ESG Report 2021

Daiseki Co., Ltd.

ESG Report Daiseki Co., Ltd.

Contents
Top Message --------------------------------------------------------------------------------------------------------------------------3
Financial and Non-Financial Highlights ----------------------------------------------------------------------------------------7
Value Creation Process -----------------------------------------------------------------------------------------------------------11
Daiseki Environmental Conservation ------------------------------------------------------------------------------------------13
Environment --------------------------------------------------------------------------------------------------------------------------17
Social ----------------------------------------------------------------------------------------------------------------------------------34
People ---------------------------------------------------------------------------------------------------------------------------------34
Safety ----------------------------------------------------------------------------------------------------------------------------------39
Local Communities -----------------------------------------------------------------------------------------------------------------43
Governance --------------------------------------------------------------------------------------------------------------------------45
Compliance ---------------------------------------------------------------------------------------------------------------------------45
Third-Party Assurance -------------------------------------------------------------------------------------------------------------54

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Top Message
Addressing Five Priority Issues to Become the No. 1
Recycling Company in Asia and Help Realize a Sustainable
Society
Steady Efforts Aimed at Achieving the VISION 2030 Long-term Vision
With industrial waste liquid recycling as our corebusiness for more than 60 years since ourfounding, the Daiseki Group has grown into
one of Japan's leading resource recycling
companies. In 2018, we formulated VISION 2030,
our long-term management vision for FY2031,
with the aim of becoming the No. 1 recycling
company in Japan and throughout Asia,
both in terms of quality and quantity.
In FY2021, ended February 28, 2021, the social
environment underwent tremendous changes due tothe spread of COVID-19, significantly impacting
the Daiseki Group’s business. However, business is

Hideki HashiraPresident and Representative Director
Daiseki Co,.Ltd.

steadily improving in line with the resumption of
production by customers in the manufacturingindustry. The challenge in FY2022 will be
returning business performance to pre-COVID-19
levels and achieving even more.
Under VISION 2030, we are targeting consolidated
net sales of JPY150bn and operating profit of JPY25bn
in FY2031, which will be achieved by developing businesses in three main locations, establishing three new core businesses andcapturing a 30% market share at its core domestic businesses. In April 2021, the Daiseki Group announced its Medium-termManagement Plan for the period FY2022–2024, which sets targets for the achievement of VISION 2030. The new Harima plant
will commence operations by FY2023, and by FY2024, we will enhance processing capabilities at our Kansai, Kyushu and Kanto
Works in an attempt to expand business.
From FY2022 onward, we will continue to expand market share in Japan through the acquisition of new customers and M&A
projects. We are also examining and reviewing new sites in collaboration with related departments. We solicited new businessideas from employees three times and are considering commercializing some of these proposals. In these ways, we will continue
working to establish these three pillars.

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ESG Report Daiseki Co., Ltd.

Coverage

Vision 2030 Long-term Vision
Daiseki aims to triple net sales and operating profit compared to FY2018 and become the sun of the industrial waste industry.

Open three new businessbases

Establish three newmainstay businesses

Capture 30% domestic
market share in mainstay
businesses

FY2022 Plan

FY2024FY2031(Mid-termManagement Plan)(Long-term Plan)

Net sales
JPY56.6bn

Net sales
JPY66.5bn

Net sales
JPY150.0bn

Operatingprofit
JPY11.4bn

Operatingprofit
JPY13.5bn

Operatingprofit
JPY25.0bn

Net sales and operating profit figures are on a consolidated basis.

Promoting Five Priority Issue Initiatives in Line with the SDGs
The Daiseki Group has identified five priority issues: environment, people, safety, communities and society, and compliance, andpromotes initiatives in line with the United Nations Sustainable Development Goals (SDGs) for realizing sustainable communities
and society.
Among these issues, the environment is at the heart of Daiseki Group business, which contributes to the creation of a recyclingoriented society through the appropriate treatment and recycling