconsciousness is on the rise against a backdrop of a low birthrate and aging society. In addition, the increase in the
global population and rising standards of living in emerging countries have expanded the market for flavors andfragrances.
The Group’s business is intricately connected with people’s lives, including food and household essentials. We
will contribute to society through our flavor and fragrance technology and achieve business growth.

Basic Strategy and Customer Success
The Group is currently engaged in business based on the three basic strategies of focusing on the expansion of
our core business (compound flavors and fragrances), securing of revenue and profit in the domestic market, andgrowth in overseas markets. Since 2017, we have promoted management reform to develop an organization thattakes up challenges without fear of change in order to tie these strategies into steady results. This reform hasbrought record-high revenue and profit in both fiscal 2020 and 2021.
Through this reform, the focus has shifted from “customer first” to “customer success.” We believe that“customer success” will contribute to the improvement of our customers’ corporate value. Rather than simply
waiting for requests from our customers, we actively research and analyze the issues faced by our customers andlatent consumer demand. We provide solutions that leverage our flavor and fragrance technology, aiming tocontribute to the success of our customers’ businesses and become the most valuable partner for them. We
launched the Business Solution Division, which is in charge of research, sales, and marketing, in October 2020 inorder to enhance our proposal capabilities and quickly respond to the increasingly diverse and sophisticated3
Copyright© T.HASEGAWA CO., LTD. All rights reservedrequests of our customers. More than a year has passed since the establishment of the new division. It has been
well received by our customers, and we feel that “customer success” is steadily taking shape.
Overseas markets are positioned as a driver of growth, and we are expanding investments to accelerate thatgrowth. In fiscal 2021, we completed our post-merger integration with MISSION FLAVORS & FRAGRANCES, INC.,
which we acquired in the United States. Our overseas business accounts for over 40% of our total revenue, and weplan to continue growing it.

Building a Sustainable Society
Simply seeking to boost our own profits is not a way to achieve sustainable growth. Efforts to solve social
problems are accelerating worldwide against the backdrop of Sustainable Development Goals (SDGs) adopted by
the United Nations and the Paris Agreement taking effect. In August 2020, we signed the United Nations Global
Compact to respond to stakeholder demands as a flavor and fragrance manufacturer and to further promote
initiatives for realizing a sustainable society. In addition, in 2021, we established a Sustainability Committee for the
purpose of systematically promoting sustainability initiatives that are integrated into our business strategies. In
2022, to further promote action on climate change, we endorsed the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD).
Our Group is focused on development of flavors and fragrances to be used as a substitute for food materials
that are becoming depleted and responding to health consciousness among consumers. In this way, we arecontributing to solving problems facing modern society, including food shortages. It is our human resources thathave supported the Group since its founding in 1903, drawing out these possibilities of flavors and fragrances andtying that into customer success. In their respective positions, employees from every division work to provide safeand reliable products with top priority placed on ensuring safety and quality control. The Group has grown bydemonstrating unwavering professionalism, a passion for responding to our customers’ needs, and the ability tosucceed under all circumstances. Our company is built on “A Foundation in Technology.” This is an expression of
our stance of contributing to the world through flavors and fragrances while our different divisions continuallycollaborate and stimulate one another.
We will use flavor and fragrance technologies to solve Global challenges and contribute to building a sustainable
society in which people can enjoy healthy and fulfilling lives.
April 2022

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Copyright© T.HASEGAWA CO., LTD. All rights reservedOur purpose
Embracing the motto of being a “A Foundation in Technology,” we strive to contribute to the creation of anenriched society through flavors and fragrances.
Our motto of “A Foundation in Technology” reflects the T. Hasegawa commitment to flavors and fragrances, and ourdesire to provide our customers with safe and reliable products. Divisions continuously collaborate to encourage
innovation while also engaging in partnerships and joint research with external parties. As a manufacturing partner,
we provide proposals that lead to customer success by exceeding expectations and accurately identifying consumer
needs and latent desires. As a member of society, we work to build and strengthen relationships with all our
stakeholders. We will use flavor and fragrance technology to resolve the problems facing society and contribute to
the creation of an enriched society.

The T. Hasegawa Approach

Our stakeholders

Localcommunities

Company Creed
Naturalenvironment“A Foundation in Technology”

Government
NGOs

Management policies① Strive to achieve stable and appropriate
profit return with the aim of improving
corporate value and increasing shareholder profit② Realize our corporate social responsibilities
by being thoroughly compliant to laws andregulations.
③ Create a safe and comfortable work environment
for our employees.
④ Work to resolve social issues and contributeto the creation of a sustainable society.

Suppliers

Customers
Consumers

The T. Hasegawa
Group
Joint ResearchPartners

Shareholders
Investors

Our Purpose
Contribute to the creation of an enrichedsociety through flavors and fragrances

Universities
and research
institutions

Employees

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Copyright© T.HASEGAWA CO., LTD. All rights reservedOur value creation process
We link the "Creation" of one and only flavors and fragrances in the world to customer success through a"Production" cycle that ensures high quality and safe manufacturing.
Value creation at T. Hasegawa(1)

Our value creation process begins with an analysis of consumer needs by Sales and Marketing, which work to
identify customer requests and latent desires.

(2)

The R&D Division creates samples of flavors and fragrances reflecting customer requirements and potential
needs.

(3)

Procurement evaluates supply chains while engaging in raw material procurement.

(4)

Manufacturing uses the optimal production facilities to efficiently and accurate generate some 12,000 flavors
and fragrances annually.

Lastly, we operate a strict quality control system to ensure the timely provision of safe and reliable products to ourcustomers.

Value creation at T. Hasegawa

High-quality, safety product "Production"Rawmaterials(3) Procurement(4) Production

Raw material andsupply procurement
based on supply
chain evaluations

The efficient andaccurate creationand timely provisionof some 12,000 flavors
and fragrances annually.

The powerof flavor
andfragrance
creation

Suppliers(1) Sales andMarketing(2) R&D
Promptly materialize
the requirements andpotential needs ofthe customers

Address customer
requests andidentify latent
needs

Providesafe andreliable
products

Customersuccess

Products

Customers

Consumers

Customerrequests
and latent
needs“Creation” of one and only flavors and fragrances in the world

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Achieving sustainable growth
We will achieve our mission by using innovation to increase business opportunities and reduce risks while stillgiving due consideration to the environment and to society.
The flavor and fragrance industry is greatly impacted by issues facing Japanese society, including population aging
and low birth rates, climate change, food shortages, as well as changes in consumer needs. We will respond to thesechanges and use innovation rooted in the "power of flavor and fragrance creation" to generate business
opportunities and strengthen our sustainability initiatives. Such initiatives include engaging in responsible
procurement, reducing environmental load, labor practices that respect human rights, and quality safety. We will
also reinforce risk management. Through these efforts, we will contribute to the creation of an enriched society
through flavors and fragrances.
Megatrends, changes inbusiness environment

Japan:
 Population decline, low birthrates, population aging
Global: Disputes between nations andregions
 Rising standard of living inemerging nations
 Foreign exchange risk
 Industry oligopoly Food shortage due to rising
global population
 Climate change caused by
global warming(Unstable weather, numerous
disasters)
 Reduced crop yield Consumer trend towards healthand environmental
consciousness
 Diversification of consumer
consciousness, needs, andpurchasing habits
 Advancement of digitalization,AI

Impact on T. Hasegawa

The T. Hasegawa Approach

Business opportunities
 Identify new business
opportunities in Japan Expand demand for flavors
and fragrances in emerging
nations Respond to diversifying
customer needs
 Increased demand foralternative raw materials,
alternatives to natural raw
materials
 Increased demand forbeverages and chilled orfrozen desserts driven by risein average temperatures
 Increase value of "flavor andfragrance" database

Expand business opportunities Creating a framework for providing diverse
flavors and fragrances that are safe, reliable,
and suited to customer preferences

Risks / Challenges
 Maturation of the domestic
market Impact of currency exchange
fluctuations on sales andprofits
 Growing gap between global
corporations
 Conflict and climate change
making natural raw materials
more expensive and harder toobtain Price hike of higher raw
material demand

Risk mitigation
 Reinforce raw material inventory
management and diversify purchasing routes
 Develop efficient production system, stableproduct supply Decline in surplus inventory
 Risk dispersal for overseas local
procurement and local production
 System for highly reliable quality assurance
and process management by expanding
inspection system and adopting strict
standards
 Environmentally friendly products design andmanufacturing, environmental safety audits Effective use of waste and improvements todeodorizing facilities

 Overseas local procurement and local
production
 Sustained R&D investments

Business strategy

Increase flavor
and fragrancecompounds

Secure earnings
in Japan

Expand overseas
business

High-quality, safety product "Production"

Procurement

Production

The
power
of flavor andfragrance Strengthen technology and innovation basedon trends: secure and develop humanresources, utilize databases and AI

creation

Sales andMarketing

R&D>Building a new business model Speedy development: Rapidly identify andrespond to customer requests and latent
needs

Mission“Creation”of one and only flavors andfragrances in the world Detailed customer service

Contributeto the creationof an enrichedsociety throughflavors andfragrances

Innovation

Contributions to SDGs
Human rights,
labor

Responsible
Procurement
Reducing
environmental load

Transparent
management

E(Environmental)

Qualityassurance

S(Social)G(Governance)

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T. Hasegawa Sustainability Promotion Structure
At T. Hasegawa, we have outlined a CSR Policy and established a promotion system for implementing CSR
activities throughout the Group.
(1) Creating the T. Hasegawa CSR Policy
Based on our existing CSR activities, our support for the IFRA-IOFI Sustainability Charter, and our participation in the
UN Global Compact, we decided to evaluate our materiality from two aspects: "contributing through our businessprocesses" and "contributing through our products." We used the results of these evaluations as the basis foroutlining a CSR Policy comprised of six areas of focus.
[CSR Policy Creation process and regular reviews]
We evaluated elements based on importance to our Group and to our stakeholders. We drafted our CSR Policy after
evaluation results were deliberated and approved at Strategic Meetings attended by the Representative Director
and executive officers designated by the Representative Director. Furthermore, any future revisions to the CSR Policy
shall require approval at a Strategic Meeting.
 The IFRA and IOFI share the common belief that successfully incorporating
sustainability to corporate business strategy is critical to achieving a prosperous
and sustainable future. This shared belief represents the foundation of their
Sustainability Charter, of which we became a signatory.

1. Signatory to the IFRAIOFI Sustainability Charter

2. Problem
extraction/prioritization

3. Adequacy confirmation/
CSR policy creation

4. Review (PDCA)

IFRA-IOFI Sustainability Initiative
1. Ensure responsible sourcing throughout the value chain;
2. Reduce our industries' environmental footprint and address climate change;
3. Enhance the well-being of employees and ensure a rewarding labor environment;
4. Be at the leading edge of product safety;
5. Be transparent and a reliable partner for society.

 We assess our corporate creed, corporate motto, our business vision, business risks
and opportunities, and existing initiatives and extract issues for evaluation. We
then prioritize issues based on stakeholder expectations and needs, as well asbased on business strategy. We also referenced GRI standards and otherinternational guidelines related to the social responsibilities of organizations.

 Through meetings with relevant division, the Sustainability Committee confirms
appropriateness and policies are then finalized via approval and Strategic Meetings.
These issues are positioned as our materiality, and served as the basis for outlining
our six CSR policies.

 CSR Policy is reviewed at Strategic Meetings once per year. As necessary, we
review policy based on initiative progress, changes in social conditions, and theneeds of our stakeholders.

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[CSR Policy]

Social issues we
aim to resolve
throughbusiness
processes

Contributing tosolving social
issues throughour products

SDGs that leads tocontributions

CSR Policy (materiality)

Category

Procurement

We promote responsible procurement across our entire value chain.

Environment

We understand the importance of reducing environmental load andproactively engage in activities related to environmental
conservation and improvement.

Human rights,
labor

We respect human rights and diversity, and work to enhance thewell-being of employees and ensure a safe and comfortable labor
environment.

Quality safety

Be a leader in product safety.

GovernanceFair corporate
activities

Ensure healthy, transparent, and fair management practices, and bea reliable partner for society.

Innovation

We contribute to resolving social issues through the flavor andfragrance business.

[Correlation between CSR Policy, risks & opportunities, and business strategy]
We identify and organize the correlation between CSR Policy, risks & opportunities, and business strategy.
CSR Policy (materiality)

Procurement

Environment

Human rights,
labor

Quality safety

Business strategy, approach
Expand business
opportunities

 Overseas local procurement and local production

Risk mitigation

 Reinforce raw material inventory management and diversify
purchasing routes
 Risk dispersal for overseas local procurement and local production
overseas Evaluate and develop alternative raw materials
 Investigate and support supplier sustainability

We understand theimportance of reducing
environmental load andproactively engage inactivities related toenvironmental
conservation andimprovement.

Expand business
opportunities

 Respond to social needs resulting from climate change

Risk mitigation

 Environmentally friendly product design and manufacturing,
environmental safety audits Effective use of waste and improvements to deodorizing facilities

We respect human rights
and diversity, and work
to enhance the wellbeing of employees andensure a safe andcomfortable labor
environment.

Expand business
opportunities

 Improve production efficiency

Risk mitigation

 Secure human resources
 Prevent, resolve human rights violations
 Prevent labor accidents

Expand business
opportunities Creating a framework for providing diverse flavors and fragrancesthat are safe, reliable, and suited to customer preferences

Risk mitigation

 Develop efficient production system, stable product supply
 System for highly reliable quality assurance by expanding
inspection system and adopting strict standards
 Develop technicians able to manufacture high-quality products

Risk mitigation

 Highly transparent management

Expand business
opportunities

 Sustained R&D investments
 Speedy development: Rapidly identify and respond to customer
requests and latent needs Detailed customer service
 Use climate change as opportunity to respond to growing demand
for alternative raw materials that increase the use of flavors

We promote responsible
procurement across ourentire value chain.

Be a leader in productsafety.

GovernanceFair corporate
activities

Ensure healthy,transparent, and fairmanagement practices,and be a reliable partner
for society.

Innovation

We contribute toresolving social issues
through the flavor andfragrance business.

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(2) Creating a sustainability promotion system
T. Hasegawa uses innovation to pursue business opportunities while also enhancing our sustainability initiatives andreinforcing risk management. Through these efforts, we strive to create an enriched society through flavors andfragrances.
We have established a Sustainability Committee to take a strategic groupwide approach to sustainability initiatives,
including ESG and the matters we outline in our CSR Policy. This Committee deliberates and decides on importantmatters concerning Group sustainability efforts, including business strategy proposals and the content of initiatives.
As necessary, matters deliberated by the Sustainability Committee are submitted for approval from Strategic
Meetings and the Board of Directors. We also delegate authority to relevant divisions as necessary.

Board of Directors
Approved by

Minutes, report

Strategy Committee
Approved by

Minutes, report

Sustainability Committee
Confirm status ofprogress

ReportRelated Divisions(business execution)

Sustainability Committee overview• Objectives
To promote a strategic groupwide approach to sustainability initiatives, including ESG and matters outlined in CSR
Policy as a cross-functional team.
• Members
The officer in charge of Internal management control as Committee Chair and Committee members are comprisedof persons appointed by the Committee Chair based on recommendations from the officers in charge of eachrelevant division.
• Secretariat
The Committee secretariat shall be comprised of the Corporate Planning Division and the CSR Division.
• Activities in FY2021
We held one Committee Meeting where we confirmed the role of the Sustainability Committee and confirmed the
direction of activities towards creating the Sustainability Report and disclosures based on GRI standards index.

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(3) Outlining KPI
We set KPI to promote efficacy in initiatives related to CSR Policy (materiality).

CSR Policy (materiality)

KPI

Procurement

We promote responsible
procurement across our entire
value chain.

 Supplier assessment implementation rate
• FY2022: 60%• FY2023: 70%• FY2024: 80%

Environment

We understand theimportance of reducing
environmental load andproactively engage in activities
related to environmental
conservation andimprovement.

 Maintain ISO14001 certification
 Energy consumption per unit
• lower by 1.6% YoY
 CO2 emissions (Scope 1, 2)• compared to FY2013 figures, reduce 25% in FY2022 and 46% by
FY2030

Human rights,
labor

We respect human rights anddiversity, and work to enhance
the well-being of employees
and ensure a safe andcomfortable labor
environment.

 Rate of women in management positions• 18% or higher by FY2024
 Rate of mid-career management hires• 18% or higher by FY2024
 Rate of foreign workers in management positions• maintain 30% or higher Rate of One on One interview based on new HR system• 100%

Quality safety

Be a leader in product safety.

 Maintain ISO9001 & FSSC22000 certification

GovernanceFair corporate
activities Board of Directors efficacy evaluations• once per year Compliance understanding test participation rate
• 100%
Ensure healthy, transparent, Harassment prevention training participation rate (forand fair management practices,management candidates)and be a reliable partner for• 100%
society.
 Training related to internal governance (for new hires, newmanagers)• once or more per year for each Important risk response reporting (follow-up)• twice or more per year

Innovation

We contribute to resolvingsocial issues through the flavor
and fragrance business.

 R&D expense to net sales ratio• roughly 8% (consolidated-based) Continue open innovation

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Stakeholder Engagement
Working to build trust-based relationships with stakeholders
Our Group views all organizations and people involved in our value creation as stakeholders. We are focusing on
engaging in dialogue with stakeholders and building trust-based relationships.

Stakeholders
Customers

Basic Approach
We aim to contribute to customer
success by building trust-based
relationships with customers byproviding safe and reliable products.

Joint Research Absorb leading research and improve
technology through knowledge
Partners
sharing and information exchanges.

Typical engagement methods and examples• Sales development• Ascertaining customer satisfaction• WEBSITE• Response to supplier survey

Relevant
CSR Policy
CSR Policy 4
Quality Safety
CSR Policy 6
Innovation• Joint research, dispatch for Joint Research Partners• Regular guidance and lectures by univesity
professors
CSR Policy 6
Innovation• Open innovation• Participation in academic conferences and researchseminars

Employees

Respect the diversity of each
employee, cultivate a culture thatallows employees to maximize theirindividual skills, and work to create apleasant, comfortable work
environment.

• Tier-specific training• Labor union• Whistleblowing System• Performance evaluation meetings (goalconfirmation, interim review, final evaluation)• Stress check (once/year)• Self-assessment system (once/year)

CSR Policy 3
Human rights,
labor

Shareholders,investors

Under a highly reliable and transparent
management structure, we work tobuild trust-based relationships withshareholders and investors throughtimely and appropriate information
disclosure and opportunities forcommunication towards achieving
sustainable growth and increasing ourcorporate value.

• General Meeting of Shareholders (once/year)• Earnings conferences (twice/year)• Individual IR meetings• Disclosure materials• IR website

CSR Policy 5
GovernanceFair corporate
activities

Suppliers

In accordance with the T. Hasegawa
Procurement Policy, we work to build
long-term, trust-based relationships byengaging in fair and highly transparent
transactions.

• Purchasing activities• Supplier audits• Site visit trends• Surveys

CSR Policy 1
Procurement

Naturalenvironment

We give due consideration toenvironmental conservation in all ourbusiness activities.

• Promote GHG emission reduction measures• Promoting energy-saving measures• Environmental Safety Committee implementation(facilities, research centers/monthly,companywide/3-4 times per year)• ISO14001 management (external & internal audits/
once per year, excluding head office)• Environmental safety audits (internal audits/ once CSR Policy 2
Environment
per year)• Site inspections (safety, energy conservation, static
electricity, systems subject to fire prevention
measures, etc., each once per year)• Resource conservation/ waste reduction andeffective use (partial composting)• Odor inspections (factories/daily, research
centers/twice per month)

Local
communities

Through business activities, contributeto development and problem
resolution for local communities, andpromote coexistence.

• Contributing to local communities through business CSR Policy 2
activities
Environment• Conducting environmental patrols
CSR Policy 6• Local contribution activities
Innovation

We engage with governments andGovernment / NGOs and participate in industry group
activities to collaborate towards
NGOs
resolving social issues.

Consumers

Contribute to enriched and healthy
lifestyles through the final products inwhich our products are used.

• Participate in industry group activities• Engage with government and NGOs
• Compliance with relevant laws and regulations

CSR Policy 5
GovernanceFair corporate
activities• Feedback from customers

CSR Policy 4
Quality Safety
CSR Policy 6
Innovation

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Groups and initiatives we support and engage withWe support and are engaged in a wide range of global sustainability initiatives

Groups and initiatives we support and engage with
• IFRA-IOFI Sustainability Charter• United Nations Global Compact• Roundtable on Sustainable Palm Oil (RSPO)• CDP• TCFD• EcoVadis• Sedex• Japan Chemical Industry Association• The Japan Flavor & Fragrance Materials Association• International Organization of the Flavor Industry

Signatory of the IFRA-IOFI Sustainability Charter
The Japan Flavor & Fragrance Materials Association (JFFMA), in which our Company is enrolled, is a member of theInternational Fragrance Association. We are also a member of the International Organization of the Flavor Industry.
We contribute to various efforts by these organizations aimed at securing the safety of flavors and fragrances, both
directly and through our involvement in JFFMA activities.
The IFRA and IOFI share the common belief that successfully incorporating sustainability to corporate businessstrategy is critical to achieving a prosperous and sustainable future. This shared belief represents the foundation of
their Sustainability Charter. We have always engaged in various sustainability activities and we became a signatory ofthis Sustainability Charter on March 31, 2020 to publicly declare our commitment to sustainability as a promise tosociety. Helping achieve a sustainable society, T. Hasegawa will engage in the following five domains outlined in the
Sustainability Charter.
IFRA-IOFI Sustainability Initiatives
1. Ensure responsible sourcing throughout the value chain;
2. Reduce our industries' environmental footprint and address climate change;
3. Enhance the well-being of employees and ensure a rewarding labor
environment;
4. Be at the leading edge of product safety;
5. Be transparent and a reliable partner for society.

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Signatory of the UN Global Compact
On August 24, 2020, T. Hasegawa was registered as a participant in the UN Global Compact, an initiative launched by
the United Nations. On the same day, we also joined the Global Compact Network Japan, a local network for UN
Global Compact participants in Japan.
The UN Global Compact is a global framework for realizing sustainable growth by encouraging participatingcompanies and organizations to commit to responsible, creative leadership and serve as positive members ofsociety.
T. Hasegawa supports the 10 principles of "Human Rights, Labour, Environment and Anti-Corruption" outlined in the
UN Global Compact. We will continue to promote responsible business practices by all our stakeholders as we work
towards the realization of a sustainable world.

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T. Hasegawa Corporate Code of Conduct
T. Hasegawa embraces the motto of being a “A Foundation in Technology,” and we strive to contribute to thecreation of an enriched society through flavors and fragrances. To enable this mission, we outline a Corporate
Code of Conduct to define the standard of behavior we expect of every member of the T. Hasegawa Group.
We are committed to developing flavors and fragrances and dedicate ourselves to providing our customers with safeand reliable products. As a member of society, we work to build and strengthen relationships with all our
stakeholders. We will use flavor and fragrance technology to resolve the problems facing society and contribute to
the creation of an enriched society. To realize this goal, we have outlined the T. Hasegawa Corporate Code of
Conduct and we proactively work to reinforce awareness throughout our Group. All T. Hasegawa executives andemployees are expected to fully understand and adhere to this Code of Conduct. We apply a high ethical standard
while engaging in fair and honest business practices while also striving to fulfill our social responsibilities.

T. Hasegawa Corporate Code of Conduct
1. Legal compliance
We continuously pay attention to laws and regulations, ensure comprehension, and act withsocial decency.
2. Environmental Issues and Initiatives
We actively address environmental issues as a member of society and endeavor to protect theenvironment.
3. Opposition to Antisocial Forces
We oppose antisocial forces and all related parties, and never engage in any relations with suchparties.
4. Respect for Human Rights
We respect the basic human rights of each individual and do not engage in any unfair
discrimination or harassment.
5. Respects for the Rights of Third Parties
We respect the rights of third parties in all business practices, and will not infringe on any suchrights.
6. Compliance with Quality Safety Standards
We operate a strict quality control system and endeavor to provide safe products that are incompliance with the law.
7. Prohibition of Insider Trading
We engage in fair stock transactions and do not engage in insider trading or any other suspicious
stock transactions.

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8. Prohibition of Conflicts of Interests
We do not engage in any actions as stipulated below that could result in conflicts of interests
between individual interests and those of the company.
(1) Become an officer or employee of a competitor.
(2) Actions that may assist or support the sales activities of a competitor.
(3) Actions that may compete with the business of our company.
9. Handling of Insider Information
We fully recognize the value of the information possessed by the company and information
provided by third parties. We strictly manage all information in accordance with “Confidential
Information Control Rules” and the “Rules related to Insider Information Control and Insider
Trading,” both of which are part of our corporate regulations.
10. Actions towards our Customers
We never engage in entertainment or gift-giving that could be regarded as bribery, nor any otherbusiness practices that may deviate from accepted social practices.
11. Relationships with Suppliers(1) We engage in transactions with our suppliers with integrity, and treat suppliers fairly andjustly.
(2) We do not use our dominant bargaining position to impose any unjustified disadvantages on
suppliers.
(3) We never accept rebates or kickbacks from suppliers.

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Sustainability Initiatives
CSR Policy 1: Procurement
We will promote responsible procurement throughout our value chain.

Basic approach
Based on our corporate creed of being a “A Foundation in Technology,” the Group seeks to contribute to thecreation of an enriched society through flavors and fragrances and is working to provide our customers with reliable
products . For that reason, building a supply chain that allows the stable procurement of quality, price-competitive
materials is essential. Building long-term relationships based on trust with our suppliers through fair, impartial, andhighly transparent trade, we will promote procurement activities that take resources, the environment, and humanrights into account so that we can achieve sustainable growth throughout the supply chain.

T. Hasegawa Procurement Group Policy
1. Legal Compliance and Ethical Trade
Observing the laws and social norms in each country and region, we will promote procurement
activities with high ethical standards and social sense together with our suppliers.
2. Consideration of Human Rights
We will respect human rights in every situation and work to ensure that we do not engage in any
activities that will lead to violation of human rights throughout the supply chain to ensure that
we do not discriminate in any way.
3. Consideration of the Global Environment
Together with all of our suppliers, we will be conscious of reducing our environmental footprint
and engage in sustainable procurement activities that take conservation of the global
environment into account.
4. Mutual Trust, Co-existence, and Co-prosperity with Suppliers
We will respect the standpoints of others based on principles of fair and open competition andmutual trust, seeking co-existence and co-prosperity with all of our business partners, including
suppliers.
5. Safety, Reliability and Customer Success
We will engage in procurement activities in such a way as to realize customer success, safety, andreliability by providing quality products to our customers and, in turn, to consumers.

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Correlation to stakeholders
We have established the “T. Hasegawa Supplier Guidelines” to promote responsible procurement throughout the
supply chain. We build long-term relationships based on trust with our suppliers through fair, impartial, and highly
transparent trade.
Overview of T. Hasegawa Suppliers
The Group does business with chemical manufacturers, flavor and fragrance manufacturers, food additive
manufacturers, food manufacturers, trading companies, contract manufacturers, and packaging material
manufacturers. In fiscal 2021, the total number of suppliers trading with the Company was around 460, and the total
number of items was 3,200. The main breakdown is flavor and fragrance ingredients (natural and synthetic), food,and food additives. The ratio of imports to domestic procurement is 35:65, and our suppliers are located in Japan,
China, the United States, the European Union, the United Kingdom, India, Brazil, Argentina, and other countries.
One of the distinctive characteristics is the high-mix, low-volume, and relatively high unit prices of the materials.
SDGs that lead to contributions

Promotion structure, governanceMaterial procurement is handled primarily by the Purchasing Division. In addition, risks related to procurement aremanaged and verified by the Risk Management Committee, which is a Group-wide organization that is chaired by
the President & CEO and has directors as members. The Purchasing Division gathers information on risks related to
procurement and reports to the Risk Management Committee.

Risks, opportunities & strategy
Risks• Insufficient procurement of flavor and fragrance ingredients derived from natural resources due to climatechange• Stagnation of business activities and loss of corporate value due to delayed action on social and environmental
issues in the supply chain
Opportunities•

Enhancement of development and manufacturing capabilities and reduction of lead times throughdiversification of items and suppliers

Strategy• Implementation of global material procurement• Research on and development of alternative raw materials• Supplier sustainability surveys and support

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Major initiatives of FY2021
We maintained our RSPO certification and established the T. Hasegawa Procurement Policy. In addition, weestablished our Supplier Guidelines and gathered information for conducting assessments.

Procurement of Perilla Oil
T. Hasegawa is actively promoting use of distinctive domestic flavor and fragrance ingredients andstriving to develop uniquely Japanese flavor. One of the important raw materials for this is Perilla oil.
To procure it, we partner with a producers’ cooperative and provide support for stable production interms of quality and volume and for business continuity.
• Seed provision: We provide seeds to producers every year to ensure stable quality and yield. We
also check the status at production areas in collaboration with seedling companies.
• Technical support: We send researchers and engineers to provide advice and support for
improving manufacturing methods and modify equipment to enhance productivity. *• Support for quality improvement: We send researchers to provide education and support quality
inspection methods that are difficult for the producers’ cooperative to acquire on its own.
• Supply of packaging material: We provide the producers’ cooperative with fillable containers andpackaging materials.
• Business continuity: We develop long-term procurement plan looking ahead several years without
significantly changing the size cultivation area to ensure that producers can earn stable profits.
*

In 2021, we dispatched our engineers and contractors to repair and improve aging Perilla oil
production equipment as the evaluation and design of equipment was difficult for the producer’s
cooperative to handle alone.

Future endeavors
In fiscal 2022 and beyond, we will further solidify our relationship with suppliers and promote sustainableprocurement.
• Sharing T. Hasegawa Supplier Guidelines with suppliers• Educating suppliers to promote sustainability within their supply chains• Requesting that our suppliers fill out our CSR procurement questionnaires based on the Global Compact Network
Japan CSR Procurement Self-Assessment Tool
Supplier Assessments implementation rate
• FY2022: 60%• FY2023: 70%• FY2024: 80%

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CSR Policy 2: Environment
We understand the importance of mitigating environmental load and proactively engage inactivities related to environmental protection and improvement.

Basic approach
We outlined our "Environmental Philosophy" to clarify our stance towards environmental protection and further
drafted our "Environmental Safety Activity Policy" to outline specific actions towards realizing that philosophy.

Environmental Philosophy
T. Hasegawa recognizes that the most important common issue facing all of humanity is to passon this irreplaceable planet to future generations. As a comprehensive manufacturer of flavors
and fragrances, we give due consideration to environmental protection in all our businessactivities.
Environmental Safety Activity Policy
In addition to "Environmental Protection", we also view "Security and Disaster Prevention,""Occupational Safety and Health," and "Chemical Safety" as core corporate themes. As such, weincorporate these themes into our Environmental Safety Activity Policy and engage in relevant
activities.
Environmental Protection
1. Promoting efficient energy consumption
2. Promote resource conservation, effective utilization of waste
3. Odor countermeasures, air/water pollutant emissions reduction
4. Strengthen environmental management system (EMS)
5. Promoting Green Purchasing
Security and Disaster Prevention
1. Promote hazardous material safety measures
2. Promote fire safety measures
Occupational Safety & Health
1. Promote labor safety measures
2. Promote work hygiene measures
3. Improve labor environment
Chemical safety
1. Establish chemical substance management system
2. Promote chemical safety measures

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Correlation to stakeholders
Information disclosure to customers
We conduct information disclosure via platforms such as the CSR Procurement Self-Assessment Tool (Global
Compact Network Japan), Sedex, EcoVadis, and CDP. We also response to supplier surveys conducted by customers.
Employee environmental education
We engage in multifaceted environmental education to improve the environmental awareness among our
employees.
• Provide intracompany web based training and information provision
We post environment-related pages to our Intracompany web site and publish a Sustainability Report and otherenvironmental information.
• Internal environmental seminars
The Environmental Safety Committee and Education Committee of each factory plans and holds seminars andworkshops related to environmental issues.
• External environmental seminars
Employees involved in environmental safety work participate in specialized seminars and attend lectures andexhibitions to accumulate their environmental knowledge.
• New employee education
Each factory provides education and training for new employees. We also conduct internal seminars for
employees to provide environment and safety-related training.
• Environmental education through our environment management system (ISO14001)
The Fukaya Facility, Itakura Facility, and R&D Center conduct ISO14001 education and training as a part of our
ISO14001 environmental management system (EMS). We also install ISO14001 message board in each workplace
to promote environmental protection by displaying Environmental Policy, environmental promotion posters, andother environment-related information.
Information disclosure to stakeholders
We post sustainability information (including this Report) on our company website.

SDGs that lead to contributions

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Promotion structure, governance
Promotion structure
We have created and operate an environmental protection management structure in accordance with our"Environmental Safety Management Rules."We acquired ISO14001 certification, the international standard for environmental management systems, at our
Fukaya Facility, Itakura Facility, and R&D Center. Our EMS is jointly managed by our Production Division and R&D
Division.

President

Senior Executive Officer
in charge of CSR

CSR Division
Environmental Safety Committee
Chair:
Executive Officer in charge of CSR
Members: Environmental Safety Committee
members from each factory
Chairman and Vice Chairman

Head officeEnvironmental Safety
Committee

R&D Center
Environmental Safety
Committee

Fukaya Facility
Environmental Safety
Committee

Itakura Facility
Environmental Safety
Committee(1) Environmental Safety Committee
1. This Committee is chaired by an executive officer in charge of the CSR Division, who is appointed by the
President & CEO. This Committee deliberates and decides on company policies related to environmental
protection and safety measures.
2. The Committee receives reports on environmental safety activity plans and activity results from each site, andcoordinates activities by the entire company.
3. The Committee selects auditors for environmental safety audits (environmental protection / security anddisaster prevention / occupational safety and health), and conducts annual audits of each site.
(2) Environmental Safety Committee of each site
1. We have established Environmental Safety Committees at our head office, R&D Center, Fukaya Facility, and the
Itakura Facility. Factory directors, etc. serve as Committee Chair and hold meetings monthly.
2. Each Committee outlines specific activity policies and targets, and promotes environment and safety-related
activities.
(3) CSR Division
1. The CSR Division proposes and promotes basic policy related to CSR and the SDGs.
2. This Division is responsible for the overall management of T. Hasegawa environmental safety activities.
3. The CSR Division serves as the secretariat for the planning and management of all company Environmental
Safety Committees and environmental safety audits.
4. The Division discloses relevant information by posting a Sustainability Report and publishing information on our
website.
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(4) ISO14001
In 2001, the Fukaya Facility and Itakura Facility acquired ISO14001 environmental management system (EMS)
certification from the Japanese Standards Association, and have since conducted related activities. Our current
certifying body is DNV Business Assurance Japan Co., Ltd. Our Production Division, which has the largest
environmental impact, continuously works towards improvements by applying a PDCA cycle based on the ISO14001
system that is adjusted for the activity progress at each factory. In June 2012, we added the R&D Center to the scopeof certification to strengthen our initiatives related to reducing environmental load from the R&D development
phase.
ISO14001 Environmental Policy
As a comprehensive flavor and fragrance manufacture with the Fukaya Production Center*, and R&D Center
involved in the production, research, and development of food flavors, cosmetic fragrances, synthetic flavors andfragrances, food additives, foods and cosmetic materials, we recognize the importance of achieving harmony withthe environment. We aim to be a company that is trusted by society. To achieve this, we engage in the following
activities related to the environment based on the following policies.
1. Promote resource and energy conservation, work to protect the global environment.
2. Promote the reduction and recycling of waste products.
3. Promote coexistence with local communities by strengthening environmental management at applicable sites
and surrounding areas, and working to prevent pollution.
4. Comply with air and water laws and treaties related to the environment.
5. Conduct internal audits to make continuous improvements to the EMS.
6. We provide environmental education to improve the environmental awareness of all employees.
*Fukaya Production Center is a business unit that manages the Fukaya Facility and the Itakura Facility
GovernanceWe conduct environmental safety audits annually at each factory. We outline in our Environmental Safety
Management Rules that those results must be reported to Strategic Meetings. The Production Division and R&D
Division, both of which are ISO14001 certified, are subject to regular maintenance inspections by an external
inspecting organization. Through these regular audits, we confirm that our environmental management system isfunctioning effectively and work to make improvements.
Environmental safety audits by the Environmental Safety Committee
Since 1997, Environmental Safety Committees conduct audits related to environmental protection and safetymeasures.
From 2008 onward, we reorganized our auditing framework into three sections in order to conduct comprehensive
checks: "Environmental Protection Audits," "Security and Disaster Prevention Audits," and "Occupational Safety and
Health Audits." During audits, we select dedicated auditors for each category. These auditors check for compliancewith environmental laws, the status of activities, and management status at relevant facilities. The auditors issue an
improvement recommendations report for matters that require improvement. In response, audited sites create an
improvement plan addressing the recommendations and submit that plan to the Environmental Safety Committee
before implementing improvements. In August 2021, we implemented COVID-19 prevention measures andconducted audits of each site. After deliberations by the Environmental Safety Committee, the results were
submitted to a Strategic Meeting.

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ISO14001 Management System Certification inspections and internal environmental audits
The Fukaya Facility, Itakura Facility, and the R&D Center, all of which are EMS ISO14001 certified, are subject toCertification inspections by DNV Business Assurance Japan Co., Ltd. to confirm system permeation and operation. At
the same time, internal environmental auditors registered and approved in accordance with parameters outlined inour environmental manual also conduct internal environmental audits.
Our Production Division, which has the largest environmental impact, applies a PDCA cycle based on the ISO14001
system that is adjusted for activity progress at each factory.
We continuously work towards improvements by engaging in corrective action to address issues or recommended
areas of improvement.

Risks & opportunities, strategy & responses
Risks• Administrative injunctions or lawsuits due to insufficient compliance with laws and regulations• Negative impact on environmental protection of local community• Decline in social value• Suspension of customer transactions, etc.
• Lack of raw materials due to climate change• Supply chain disruptions due to disasters, etc.
Opportunities• Respond to social needs resulting from climate change
Strategy• Reinforce response to legal compliance and risks• We will apply our CSR Policy to resolve environmental issues and accelerate growth strategy.
Risk response• Strategic Meetings evaluate and decide on targets from a long-term perspective, manages progress of policies
outlined by the Environmental Safety Committee, and promote awareness throughout the Group.
• Reinforce global warming measures (Environmental Safety Committee activities aimed at reducing energy
consumption, and CO2, raw material and resource conservation, and effective use through the composting ofwaste products)• We are enrolled in various platforms such as Global Compact Network Japan, Sedex, EcoVadis, and CDP to engage
in information disclosure and maintain transparency.
Response to opportunities• Expand transactions with customers by ensuring information disclosure and traceability• Accelerate innovation, develop, propose, and sell new products aimed at achieving SDG targets• Contribute to resource conservation for container raw materials by making PET bottles thinner and lighter using a
Carbonation Enhancer® and a natural light degradation Inhibitor.

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TCFD initiatives
In March 2022, we declared our support for the TCFD recommendations.
We have been in preparation to identify climate change risks and opportunities, and their respective impact, aheadof disclosing response measures.
Amid the acceleration of global efforts to achieve a decarbonized society, we are proactively addressing the issue ofclimate change.

Governance• Discuss at Strategic Meetings• The topic for FY2021 is to outline mid-term CO2 emission reduction
targets

Strategy• In fiscal year 2022, identify risks and opportunities and start
preparations for disclosure• The Environmental Safety Committee and the Sustainability
Committee will evaluate future policies and submit issues toStrategic Meetings for deliberation.

Risk management• Risk management system outlined in CSR Policy 5 [RiskManagement], address during risk identification process

Metrics and targets• The Environmental Safety Committee set Scope 1 & 2 CO2emissions reduction targets
Reduce to 46% of FY2013 by FY2030.
• The Environmental Safety Committee manages progress anddiscloses data
(Reference: (3) Environmental targets and results (FY2021))• Use CDP supply chain program to ascertain Scope 3 CO2 emissions
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Major initiatives in FY2021(1) Environmental Accounting
To ensure efficient and effective environmental protection activities, we referenced the Environmental Accounting
Guidelines published by the Ministry of the Environment to conduct environmental accounting. (Reference: ESG
Databook 2022)(2) Initiatives towards mitigating environmental load
• Energy use
We recognize energy conservation as an important issue and are proactively engaged in conservation efforts. In
addition to companywide energy conservation activities, we are also promoting energy conservation by upgrading
all boilers in our Production Division to more efficient models, and installing special high-voltage power receiving
and transforming equipment and energy monitoring systems. The Fukaya Facility and the Itakura Facility, which are
Type 1 Designated Energy Management Factory as defined by the Energy Conservation Act, are working on energy
conservation based on energy usage optimization standards.
In FY2021, we improved manufacturing processes, promoted the effective use of steam to reduce steam loss, andoptimized boiler operations to reduce energy consumption by 5,390 GJ compared to the previous fiscal year. We
also improved our basic unit for energy by 0.6% but this is below our goal reduction rate of 1.8%. We will continue
implementing effective measures to reduce energy consumption. (Reference: ESG Databook 2022)

Act on Rationalizing Energy Use Regular Reports
We received an S Class evaluation for six consecutive years (FY2015 through FY2020) through theBusiness Operator Classification Evaluation System.
Act on Rationalizing Energy Use Regular Reports and the Business Operator Classification Evaluation
System is a system by which the Ministry of Economy, Trade, and Industry (METI) evaluates businessenterprises that submit regular reports and ranks them into four classifications: S, A, B, or C. METI
publishes these evaluation results to its website. Through our FY2020 report (results for FY2019), theaverage change in our basic unit for energy for the past five years was 99.0%, indicating we had
improved our average basic unit for energy, which is defined in the Energy Conservation Act, by 1%
or higher each year.
We were awarded an S Class evaluation for the first time in FY2015 and earned this S Classevaluation for six consecutive years through FY2020.
Moving forward, our Environmental Safety Committee will continue to take the lead in proposing
energy conservation measures and the Production Division will continue shifting to new facilities
with better energy efficiency while also monitoring and improving the state of energy facility use.
Our Production Division and R&D Division collaborate to improve manufacturing processes and theentire company works collectively to achieve energy conservation by running a PDCA cycle forenergy measures. We will continue implementing energy conservation measures towards being able
to obtain these high evaluations.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved• CO2 emissions
In FY2021, we were able to reduce energy consumption significantly by engaging in efficient production activities. As aresult, we reduced Scope 1 and 2 emissions by 3.7% compared to the previous fiscal year. As for our target of achieving
a 46% reduction by FY2030 from FY2013 levels (18,814t), we reduced FY2021 CO2 emissions by 20.6%.
We also have started calculating Scope 3 emissions on categories for which we are able to calculate. We will receive
third-party validation of our CO2 emission calculations to further expand our understanding of our environmental load.
We will also continue engaging in long-term initiatives related to CO2 emissions. (Reference: ESG Databook 2022)• Water use
We use water for manufacturing processes as well as for cooling and cleaning. We have reduced our water usage byimproving manufacturing methods to reduce cooling water use, improve cleaning methods, and increase coolingwater recycling equipment. In FY2021, we reduced water usage by 4.5% to 442,776 ㎥. We will work to effectively
use water resources and further reduce water usage. While we recognize that, at present, water risks do not
represent a high risk for our production area, we will continue to check risks and response appropriately. (Reference:
ESG Databook 2022)• Effective use of waste
We manufacture a diverse range of flavor and fragrance products, and that manufacturing results in the production ofvarious waste. In addition to promoting the effective utilization of these waste, we will also proactively promote thereuse of waste containers, paper, waste glass, and oils. We also have worked to limit the production of landfill waste.
In our contracts, we visit operators and conduct regular audits to confirm they practice proper treatment. As the
producer has a responsibility for waste products, we use environmental safety audits to check status once per year. We
share this information throughout the company and immediately engage in corrective action to address recommended
matters.
As hazardous materials are treated by a waste disposal operator, we manage those records via a manifesto. Throughthis manifesto, we confirm that no materials go untreated.
In FY2021, we reduced waste materials by 0.4% from the previous year and achieved a 97.6% rate of effective
utilization for waste products. We did not achieve our target of zero landfill waste due to the need for landfill
treatment of slate tiles (containing asbestos) from the Fukaya Facility, which was damaged in a typhoon. (Reference:
ESG Databook 2022)
We also generate a high volume of botanical residue from our natural botanical extraction process. This botanicalresidue is currently being processed into compost using the fermentation composting technology of the Koumi
Compose Co., Ltd., which is a joint venture company between T.HASEGAWA CO.,LTD. (45%equity) and a company
producing compost. This composting process takes place in the town of Koumi, located in the Minamisaku District ofNagano Prefecture, and growers of highland vegetables are the prime beneficiaries of this compost.

Laying compost(Koumi, Nagano Prefecture)

Vegetable farm
(Koumi, Nagano Prefecture)27
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• Odor countermeasures
Being a manufacturer of flavors and fragrances, we pay special attention to
our odor countermeasures and volatile compounds. Using deodorizing
technology, we make efforts to prevent the emission of malodors. We
conduct regular environmental evaluation inside our facilities and thesurrounding local community areas.
• Wastewater treatment
Since installing wastewater treatment system at the Fukaya Facility in 1969,
we have been improving our wastewater treatment system by increasing
our treatment technology such as the activated sludge method, dissolved
air floatation method, anaerobic method, coagulation and sedimentation
method and the membrane filtration method.

Deodorizing equipment(Itakura Facility)

Wastewater from each facility is treated through a tertiary treatment
process. Wastewater in R&D is treated through a secondary treatment
process before being discharged into the sewer system. We comply with
wastewater standards outlined in the Water Pollution Control Law,
prefectural ordinances, and wastewater control level.
Wastewater treatment facilities(Itakura Facility)• Biodiversity protection

The preservation of biodiversity is one of the most important issues that society as a whole must address. The
production of flavors and fragrances uses resources such as energy, natural and synthetic raw materials, and water,which may have some impact on the ecosystem in the entire value chain.
One of the ways in which we can contribute through flavors and fragrances is to develop alternatives for widely
consumed food resources, and to reduce consumption. For example, with foods such as meat, milk, sugar, lard,palm, coffee, tea, cacao, and nuts, which are expected to see a surge of demands, if the reduced amounts used inprocessed foods can be supplemented through flavoring and fragrances, then these products can be delivered toconsumers without causing changes in preferences. The use of flavors and fragrances not only helps protect foodresources, but it also makes it possible to provide a stable supply of lower prices than compared to naturalingredients.
The second way in which we contribute is by "reducing food loss." By using manufacturing technology to create
powdered flavors and fragrances, not only can we reduce container and shipment costs related to transporting theflavors and fragrances, but we also help our customers improve the storage performance of food. Also, using
Carbonation Enhancer® and light degradation Inhibitors contributes to making thinner PET bottles and theextending food expiration dates.
We will deepen our understanding of the relationship between our business activities and biodiversity byimplementing a systematic process of internal education. We will promote activities aligned with our business andthe characteristics of the regions in which we operate.

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(3) Environmental targets and results

Environmental targets

FY2021 targets

FY2021 results

Medium- to longterm targets

1. Strengthening our environmental management system (EMS)
1) Make continuous
improvements to the EMS

Continuously implement and improve
environmental conservation activities
Maintain ISO14001 Management System
Certification

Applied to all T. Hasegawa divisions
Manufacturing and R&D divisions worked tomaintain ISO 14001 Management System
Certification

Continuous
implementation
Continuous
implementation

2) Conduct environmental
auditsConduct environmental safety audits
Conduct ISO14001 audits, internal
environmental audits

Conducted environmental safety audits
in ISO14001-certified divisions

Continuous
implementation
Continuous
implementation

3) Promote environmental
safety education

Plan and conduct various education
Plan and conduct ISO14001 education andtraining

Provided intracompany web base training
and other education in ISO14001-certified
divisionsContinuous
implementation
Continuous
implementation

4) Improve environmental
management

Issue Sustainability Report
Conduct environmental accounting report

Issued Sustainability Report
Conducted environmental accounting report

Continuous improvement
Enhance content

2. Promoting energy conservation
1) Reduce energy use

Energy consumption rate per unit: Reduce by
1.8% YoY

Reduced by 5,390 GJ (1.8% YoY reduction)(Production volume consumption rate
reduced by 0.6% -> target not achieved)

Continuous
implementation

2) CO2 emissions reduction(Scope 1, 2)CO2 emissions reduction: Reduce by 1.0% YoY(total volume)

Reduced by 575t (3.7% YoY reduction)
Medium- to long-term target progress(20.6% reduction vs. FY2013)

By FY2030:
Reduce to 46% of FY2013

3. Resource conservation, effective utilization of waste
Continuous improvement

Copy paper usage: Continuous improvement

Water usage reduction: 20,872m2(4.5% YoY reduction) (Consumption rate:
3.4% improvement)
Copy paper usage reduction: 3,508kg(20.4% YoY reduction)2) Promote effective use ofwaste

Continuous improvement in effective
utilization rate of waste

Effective waste utilization rate of 97.6%(1.0% YoY improvement)

Continuous
implementation

3) Landfill disposal volume
reduction

Zero landfill disposal

Landfill disposal volume: 0.2t
Effective use of landfill glass waste

Zero landfill disposal

Water usage: Continuous improvement
1) Promote resource
conservation

Continuous improvement

4. Limit environmental emissions
1) Prevent air/waterpollutants

Managed based on self-imposed values(factories)

Managed appropriately within self-imposedvalues
Improved wastewater treatment facilities

Continuous improvement

2) Odor control

Increase and appropriately manage
deodorizing facilities
Conduct odor patrols (factories, R&D centers),
zero odor complaints

Appropriate operations, complaint; one caseContinuous improvement

3) Chemical substancemanagement

Applying PRTR*(PRTR Law and self-regulated
substances)*Pollutant Release and Transfer
RegisterApplied PRTR*(PRTR Law and self-regulated
substances)*Pollutant Release and Transfer Register

Continuous
implementation

Promoting green purchasing

Operating based on Basic Principles &Guidelines on green purchasing

Continuous
implementation

5. Green purchasing
1) Promote green purchasing

Future endeavors• We will start procuring renewable energy and work on Scope 1 and 2 medium- to long-term CO2 emission
reduction targets.
• We will acquire a third-party certificate for CO2 reductions to ensure the transparency of our calculation methods
and reliability of our data.
• Through the CDP supply chain program, we will track CO2 emissions along our entire supply chain.
• To improve and increase reporting of climate-related financial information based on TCDF recommendations, wewill identify climate change risks and business opportunities, and their respective impact, and identify response
measures.

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FY2022 targets

Environmental
Protection(1) Promote energy conservation• Monthly progress monitoring of energy consumption against the target for each section in
manufacturing facilities• R&D Division and Production Division collaborating to improve manufacturing processes
Promoting energy conservation in production activities• Continuous evaluation of capital investments related to long-term energy and resource
conservation(2) Resource conservation and effective use of waste• Continuous reductions to water and office paper usage• Achieve zero landfill waste(3) Continuous implementation of other management activities• Reinforce energy management through the ISO14001 Environmental Management System(1) Energy consumption rate per unit: Reduce by 1.6% YoY

Numerical targets
Occupational Safety& Health
Safety & Disaster
Prevention
Chemical productsafety(2) CO2 emissions: Reduce by 25% against FY2013 (46% reduction from FY2013 throughFY2030).

(1) Promote labor safety measures• Reinforce static electricity countermeasures and firefighting drill• Conduct special safety inspections at Fukaya Facility/Itakura Facility(2) Promote fire safety measures• Exercise the firefighting drill(3) Continuous implementation of other safety control

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CSR Policy 3: Human Rights and Labor
Respecting human rights and diversity, we will improve employee benefits and create a safe
and comfortable work environment.

Basic approach
Basic Policy on Human Rights
The Company will support international human rights standards such as The Universal
Declaration of Human Rights, The ILO Declaration on Fundamental Principles and Rights at
Work, and the United Nations Global Compact and will act in accordance with the policy below
based on the United Nations’ Guiding Principles on Business and Human Rights.
1. Never engage in child labor or forced labor.
2. Comply with regulations on working hours, holidays and minimum wages stipulated by thelaw.
3. No discrimination in terms of hiring, salary increases and promotions.
4. No harassment against employees or in any working environment.
5. Make efforts to prevent accidents and disasters by giving priority to securing health andsafety of the workplace and workers.
6. Engage in discussion with labor representatives appropriately and faithfully.
We will check the status of compliance with items 1-6 of the above policy and work to identify,
prevent, and mitigate any negative impact on human rights related to the Company’s businessactivities.
In addition, we will endeavor to remedy or correct the situation through proper procedures inthe event that it becomes clear that our business activities have had or exacerbated a negative
impact on human rights.

Promotion structure, governance
Based on our belief that human rights and labor are integral parts of compliance, we have established a Compliance
Committee that is chaired by the President & CEO and includes directors as members. This committee identifies
issues related to human rights and labor and works on improvements as necessary.
Initiatives Related to Respect for Human Rights
The Group has established Compliance Regulations along with the T.Hasegawa Corporate Code of Conduct to befollowed by all employees as they engage in business activities, and these include respect for human rights. We will
make our employees aware of the Code of Conduct and thoroughly instill it in order to spread awareness of respectfor human rights and prevent issues related to human rights. In addition, based on these regulations, we haveestablished internal and external whistleblowing hotlines for employees and work to quickly identify and address
issues related to human rights. The Risk Management Committee and the Compliance Committee conduct annual
joint risk surveys in each division. The survey can identify risks of violation of human rights.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved

SDGs that lead to contributions[Human Resources Development]
Risks, opportunities & strategy
Risks• If there are not enough human resources with suitable skills, business operations will be suspended, and skills
transfer will be difficult.
Opportunities• Increase employee motivation• Increase production efficiency by improving the working environment
Strategy
In accordance with the management policy to create a safe and comfortable work environment for our employees,
we seek to create an energetic corporate culture in which human resources can grow and maintain their motivation
and are committed to providing opportunities to employees to advance their career fairly and without regard torace, nationality, gender, religion, disability, or other attribute.
Education System
Tier-specific training
Shared values

Training content

Engaging others to improve
results

Execution level

Learning about theCompany
Autonomous action

Junior board
Mid-career employee
training

Internal seminars
Third year training
Orientation

Sales instruction manual

Instruction
level

Fostering awareness ofparticipation in
management

Human resources development program for mid-career
employees
On-the-job training for trainers

Management training

Training program at other division*

Promoting autonomy
and growth ofsubordinates

Harassment prevention training

Training for newly
appointed managerial staff

Support for acquiring qualifications

Understanding
managerial role

Language training

Managers

Senior management
training

By job category
Research Manufacturing Sales

Support for correspondence education

Seniormanagement

Management level

Basic management
skillsSkill improvement* Program in which employees in their third year or so with a division undergo training at a different
research laboratory to improve their knowledge and skills
Ensuring Diversity in Promotion of Core Human Resources• Our approach to securing diversity

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The Company respects the diversity of each employee and has actively promoted outstanding human resources tomanagement positions regardless of gender, nationality, or career background. After promotion, we also provide
management training and other ongoing education to improve their skills. The Company seeks to further increase
the percentage of women in management and will work to promote women and mid-career workers to continue toaddress the changing management environment. We will also continue promoting talented foreign nationals to
expand our overseas business according to our growth strategy.
[Autonomous and Measurable Targets for Securing Diversity and Status Thereof]
Item

Current

TargetCompletion

Percentage of women in
management positions

16.8%

18% or higher

September 30, 2024

Percentage of mid-career
workers in management
positions

16.3%

18% or higher

September 30, 2024

Percentage ofmanagement positions
filled by foreign nationals

30.0%

30% or higher

Maintain current
percentage*Current percentage is as of September 30, 2021

Major initiatives of FY2021
Understand the roles at each level and acquire the required skills.
• Tier-specific training
We conduct training for new employees, mid-career employees, and new managerial staff. The purpose of the
training is for the employees to understand the roles at each tier and acquire skills. Implementing a PDCA cycle,
we are working to make improvements to be able to plan and carry out better training.

Support employees’ studies and growth.
• Online study support
We organize courses that meet a wide range of needs in order to promote self-development. Starting this fiscal
year, we raised the percentage of enrollment fees covered for outstanding graduates in order to further
encourage skills development.
• Support system for acquiring qualifications
When acquiring qualifications recognized by the Company, such as those for certified public tax accountants andlabor and social security attorneys, the Company pays up to half of the enrollment fees. In addition, employees
meeting certain requirements, such as a specific TOEIC score, are provided with an incentive payment.
• Internal seminars
Employees from each division provide lectures on the operations in their division and other current events.
Participants not only gain a better understanding of T.Hasegawa as a whole, but also the connection andrelationship between their division and the division in charge of the lecture, which can be applied to their own
operations. By teaching others, the lecturers are also able to deepen their understanding of the operations of
their own division.
• Life planning seminars
The Company pays for external seminars on living a fulfilling “second life” after retirement offered to interested
employees and their spouses.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved• Re-employment support for those having reached mandatory retirement age
We offer a “Re-employment Support Program,” which provides re-employment know-how to those seeking reemployment, and a “Second Life Program,” which is for those seeking to start their own business or moveoverseas, to help those who are interested set out on a new path after reaching mandatory retirement age.

Foster management awareness among younger workers.
• Junior board
We carry out selective training for cultivating the ability to come up with a medium- to long-term vision, acquiring
business management skills, and raising awareness of participation in management.

Support development of global human resources.
• Language training
The Company pays for language lessons by native speakers for employees who need English or Chinese language
skills.
• Pre-departure training for expatriates
We invite outside lecturers to provide lectures to employees assigned to overseas subsidiaries on the cultures,laws, and business practices of the countries where they will be living.

Support management encouraging growth and autonomy.
• Management training
The purpose of this training is to help managers understand and practice management that encourages thegrowth and autonomy of their subordinates.
To ensure that everyone has the same perspective and mindset, the course is open to employees who have been
in management positions for a certain period of time.

Train senior management.
• Senior management training
Two members of senior management took a business school course.

Future endeavors
Human resources system reform
We revised the whole HR evaluation system, including job titles and assignments, evaluations, and compensation.

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Copyright© T.HASEGAWA CO., LTD. All rights reservedBy clarifying the roles required by the Company (job titles and assignments) and introducing a corresponding
evaluation system, we have reformed the personnel system so that compensation is commensurate withperformance.
Key Points of New Human
Resources System

Achievement of management targets
Employee training and career realization

New Human Resources System

Job class system• Establishment of classes according toduties, skills, and preferences

Evaluation system• Reduce of seniority criteria andclarification of company requirements

Compensation system• System for working on challenging goals
closely linked to company andorganizational policies• Reduce seniority criteria and set
compensation according torole/performance• System connected to human resources
development based on company
requirements• Increase compensation levels for younger
and mid-career employees and set
compensation high enough to ensure
hiring competitivenessIn addition, we are continuing the initiatives of fiscal 2021 and are looking into a more effective systematic
educational system that is in line with the human resources system.

Steady implementation of interviews for personnel evaluation and training
We will promote systematization of personnel evaluations according to the new human resources system reforms,
such as record keeping for each interview, goal setting, and evaluation. We will strive to interview 100% of
employees to be evaluated.

Implementation of training for those conducting evaluations according to human resources system
reform
We will implement training for those conducting evaluations so that they understand the intent behind the newhuman resources system reform and can properly conduct evaluations and training.

[Creating Safe and Fulfilling Workplaces]
Risks, opportunities & strategy
Risks• Work accidents• Administrative dispositions, lawsuits, damage to social reputation arising from work accidents• Loss of excellent human resources due to deterioration of working environment• Resignations for nursing or childcare• Difficulty in hiring due to damage to social reputation
Opportunities• Increased job application rate and employee retention rate
• Increase production efficiency by improving the working environment
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Copyright© T.HASEGAWA CO., LTD. All rights reserved

Strategy
In accordance with the management policy to create a safe and comfortable work environment for our employees,
we seek to create an energetic corporate culture in which human resources can grow and maintain their motivation.
Programs for a pleasant working environment
ProgramDescription

Self-assessment system

Employees are able to inform the company not only of theirwork but also their personal circumstances for the purpose ofrevitalizing the workplace, ensuring appropriate and effective
allocation of personnel, and utilizing human resources
effectively.

No Overtime Day

Every Wednesday is No Overtime Day and is used to review
the way of doing things and increase operational efficiency. At
the same time, by reducing overtime work, we will enhance
our employees’ private lives and promote healthy living.

Leave and reduced working hours forchild/nursing care

Leave: Employees with applicable family members can takefive days (10 days if they have two or more family members
requiring care) of paid leave per year.
Reduced working hours: Employees with applicable family
members can reduce their working hours to five or six hours
per day.

Job search registration system for employees
who have left their jobs for child/nursing care

Provides information to employees who have resigned to care
for a child or adult family member and wish to receive midcareer recruitment information when there is a corresponding
job opening.

Continuous service awards

Employees who have reached their 15th, 25th, and 35th yearof continuous service are granted special incentive leave andpresented with an award.

Cultural and sporting events

We hold company-wide voluntary participation events such as
sports competitions, workplace events such as theatre-going,
and various club activities to promote friendships that extend
outside of work and increase employee motivation.

Fair treatment and evaluation of non-full-time employees• Payment of family allowances, housing allowances, and congratulatory or condolence money the same as thosefor full-time employees• Enhancement of long-term absence and leave systems• Introduction of evaluation system and implementation of follow-up interviews• Reflection of evaluation results in salary and bonuses to increase employee motivation

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Obtaining “Kurumin” certification logo
In 2022, the Company obtained certification for the third time for conforming to standards based on the Act on
Advancement of Measures to Support Raising Next Generation.
Occupational safety and health initiatives
Our top priority is ensuring safety and health in our operations. We understand and comply with the Industrial
Safety and Health Act, the Fire Service Act, and other safety and health-related laws, and we strive to create a safeand healthy working environment. The Environmental Safety Committee makes decisions on environmental safety,
company-wide policies on safety measures, action plans, and other such matters. The Environmental Safety
Committee takes the lead at each workplace in providing guidance on environmental safety, security, and disasterprevention activities, including regular patrols of the workplace and support for checking and improving dangerous
locations and things that could be health hazards. At the same time, the Occupational Safety and Health Committee
provides guidance on matters related to occupational safety. All employees are aware of the importance ofenvironmental safety, occupational safety, and safety and disaster prevention and are engaged in these activities.
System for identification of hazards, risk assessment, and investigation of accidents
Members of the Occupational Safety and Health Committee of each division take the lead in identifying, assessing,and reviewing the danger and hazards of dangerous work and raw materials (chemical substances) handled in orderto improve safety and health. Based on the results, measures to prevent dangers and health hazards are
implemented, and protective equipment is provided to all employees involved in the related work.
We also consider the health of our employees by taking light and noise measurements twice a year and taking
measurements in working environments where volatile substances are used.
In addition, a special plant patrol team conducts annual occupational safety patrols to investigate potentially
dangerous locations and make continuous improvements.
The Accident Investigation Committee takes an active role in sharing accident information with related parties in atimely manner.
System for improving processes
Audits by the Environmental Safety Committee identify work safety issues requiring improvement, and we promptly
address these findings at the plant with Corrective Action Reports.
System for employees to report danger
At the Fukaya Production Center, we have put together a system in which employees provide information on nearmisses and requests for improvement at morning meetings and safety roundtables at each division and report themto their supervisors.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved

Training for employees on safety and healthAt the Fukaya Production Center, we regularly hold occupational safety workshops for all employees in an effort toraise employee awareness with respect to safe work.
We also actively participate in outside workshops to acquire qualifications necessary for the work.

Major initiatives of FY2021
Support for new and mid-career hires• We conduct one on one interviews with new employees and mid-career hires so that they can quickly achieve
their potential by eliminating their concerns about the new environment.

Encouragement to take paid leave• We call on division managers to encourage employees to take paid leave.

Ascertainment of employee requests through labor union• We hold monthly discussions with the labor union to properly understand employee requests.

Initiatives for risks related to human rights• Ascertainment of risks related to human rights
By establishing multiple channels for consultation and whistleblowing as shown below, we are working to make iteasier to provide information so that we can quickly discover issues.
• Assignment of persons in charge at each site
• Installation of banner on intracompany web site
• Direct e-mail• Whistleblowing boxes• Outside attorneys
Moreover, the Risk Management Committee and the Compliance Committee conduct annual joint risk surveys ineach division so that risks can be identified even if no report is received through one of the contact points
established by the Whistleblowing System.
• Harassment prevention training
Not only does harassment in the workplace undermine the personhood and dignity of the victim, but it also
harms motivation and self-confidence and can even lead to deterioration of mental health. Based on ourconvictions as a company that does not allow harassment, we provide a wide range of training to prevent
harassment and educate our employees. In addition to the annual training for newly appointed managers, infiscal 2021, we also provided training for the instructors.
As has been the case in the past, there were no cases of serious violation of human rights or discrimination related
to the Group’s business continuity in fiscal 2021.

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Copyright© T.HASEGAWA CO., LTD. All rights reservedOccupational safety and health initiatives• Safety patrols: Conducted monthly by the Occupational Safety and Health Committee• 5S activities: The Occupational Safety and Health Committee leads in monitoring and grading the activities ofeach section throughout the year and presents awards once a year. Education on “5S” Activities* 5S stands for Seiri (Sort), Seiton (Systemize), Seiso (Shine), Seiketsu (Standardize), Shituke (Sustain).
• Safety slogans: Slogan ideas are collected from employees, selected by the Occupational Safety and HealthCommittee, and posted in each section for the whole year. Efforts to raise awareness• Safety roundtables: Hold monthly by each section. The Occupational Safety and Health Committee and others
share information from the facilities and each committee.
• Collective fire and emergency drills: Hold twice a year
* Includes firefighting, reporting, evacuation guidance, rescue, and security• Prevention of overwork and interviews with industrial physician: We check with employees whose overtime work
exceeds the level set forth in our internal regulations and ask if they would like to have an interview with anindustrial physician. We also encourage them to be aware of their physical health.
• Health checkups: Employees 35 years of age and older can receive a full medical examination at the Company’s
expense, and we encourage them to actively undergo health checkups.
• Stress checks: Conduct once a year, and the results of group analysis are used in mental health care. We
recommend that employees determined to have elevated levels of stress talk with an industrial physician.
• Provision of health-related information: We distribute a monthly insurance newsletter. We have an industrial
physician go over the health checkup results and encourage employees that need it to undergo an examination.
Information on health issues and the work environment by industrial physicians is posted on bulletin boards
inside the Company.
 Related data (Reference: 2022 ESG Data Book)

Future endeavors• Aiming to balance childcare/nursing care with work, we will introduce an hourly paid leave system for employees
engaging in childcare or nursing care.
• We will continue to reform the human resources system so that employees can go about their work with a senseof job satisfaction.
• We will look into creating an environment/system that makes it easy for older people to work.
• We will look into creating an environment/system that makes it easy for people with disabilities to work.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved

CSR Policy 4: Quality and Safety
We are on the cutting-edge of product safety.

Basic approach
In order to meet the customer requirement of products that are safe and secure to use, the Group has established aquality assurance system and emphasizes the supply of safe and secure products.

Quality & Food Safety Policy
We will implement the following policies to provide our customers with products that are safe touse.
1. We value communication with our customers and work to provide products that embody theneeds of our customers and satisfy them.
2. From R&D to raw material procurement, manufacturing, distribution, sales, and administration,
we steadily fulfill our role and duties and provide quality products and services that ourcustomers rely on.
3. We observe the related laws and regulations and have established a quality assurance systemthat allows us to provide safe, high quality products, and we work continuously on making
improvements.

Correlation to stakeholders
We are committed to providing products that are safe for customers and valuable for customer success.
SDGs that lead to contributions

We have adopted a traceability system for product quality that employs barcodes from raw material acceptance toproduct shipment so that our customers can use our reliable products. Every step is traceable from product lot tomanufacturing records, product inspection results, lot numbers of raw materials used in the product, and raw
material acceptance inspection results.
We check the quality and safety information for the raw materials we use, including standards, allergies, andresidual agrochemicals. We also confirm that the compounds used in flavors and fragrances comply with related
laws such as the Food Sanitation Act, the Fire Service Act, the Industrial Safety and Health Act, and the Act on theRegulation of Manufacture and Evaluation of Chemical Substances, etc.
We actively manage information on flavor and fragrance ingredients as chemical substances, issuing Globally
Harmonized System of Classification and Labelling of Chemicals (GHS)-compliant Safety Data Sheet (SDS), disclosing
information on substances subject to legal regulations, and providing products that customers can use safely.
In addition, by ensuring the traceability of information through a traceability system, we strive to reduce theresponse time for customer inquiries and provide sustainability information.
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Copyright© T.HASEGAWA CO., LTD. All rights reserved

Promotion structure, governanceIn order to provide our customers and consumers with a guarantee with respect to the quality and safety of our
flavor and fragrance products, we have built a quality assurance system centered on the Quality Assurance Division,
which is under the direct control of the President & CEO. We value communication with our customers and promote
quality and safety activities. All raw materials we use are registered. Only those raw materials whose quality andsafety have been verified are used to produce samples and manufacture products. We focus on providing highquality products, performing final inspections on all products provided to customers.
Our Quality Assurance System

President
R&D Center

Quality Assurance
Division

Quality Control
CenterFacility

Supplier

Purchasing
Division

Sales
Division

CustomerCommunication with Customers
Customer
Product Specification
SDS
Test Reports

Required quality

Assessment

Product

Complaints
Inquiries
Requests

Production

Sales

Sample presentation

Feedback

Planning

Marketing

Development /improvement

Quality Assurance

T.Hasegawa

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Copyright© T.HASEGAWA CO., LTD. All rights reservedQuality Control from Raw Materials to Products• Quality Assurance Division
We confirm legal compliance at the raw material purchase stage and provide our customers with reliable product. In
addition to complying with laws and regulations in Japan, we check the laws and regulations of the destination
country for export products for our overseas customers and provide products that comply with the laws andregulations of each country/region.
Moreover, we are promoting digitalization of Product Specifications to provide our customers with accurate
information in a timely manner.
• Quality Control Center
The Quality Control Centers at the Fukaya and Itakura facilities manage the plant quality systems and conduct
quality inspections on products manufactured at the facilities and raw materials purchased. Quality inspections are
performed on all products and raw materials handled at the plants to provide customers with products of stable
quality.
In quality inspections, we are promoting the introduction of inspection equipment necessary for ensuring thequality of products and raw materials, and we have established a system that allows us to carry out all inspections
internally. The inspection results are automatically transferred from the inspection equipment to the computer
system by an automatic transfer system. Measurement, pass/fail determination, and inspection card issuance is fully
automated (digitalized), which also helps to prevent tampering with the data. As a company that handles fragrances,
we are also pouring effort into training sensory inspectors. Only those who have been trained to distinguishfragrances and have passed our internal certification test are involved in sensory tests as sensory inspectors.
• ISO9001
In 1998, we acquired ISO9002 certification for the quality management system at our facilities, and in 2003, wetransitioned to ISO9001 certification. In 2007, we expanded the scope and acquired company-wide certification. The
President & CEO is at the top of management, and all employees involved in business activities cooperate in allhands quality activities.
In 2012, we obtained FSSC22000 certification for our food safety management system and thereafter began rollingout a management system integrating ISO9001 and FSSC22000. However, currently, to narrow down the activities at
each division to focus on the most suitable standards, we have changed the scope so that Head Office, branches,sales offices, R&D Center, and fragrance facilities are covered by ISO9001 certification, and since 2019, flavor
facilities are only FSSC22000 certified.
Additionally, in China, we acquired ISO9001 certification in Shanghai in 2004 and in Suzhou in 2010. Thesecertifications guide our quality activities.
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Copyright© T.HASEGAWA CO., LTD. All rights reserved• FSSC22000
All divisions related to flavors obtained FSSC22000 certification for their food safety management systems in 2012.
By acquiring international standard certifications approved by the Global Food Safety Initiative (GFSI), we
continuously reduce risks related to food safety and providing safe and secure products that all our customers are
confident in.
FSSC22000 is a standard specific to food safety, so since 2019, we have only obtained this certification at our flavor
facilities.
In addition, we have acquired certification under international standards related to food safety at our overseas
subsidiaries.
Overseas Subsidiaries - Status of International Food Safety Standards Certification• Internal audits
We conduct annual internal quality and food safety audits at all divisions. We provide training as internal auditorsand conduct audits among employees with certified employees as internal auditors. This helps to make
improvements to areas that are not usually noticed and eliminate operational inefficiencies. Findings are rolled out
to other divisions to make ongoing improvements in every division.
• 5S Audits
Members from the Quality Control Center at the Fukaya and Itakura facilities enter the manufacturing area to
conduct hygiene audits based on 5S, which stands for Seiri (Sort), Seiton (Systemize), Seiso (Shine), Seiketsu(Standardize), Shituke (Sustain). Hygiene control at the facilities forms the basis of food safety and helps prevent
contamination by foreign materials or microorganisms.
In China (Shanghai and Suzhou), regular patrols and inspections are conducted by the 5S Management Committee.
• Management review
Reports are provided to management as a review of activities related to quality and food safety performed during
the year. Reflecting on the year’s activities and receiving approval and assignments from management allows us toengage in ongoing improvement activities.
• Compliance initiatives
We believe that employee awareness is important in order to provide customers with high quality products, so weare engaged in activities to raise awareness of compliance. We carry out quality education at various times,
including when employees join the company and when they are promoted. In particular, as legal information
changes on a daily basis, we constantly gather information from industry groups and various media so that we canpromptly communicate legal information to employees through our Intracompany web site, regular workshops, andvarious study sessions. This information is published on the Intracompany web site and can be checked by
employees at any time. Regular study sessions are held on food safety at the Fukaya and Itakura facilities to raisecompliance awareness among employees.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved• Internal Halal Committee
In order to address the requests of Islamic customers, our exports to Southeast Asia are Halal certified so that we
can supply safe and secure products. We have established an Internal Halal Committee, selecting members from
related divisions such as Sales, R&D, and Production. The committee shares Halal-related information with our
locations in China and Southeast Asia and maintains the Halal certification. We have also entered into an agreementwith the Nippon Asia Halal Association as an advisor and work to solve various problems.
• Response to complaints and Quality Control Committee
When complaints arise, quality-related divisions coordinate to clarify the cause and countermeasures and provide a
prompt response to the customer. Serious complaints are quickly reported to management, and proper measures
are taken from the customer’s perspective. Complaint information is shared at Quality Control Committee meetings
and rolled out to other divisions to help prevent recurrence. When a manufacturing problem occurs, the cause andcountermeasures are clarified in the same way as when dealing with complaints, and information is shared at
Quality Control Committee meetings to help prevent recurrence.

Risks, opportunities & strategy
Risks• Loss of trust due to poor product quality
Opportunities• Improved trust owing to improved product quality
Strategy• Investment in aging equipment• Improvement of inspector skill level• Review of manufacturing methods and conditions• Improvement of manufacturer skills through education and training• Enhancement of production system (supply system)• Reduction of lead time through promotion of fully automated issuance of inspection cards (digitaltransformation)• Improvement of fragrance judgment in sensory test division training for manufacturing personnel
Ongoing Enhancement of Promotion Structure• Development of the flavor and fragrance industry and enhancement of the response to the environment
surrounding the industry
We actively dispatch committee members to industry associations in each country to respond to constantly
changing legal information and develop the flavor and fragrance industry as a whole. We also participate in domestic
associations such as the Japan Flavor & Fragrance Materials Association (JFFMA) and the Japan Food Additives
Association as well as international industry associations such as IFRA and IOFI as special committee members from
JFFMA. We are engaged in activities so that the industry as a whole can respond swiftly and appropriately to thevarious regulations surrounding the industry and develop the flavor and fragrance industry as a whole.

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Copyright© T.HASEGAWA CO., LTD. All rights reservedIn addition, we have joined the China Association of Fragrance Flavor and Cosmetic Industries (CAFFCI) in China andthe Flavor and Extract Manufacturers Association (FEMA) in the United States and have dispatched committee
members to participate in the activities of those industry associations.
• Enhancement of response to quality in R&D
Laws and regulations are constantly changing not only in Japan but overseas as well. Active participation in theactivities of industry associations and information gathering are necessary in order to respond quickly to thesechanges, address them in products, and communicate information to customers. The gathered information isregistered in an internal database and quickly reflected in product information. Updated information is always
accessible to researchers, which allows products to be developed based on the latest information. It can also be
used when providing information to customers.
• Enhancement of response to quality in manufacturing processes
In the manufacturing process, we are always required to make products of consistent quality. We assign codes toevery raw material and product, and by managing these through barcode, we prevent introduction of the wrong raw
material and keep products from getting mixed up. In addition, at our flavor and fragrance compound facilities andpowder facilities, data on the weight of the raw materials and the scales used for filling products is recorded in thesystem. Combining that with barcode management helps with manufacturing control and traceability. By introducing
digitalization technology at our facilities, we are striving to continually provide products of consistent quality.

Major initiatives of FY2021
Regular audits were conducted for ISO9001 and FSSC22000, and there were no serious findings, so our maintenanceof the certifications was approved. An audit was also conducted for Halal certification, and it was renewed as well.
As an initiative for food safety, we are increasing the number of surveillance cameras inside our facilities, introducing
an entrance/exit management system, and implementing exclusion measures. Because the raw materials we used
are procured from around the world, we coordinated with the Purchasing Division to enhance our acceptanceverification work. We promoted direct sending of samples to customers from our facilities to improve customer
service. In addition, at our facilities, we implemented an operational improvement suggestion program, and thisyear, we received around 1,500 suggestions from employees. Each of our employees is working to provide productswith an awareness of quality and food safety. Employees working on manufacturing of flavors and fragrances forfoods take a course on HACCP and work to accumulate their knowledge and awareness of food safety (in fiscal 2021,
12 employees at the Fukaya Production Center took the HACCP course).
We also provide courses on ISO9001 and FSSC22000 to increase employee awareness of quality and food safetysystem requirements in each division and improve operations. (FSSC22000 course: Held twice for 92 participants;
ISO9001 internal auditor seminar: Held once for 32 participants)

Future endeavors
Customer demands for safety and security never cease. We will work to enhance our quality assurance system,
striving for quality that will continually earn the trust of our customers. The Quality Assurance Division, which isunder the direct control of the President & CEO, will lead our efforts to ensure close coordination with the Quality
Control Center of the Production Division and the Quality Assurance Divisions of our overseas locations so as toprovide quality products that will satisfy all of our customers both in Japan and abroad. At our facility, we will review
our manufacturing methods and work on improving operations in order to reduce the number of complaints fromour customers and further reduce rejected goods. We will maintain our ISO9001 and FSSC22000 certifications toimprove quality and maintain food safety.
Furthermore, we will actively carry out training at our R&D Center to improve skills, thereby producing highly skilledworkers to handle flavor and fragrance production in our Production Division. At the Quality Control Center, we will45
Copyright© T.HASEGAWA CO., LTD. All rights reserved

work to improve the skills of inspectors and enhance the inspection system in the aim of providing customers withhigh quality products.
Similarly, we will continue to train employees involved in production, introduce an operational improvement
suggestion program, and engage in process control in the Production Divisions of our overseas locations.

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CSR Policy 5: Governance Fair Corporate Activities
Ensure management healthy, transparency, and fairness,and be a reliable partner for society.

[Corporate Governance]
Basic approach
As a listed company, we respect the following five basic principles of corporate governance. While expanding
management monitoring functions and reinforcing compliance, we work towards sustainable growth andmaximizing our corporate value by making accurate and quick management decisions, and ensure timely andappropriate business execution.
(1) Protect shareholder rights and ensure equality(2) Build smooth relationships with stakeholders(3) Create comfortable work environment for employees(4) Ensure timely and appropriate information disclosure and transparency(5) Enhance management supervision and ensure accountability to stakeholders by the Board of Directors and theBoard of Auditors
SDGs that lead to contributions

Promotion structure, governance
As a company that has established a Board of Auditors in accordance with the Companies Act, we supervise
important decision-making and business execution by the Board of Directors. The Board of Auditors and its
members are independent of the Board of Directors, and conducts audits of business execution by the Board of
Directors. We also have adopted an executive officer system to promote the appropriate division of responsibilities
related to management and business execution.
Furthermore, we established three independent functions: Strategic Meeting, Appointment Committee andCompensation Committee.
Strategic Meeting is designed to engage in dynamic deliberations on business execution, including business strategy
proposals and important matters related to operations. Appointment Committee and Compensation Committee isfor transparency and objectivity in the processes related to nominating director candidates and deciding on director
compensation.

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An overview of our corporate governance structure is as indicated in the following chart.

General Meeting of Shareholders
Nominate / Dismiss

Appointment
Committee
Compensation
Committee

AdviseParticipate

Board of Directors(Directors)

ReportNominate / Dismiss

Nominate /Dismiss

Audit & Supervisory
Board

Audit / Monitor(Corporate Auditors)
Nominate / Dismiss

Nominate / Dismiss

Exchange information/ opinions

President & CEO

ReportParticipate Participate

Participate

Strategy Meeting

Audit / Monitor
Instruct

Accounting Auditor

Fulltime Auditors

Participate
ReportInstruct

Business execution

Exchange
information /opinions

Auditing
Exchange information/ opinions

Internal audits

Managing Divisions
Audit

Diversity of directors and corporate auditors
To achieve corporate governance that will serve as the foundation of a credible and highly transparent management
system, we ensure diversity in our nomination of directors and corporate auditors. For both internal and external
candidates, we make nominations based on the comprehensive consideration of character, expertise, knowledge invarious fields, experience, career, gender, and age, among other factors. As stipulated in our Articles ofIncorporation, we appoint the appropriate number of directors (up to 10 members) necessary to enable active
deliberations and evaluations, and rapid decision-making.
Skills matrix for directors and auditors
Particularly important skills among the expertise we require.
Name

Takao Umino
Yoshiaki Chino
Minoru Nakamura
Tetsuya Nakamura
Koichiro Kato

Title/post:

President & CEO
RepresentativeDirector &Deputy President
Director & Senior Executive
Vice President
Director & Executive Vice
President
Director & Executive Vice
President

Corporate
management
Businessstrategy

ESG
Sustainability

Quality

Sales
Marketing

●

●

●

●

●

●

●

●

●

●

●

OverseasstrategyInternational

Accounting
FinanceHuman
resources
Human
resource
development

Legal affairs
ComplianceRiskmanagement

●

●

●

●

●

●
●

●

●

●
●

●

●

●

●

●

●

●

Outside Director●

Takao Yuhara

Outside Director●

Akiko Izumi

Outside Director●

Full Time Audit &Supervisory Board Member
Outside Audit &Tomoyoshi Arita
Supervisory Board Member
Outside Audit &Kazuhito Yamamura
Supervisory Board Member
Outside Audit &Junko Imura
Supervisory Board Member●

Production●●

Shingo Ohkado

Takehiro
Matsumoto

R&D

●
●

●

●

●

●
●

●

●

●

●

●

●

●

●

●

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Copyright© T.HASEGAWA CO., LTD. All rights reservedSuccession plan
Our Group recognizes that the planned development of successors to our President & CEO is strategically important
to ensuring continuous future improvements to our corporate value. In accordance with our Basic Policy on
Corporate Governance, candidates attend important meetings, including meetings on business execution, Board of
Director's meetings, and Strategic Meetings, to cultivate experience in management planning. We are engaged in
the planned candidate development to foster acquisition of the capabilities, experience, knowledge, and skills
necessary to serve as President & CEO. Our Board of Directors receives advice from our voluntary Appointment
Committee and supervises progress.
To ensure transparency and objectivity related to the selection of candidates for the position of President & CEO, a
voluntary Appointment Committee, which is comprised of the representative director and has a majority of outside
directors as members, discusses on recommendations and issues reports to the Board of Directors. The Board of
Directors considers reports from the Appointment Committee while continuously evaluating overall efforts related
to successor development.
Board of Directors' efficacy evaluations
Each year, we analyze and evaluate the efficacy of the Board and publish a summary of those findings.
PDCA cycle for improving Board efficacy

All directors &corporate auditors Survey

Meeting of independent
officers

Deliberated by
the Board of Directors

Improvement strategy evaluation andimplementation towards next fiscal year
Corporate governance report disclosure

Strategy
As a member of society, our Group works to build and strengthen relationships with all our stakeholders. We will use
flavor and fragrance technology to resolve the problems facing society and contribute to the creation of an enrichedsociety. To ensure we fulfill our social responsibilities and to promote sustainable growth and long-term
improvements in corporate value, it is critical that we, working under a credible and highly transparency
management system, engage in rapid decision-making and business execution that flexibly adapts to changes in ouroperating environment. We place significant importance on ensuring corporate governance that will serve as thefoundation of a credible and highly transparent management system, and make continuous efforts to ensure we
maintain a strong and effective governance structure.

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Objective indicators for judging management target achievement status
We recognize the operating scope that is both feasible and necessary in order to improve our medium and longterm corporate value through sustainable and stable growth. With that scope in mind, our targets for FY2024 are a
consolidated net sales growth rate of 5.0% or higher, a consolidated operating profit margin of 14.0%, and aconsolidate ordinary profit margin of 15.0%.

Major initiatives in FY2021• We implemented our Basic Policy on Corporate Governance, which we created based on the principles of the
Corporate Governance Code.
• We held twelve Board of Directors meetings, where we decided on important matters related to management,
including management policy, budget, and other matters required by law and our Articles of Incorporation. We
also conducted monthly performance analyses and evaluations, and discussed performance from the perspectiveof compliance with law and our Articles of Incorporation, as well as to check the appropriateness of businessactivities.
• The Board of Auditors is comprised of four corporate auditors, including three outside auditors. The Board
convened eleven times to receive reports on important matters related to audits and to discuss and vote onreported matters. Auditors also attended important meetings such as Board of Directors meetings to audit andsupervise the status of business execution by directors. Auditors met with the President & CEO, executive officers,
and division heads twice during the year to exchange opinions. The Board also conducted audits of subsidiaries
and plants in accordance with audit plans. Furthermore, we worked to increase audit functions by engaging in
regular exchanges of opinion with the auditing accountant and our internal audit division.
• The Appointment Committee, a voluntary committee comprised of the representative director and a majority ofoutside directors, convened four times. The Appointment Committee nominates director candidates from amultifaceted perspective, including factors such as excellent character, expertise, and management capabilities,
and submits those recommendations to the Board of Directors.
• The Compensation Committee, a voluntary committee comprised of the representative director and a majority ofoutside directors, convened once. The Compensation Committee discussed on matters related to director
compensation and submits their findings to the Board of Directors.
• To ensure the efficacy of the Board of Directors, we conducted surveys on the structure and management ofBoard of Directors' meetings. All members of the Board of Directors and the Board of Auditors responded tothese surveys, with results summarized and submitted to the Board of Directors for analysis and evaluation. From
the results, we confirmed that the Board of Directors functioned effectively in FY2021.

Future endeavors• We will continue implementing initiatives to maintain a strong and effective governance structure, the foundationof a credible and highly transparent management system.
• We conduct Board efficacy evaluations once per year.
• Results of the efficacy analysis for the Board of Directors conducted in FY2021, we recognized the need topromote the digitization of materials in order to provide explanations further in advance, achieve the earlysharing of materials, and enhance security. Doing so will allow us to increase discussion time during meetings. We
will also increase opportunities for discussions on management strategy and risks. Furthermore, to promotebetter understanding business operations and execution among outside officers, we will enhance the content ofreports from each division, inspect laboratories and facilities, and hold regular interviews between outside
officers and officers in charge as we work to improve governance.
• In June 2021, we submitted a corporate governance report based on the revised Corporate Governance Code to
the Tokyo Stock Exchange to disclose information on the status of our corporate governance.
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[Compliance]
Basic approach
We position compliance as one of the highest priority issues related to our corporate activities. We outlined theT.Hasegawa Corporate Code of Conduct and Compliance Rules to ensure that the business execution of all officers
and employees is compliant with laws and our Articles of Incorporation, as well as to fulfill our corporate social
responsibilities. We promote awareness of this content among all officers and employees to reinforce compliance.

Bribery and anticorruption initiatives
T.Hasegawa supports the ten principles of "Human Rights, Labour, Environment and Anti-Corruption" outlined in the
UN Global Compact. We will continue to promote responsible business practices by all our stakeholders as we work
towards the realization of a sustainable world.

T.Hasegawa Policy on Bribery and Corruption
In light of international trends towards the strengthening of laws and regulations on bribery andcorruption, T.Hasegawa established the following basic policy on bribery and corruption toensure business activities that are compliant with the laws of the countries and regions in which
we operate.
1. Our Group does not allow any acts of bribery or corruption. We comply with all laws andcorporate ethics related to bribery and corruption prevention applicable in Japan andoverseas. This includes "legal compliance", "treatment of customers", and "relations with
suppliers" indicated in T.Hasegawa employment regulations and the T.Hasegawa Code of
Conduct.
2. No matter what the reason, T.Hasegawa shall never demand a bribe, any corrupt act, or gain
only attainable through unjust means. We ensure thorough understanding of this policy
among all domestic and overseas business partners involved in our Group operations andrequest cooperation to prevent any unjust gains on behalf of our Group.
3. T.Hasegawa appoints the officer in charge of internal management control as the chiefsupervisor related to the prevention of bribery and corruption. To strengthen our compliancesystem, we implement the necessary training to prevent bribery and corruption and work toenhance our whistleblowing system.

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Drafting tax policy
Our tax environment grows more complex as we continue to expand our global operations. To address this growing
complexity, we are working to enhance our tax governance to ensure our ability to appropriately respond to the tax
risks that exist in each of the countries and regions in which we operate. As part of this effort, we have outlined theT.Hasegawa Tax Policy. The objective of this policy is to foster an awareness of tax compliance within all our officers
and employees.

T.Hasegawa Tax Policy
Basic policy
Our Group adheres to the T.Hasegawa Corporate Code of Conduct to ensure to compliance with
relevant laws and regulations. Appropriately fulfilling our obligations in each country and regionin which we operate ensures that we fulfill our corporate social responsibilities while working tofurther improve our corporate value.
1. Legal compliance
Our Group complies with relevant tax laws and appropriately fulfills our tax obligations. We do
not use tax incentives that are not related to actual business and do not engage in tax avoidance
using regions known as tax havens. With international transactions, we comply with the laws andtax ordinances of each country and region, as well as with international tax rules.
2. Ensuring transparency
Our Group complies with all relevant accounting and disclosure standards, and work to provide
appropriate information disclosure to all stakeholders. If we receive a request from tax
authorities, we provide necessary information disclosure and work to build relationships withauthorities. If any tax problems are discovered, we immediately implement necessary measures
to prevent reoccurrence.
3. Minimizing tax risks
By maintaining a correct understanding of tax systems, we strive to minimize tax risks towards
increasing our corporate value. In our business activities, if we have transactions involving an
ambiguous interpretation of tax duties, we receive advice from experts to sufficiently evaluate
the transaction in advance and, as necessary, confirm with tax authorities in order to mitigate tax
risks.
4. Tax governance
Our Group receives advice from external experts regarding changes in operating environments
and the tax systems of the countries and regions in which we operate. To ensure accuracy in ourinterpretation of tax laws, we respond in a timely and appropriate manner, and have establishedsystems to promote rapid information sharing with the head office.

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Approach to animal tests
Our Group policy is to not use animal testing in any of our R&D for flavor and fragrance products. We also do notsupport any activities that involve animal testing.
However, some animal testing cannot be avoided due to requirements by administrative authorities.

Promotion structure, governanceCompliance Committee
We established a Compliance Committee in accordance with compliance regulations. With the President & CEO
serving as Chairperson, the committee is comprised of directors and other members. The Compliance Committee
works to prevent illegal activities. To ascertain facts related to latent illegal activities that have been undetectedprevent bribery, and to quickly implement corrective action in the event of an illegal activity, the Compliance
Committee regularly investigates for illegal activities within the company.
Whistleblowing system
We have established a whistleblowing system to receive reports of illegal activities.
• Compliance training and education
We work to foster a sense of respect for compliance by providing training and education to all officers andemployees regarding laws and regulations related to the execution of their duties.
Management of a whistleblowing system
To ensure reliable financial reporting, we have outlined rules on internal controls and implement an internal control
system related to financial reporting. We also have established a system for appropriately evaluating the efficacy ofthat system.

Target• Compliance comprehension test: Once per year
• Harassment prevention training: Once per year (required for all employees promoted to management positions)

Major initiatives in FY2021• In addition to outlining the T.Hasegawa Corporate Code of Conduct and reinforcing awareness among all officers
and employees, we also distribute the document to create an environment that allows all employees for
immediate confirmation of policy. In FY2021, we worked to improve compliance awareness by conducting acompliance comprehension test for all employees to confirm employee understanding of the standards and codeof conduct requiring integrity and respect for ethics.
• In accordance with compliance rules, the Compliance Committee met once in FY2021. The Compliance
Committee deliberates on important matters related to compliance and reports on the results of comprehension
tests. In FY2021, there were no serious compliance violations related to Group business continuity. We confirmedthat Group business was operating properly and the correct answer rate for the comprehension test was 99.9%.
This confirms that employees have a deep understanding of various rules.
• We have established a whistleblowing system at our company and subsidiaries. We established both internal andexternal consultation / whistleblowing hotline, and investigated facts and examined countermeasures forreported information. The Compliance Committee also reports to the full-time auditors on the status ofconsultations and reports from each company. To promote the active use of the whistleblowing system, we
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Copyright© T.HASEGAWA CO., LTD. All rights reserved

promoted understanding of the system by including questions related to the whistleblowing system in thecompliance comprehension test.
• We completely reject any involvement with antisocial forces or organizations that pose a threat to social order or
security, and we resolutely refuse unreasonable requests from antisocial forces and organizations. We outline thisstance in the T.Hasegawa Corporate Code of Conduct to and ensure compliance among all officers andemployees. We constantly collect information from relevant administrative agencies and organizations, including
the police. We have established a system for prompt and systematic response in close cooperation with theseorganizations, and lawyers in the event of an incident.
• To prevent harassment in the workplace (including sexual harassment, harassment related to pregnancy,
childbirth, childcare, and nursing care leave, and power harassment), we outline matters requiring employee
compliance and administrative measures for addressing problems rooted in employee behavior in ourharassment prevention rules and work to ensure awareness among employees. In FY2021, we conductedharassment prevention training for newly appointed managers.

Future endeavors• Our Group will continue the above efforts towards increasing compliance awareness among our employees. We
will work with Group companies to enhance and strengthen the compliance system of our entire Group.
• We worked to improve compliance awareness by conducting a compliance comprehension test (once per year)
for all employees to confirm employee understanding of the standards and code of conduct requiring integrity
and respect for ethics. (FY2022 compliance comprehension test participation rate target: 100%)• To promote the utilization of the whistleblowing system, we promote understanding of the system by including
questions related to the whistleblowing system in the compliance comprehension test.
• We work to prevent harassment in the workplace by conducting harassment prevention training once a year. This
training is mandatory for all employees promoted to managerial positions.
• To promote understanding of internal controls, we will provide training on internal controls once a year for new
employees and newly appointed managers.

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[Risk Management]
Basic approach
We have established internal rules governing our risk management system. In these rules, we outlined that relevant
divisions must conduct risk analysis and management, and evaluate countermeasures. Additionally, these rules
stipulate that a Risk Management Committee is to be established for risks requiring a groupwide response. This Risk
Management Committee serves as a supervisory body to Related Divisions or group companies for analyzing andmanaging risks, and the evaluation of countermeasures. To ensure business continuity in the event of an unforeseen
situation or crisis, our basic approach is to outline business continuity rules and business continuity guidelines aslower level regulations. Furthermore, we reinforce awareness among all officers and employees of the company.

Promotion structure, governance
We have established internal rules and relevant divisions conduct risk analysis and management, and evaluate
countermeasures. Additionally, a Risk Management Committee established by relevant divisions and in accordancewith risk management rules conducts the necessary risk analysis, management, and evaluation of countermeasures
for the company and Group. The Risk Management Committee overseas risk management for the entire Group with
the President & CEO serving as Chairperson and Committee members consisting of directors and other personnel.
Risk Management Committee structure chart

Board of Directors
ReportRisk Management Committee(Chair: President & CEO)
Auditing
Division

Quality
Assurance
Division

Sales Division

R&D Division

Production
Division

Secretariat: Corporate Planning Division

Global Business
DivisionInternal
Management
Control Division

Overseassubsidiaries

Domestic
subsidiaries

Risk identification process
Our Group identifies risks by conducting annual companywide risk assessments in accordance with risk management
rules. Risk assessment results are deliberated by the Risk Management Committee and then reported to the Boardof Directors. Based on risk assessment results, we select the core items for monitoring by the Risk Management
Committee and regularly confirm the status of progress.

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Major risks
The major risks that the Group has identified and the main initiatives related to those risks are as follows.
Risk item

Relevant risks

Major initiatives

Climate risks

Unstable weather could cause sluggish
sales for final products in customer
industries (beverage industry, foodindustry, toiletry industry, etc.), which
could affect Group performance.

• Increase the ratio of sales in categories
other than beverages, which are mostaffected by unseasonable weather.

Raw material
procurement risks

Damage caused by abnormal weather(cyclones, hurricanes, etc.) in production
areas, social unrest (terrorism, war,
infectious diseases, etc.), or accidents at
suppliers could make it difficult to procure
raw materials, which could affect Group
performance.

• Promote raw material procurementfrom multiple global business partners,
and promote procurement source andprocurement method diversification.
• Engage in global purchasing throughcollaboration between domestic andoverseas subsidiary.

Disaster risks

Damage caused by natural disasters(earthquakes, typhoons, etc.) and social
unrest (terrorism, wars, infectious diseases,etc.) could impact Group production bases,
which could affect Group performance.

• To ensure business continuity in theevent of an unforeseen situation orcrisis, outline and implement business
continuity rules and business continuity
guidelines as lower level regulations.
Improve effectiveness by conducting
firefighting training and safety
confirmation training based on a largescale disaster scenario.

Quality risks

Damages attributable to product defects
could affect Group performance.

• As a manufacturer involved in foodsafety, prioritize safety first and work to
supply products with quality thatsatisfies customers.
• Ensure product safety by having the
Quality Assurance Division, which
reports directly to the President & CEO,establish a comprehensive quality
assurance system that covers R&D, rawmaterials procurement, production, andsales.
• Buy the product liability insurance toaddress potential situations.

Economic risks

Economic conditions or trends, financial
conditions, and trends in the spending of
consumers impacted by those conditions
could cause sluggish sales for the final
products of customer, which could affectGroup performance.

• Promote global expansion in Asia
regions, particularly China andSoutheast Asia, as well as the UnitedStates to diversify areas of engagement.
• We will accurately grasp market growthpotential and consumer preferences ineach country and region where ourGroup operates. We will formulate andpromote business strategies that can
respond quickly and flexibly to rapidlychanging business environments.

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Risk item

Relevant risks

Major initiatives

Environmental risks

Stricter environmental laws and regulationsin Japan and overseas could affect Group
performance due to increased cost burden
and restrictions on business activities.

• Reinforce compliance withenvironmental laws and regulations ineach country and region where we
operate.
• As part of our commitment toenvironmentally-conscious businessactivities, we require proactive
initiatives related to environmental
protection and the improvement ofenvironmental issues through our CSR
Policy and the T.Hasegawa Corporate
Code of Conduct.

Impairment lossrisks

In the event of a significant decline in themarket value of Group assets, or thedeterioration of business profitability, theapplication of impairment accounting
would result in an impairment loss on fixed
assets, which could affect Group
performance.

• Appropriately evaluate the profitabilityof retained fixed assets, evaluate
whether or not to maintain holdings,
and plan utilization strategies. Also makecapital investments to ensure the stable
maintenance of fixed assets and improveasset value.
• When acquiring business or a company,
draft business plans and thoroughly
measure future value. After acquisition,systematically promote PMI (postmerger integration) to maximize
projected synergy.

Subsidiary risks

Our Group positions the Japanese domestic
market and overseas markets as growth
drivers. We are strengthening our global
expansion into Asian regions, particularly
China and Southeast Asia, as well as theUnited States. However, fraud or other typeof scandal due to insufficient management(corporate governance) of domestic andoverseas subsidiaries could damage ourcorporate image or cause a loss ofcredibility, which could affect Group
performance.

• Place significant importance on ensuringcorporate governance that will serve as
the foundation of a credible and highly
transparent management system, andwork to maintain a strong and effective
governance structure.
• Apply the T.Hasegawa Corporate Code of
Conduct and compliance rules tosubsidiaries and build a compliancestructure for the entire T.Hasegawa
Group. Establish a whistleblowing
system to receive reports of illegal
activities.
• Create core basic rules at overseas
subsidiaries and strengthen thegovernance system of overseas
subsidiaries.
• Position the management risks ofoverseas subsidiaries as priority risks for
the Group. Conduct regular audits ofoverseas subsidiaries based on
guidelines and audit plans, including
their implementation of the Group's
core basic rules.

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Risk item

Relevant risks

Major initiatives

Currency rate
fluctuation risks

Financial statement categories indicated in
the local currency of overseas subsidiaries
are converted into yen to prepare
consolidated financial statements. As such,the exchange rate at the time of conversion
could affect Group performance.

• Promote global expansion in Asia
regions, particularly China andSoutheast Asia, as well as the UnitedStates. Also promote overseas
production and sales to reduce currency
rate fluctuation risks.
• Draft a management plan thatincorporates fluctuations in exchange
rates.
• The parent company is largely
unaffected by fluctuations in exchange
rates as the value of exports from Japanand the value of imports of raw
materials from overseas are roughly thesame amount.

Information security
risks

Information assets related to Groupbusiness activities lost, damaged or leaked
to the outside due to a cyberattack,computer virus infection, or system failure,
could result in a suspension of business ordamage to our Group's reputation, which
could affect Group performance.

• Establish rules regarding information
security, including the "Basic Policy on
Information Security andCountermeasure Standards," and ensure
the appropriate implementation andmanagement of information assets
owned by the Group.
• Install information security software tocreate an environment that enables
early detection, defense, and responses.
• In addition to regular information
security education for all officers andemployees, provide notifications andconduct other enlightenment activities
such to increase information security
awareness.

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Risk item
COVID-19 risks

Relevant risks

Major initiatives

The spread of COVID-19 could affectdomestic and overseas economic activities.
Depending on the future progression of thevirus, there could be an impact on Groupbusiness activities.

• It is difficult to accurately predict when
COVID-19 might subside, and there
remains a lack of clarity regarding
infection trends. Depending on the
future progression of the virus, there
could be an impact on Group businessactivities. As such, we will continue tomonitor conditions.
• Our Group Emergency Response HQ
established in accordance with Groupbusiness continuity rules and business
continuity guidelines (pandemic edition)gathered domestic and overseas
information necessary for business
continuity, and proposed andimplemented countermeasures. To
prevent the spread of COVID-19 and toensure the safety of employees, we
implemented measures such as
staggered commuting andtelecommuting at sites in Japan basedon the status of infections.

Major initiatives in FY2021• Risk Management Committee
The Risk Management Committee discussed risk management plans, including risk analysis and management,
evaluation reports on priority risk response and annual risk management plans, and the planning andimplementation of countermeasures. In FY2021, the Risk Management Committee convened once.
• Business continuity
We outline and implement business continuity rules and business continuity guidelines to ensure business
continuity in the event of an unforeseen situation or crisis. We promoted awareness of importance in business
continuity planning among all officers and employees, and conducted firefighting training and safety confirmation
training based on a large-scale disaster scenario.
• Internal audits
The Internal Audit Division conducts internal audits of company operations based on internal audit plans.
• Information security
We establish rules regarding information security, including the "Basic Policy on Information Security andCountermeasure Standards," and ensure the appropriate implementation and management of information assets
owned by the Group. We install information security software to create an environment that enables early
detection, defense, and responses. In addition to regular information security education for all officers andemployees, we also provide notifications and conduct other enlightenment activities such to increase information
security awareness.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved• Intellectual property rights
The importance of intellectual property rights increases annually due to a growing awareness of intellectual
property rights in society and various measures taken by the government. We have designated the Legal Division
as a division in charge of intellectual property rights. We secure intellectual property rights for the results of our
R&D efforts, and utilize those results towards providing high-quality, high-value-added products.
• Response to COVID-19
In response to the global COVID-19 pandemic, we established an Emergency Response HQ in accordance withGroup business continuity rules and business continuity guidelines (pandemic edition). This HQ gathered
domestic and overseas information necessary for business continuity, and proposed and implemented necessary
countermeasures. To prevent the spread of COVID-19 and to ensure the safety of employees, we also
implemented measures such as staggered commuting and telecommuting at sites in Japan based on the status of
infections.

Future endeavors• We will implement risk management plans drafted by the Risk Management Committee to monitor priority risks
and continue working to reduce risks. We will regularly identify latent risks and work to prevent crisis situations
through risk avoidance and mitigation.
• Specifically, we conduct annual Group risk assessments one per year to identify companywide risks. Our Risk
Management Committee reports on the results of risk assessments, selects priority risks. For identified importantrisks, the Committee issues progress reports (follow-up) twice a year to check on response progress.

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CSR Policy 6: Innovation
We contribute to resolving social challenges through the flavor and fragrance business.

Basic approach
We use compounding technology, analysis, synthesis, and materials development to drive the development offlavors, fragrances, and new aroma elements. We work to develop original flavors and fragrances, and establish andoptimize new manufacturing methods.
By responding to customer requests and latent needs from the perspective of resolving social challenges, we link ourbusiness activities to new product and new business development. This development is rooted in themes such as"responding to health consciousness", "contributing to foodtech", "providing health and enrichment", and "reducing
lifestyle odors". We aim to create a sustainable society by supporting enriched and healthy lifestyles through flavors
and fragrances.
Contributing to the flavor and fragrance industry through business activities
Response to health consciousness

Contributions to foodtech

Providing health and enrichment

Reducing odors whichcome from daily activities

Improve corporate value
Sustainable growth

Relationships with stakeholders
Customers
We provide our customers with the ideal flavors and fragrances, which are high quality and high value-added
products.
Examples of customer success
Developing and providing flavors with a long-lasting shelf life. We responded to customer needs for delicious
product flavor with a long shelf life while also contributing to food loss reduction.
Natural environment
To develop alternatives and reduce the use of widely consumed food resources, we develop flavors, fragrances, andingredients that enable manufacturers to reduce the volumes used in processed foods without altering the flavors
customers prefer. We help protect biodiversity and food resources by developing ingredients that enhance the flavorof natural raw materials. We also contribute to plastic bottle thickness reduction and resource savings by developing
ingredients that enhance the sensation of carbonation.
Joint Research partners and research institutions
We engage in knowledge sharing and information exchanges to absorb leading research and improve ourtechnology.

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SDGs that lead to contributions

Promotion structure, governanceWe established the Business Solution Division to strengthen collaborations between the Sales, the Sales Planning
Division, the Marketing Division, and the R&D Division. Based on strategy proposals from the Business Solutions
Planning Department, we take an organized approach to providing high quality and high value-added products tocustomers as we strive to resolve social challenges and achieve sustainable growth.
Our R&D Center (Kawasaki, Kanagawa) is the driving force of our flavor and fragrance development. Our Flavor R&D
Center, Fragrance R&D Center, and Technology R&D Center pursue research in their respective fields. They also
engaging in collaborations to strengthen our R&D capabilities by fusing the results of the respective R&D Centers.

Business Solution
Division

Sales Division

Sales Planning Division
Business Solution
Planning Department

Marketing Division
R&D Division

Opportunities & strategy
Opportunities• Social challenges we can solve through our technology• Increasing interest and need for creation of a sustainable society• Potential for flavors and fragrances to create new value
Strategy• Proposal activities using marketing data
• Speedy development: Rapidly identify and respond to customer requests and latent needs• Attentive customer service• Leverage climate change as business opportunity to respond to growing demand for alternative raw materials• Sustained R&D investments

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Major initiatives of FY2021
Create organization structure
Through the Business Solution Division, we strive to strengthen collaborations between the Sales, the Sales Planning
Division, the Marketing Division, and the R&D Division to develop technology that contributes to future increases insales. We have created a structure that increases the speed of our customer responses by promoting sales activities
based on our research results.
Product development and proposals
We established a proposal method that consolidates market data and sensory evaluation data to create visual
representations of customer issues and support product development. We developed a physiological response
measurement method to create visual representations of the effects of flavors and fragrances by evaluating pleasantand unpleasant responses.
Contribute to society• Responding to health consciousness
Bringing delicious tastes to low-sugar, low-salt, and low-fat foods
We develop materials that enhance sweetness, umami, and saltiness, respond to customer development needs for"healthy and delicious" products, and propose materials that add delicious flavor to foods with reduced sugar andsalt content. By developing products that provide rich flavor, we provide a sense of delicious savories to low-calorie
and non-oil products, which can help prevent excessive calorie intake.
• Contributions to foodtech
Solutions for depleted food resources
To develop flavors and fragrances that can replace depleted food resources, we are also developing a flavor series
that provides an alternative to savory natural raw materials and alternative flavors and fragrances for citrus essential
oils. In response to the shortage of vanilla beans, we combined blended flavors and heat reaction technology todevelop a partial substitute for vanilla extract. And to address milk shortages, we are using aroma analysis todevelop blended flavors and fragrances. We can then combine those results with fat and oil emulsions to provide amilk substitute. Amid growing needs for the development of meat-free products, such as hamburgers made fromsoy protein, to reduce the environmental burden, we have developed authentic-tasting beef and beef fat-type
products that are free of animal ingredients. We have also developed alternative flavorings such as chicken andpork.
We also reassess the quality of products used in food to extend food quality warranty length, which contributes tofood loss reduction.

• Providing health and enrichment
Pursuit of delicious food flavors / Bringing fragrance to lifestyle spaces
Through our development of ingredients that give savory tastes to food, we are contributing to the creation ofdelicious food.
In addition to developing sustainable aromatic materials that effectively provide fragrance to living spaces, we arealso developing environmentally-friendly biodegradable microcapsules in response to the problem of micro-plastics.

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Copyright© T.HASEGAWA CO., LTD. All rights reserved• Reducing odors which come from daily activities
Solutions for an aging society
As a solution to various unpleasant odors in our daily lives, we research and examine unpleasant odors in detail, anduse data to develop fragrances that help reduce or eliminate unpleasant odors. In addition to developing masking
materials for daily odors that contribute to environmental improvements at hospitals and nursing care sites, we also
use near-infrared spectroscopy (NIRS) and develop a Swallowing Map™ to add ease of eating and delicious flavor tonursing care food.

T.Hasegawa original technology
We introduce various examples of our original technology on our website.
Top > Research & Development > Our technology
https://www.t-hasegawa.co.jp/en/research/techniqueSocial contributions through the flavor and fragrance businessWe participate in the tree planting and product development programs of the Harumeki Foundation, which wasestablished to support the person with vision impairment.
Top > Sustainability > Social Contribution
https://www.t-hasegawa.co.jp/en/sustainability/social

Future endeavors
We set KPI related to maintaining and improving our net sales to R&D expense ratio and our ability to continuously
implement open innovation. We work to strengthen product development and proposals by promoting joint
research with universities and research institutes towards achieving new technology development. At the sametime, we continuously work to improve our organizational structure.
KPI: R&D expense to Net sales ratio• Roughly 8% (consolidated-based)
R&D expense ratio results: FY2021: 8.4% (consolidated)
KPI: Continue open innovation• Continuously engage in joint research with universities and research institutes towards achieving new technology
development. At the same time, we continuously work to improve our organizational structure.
Research collaborations: 11 projects (projected for FY2022)

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Copyright© T.HASEGAWA CO., LTD. All rights reserved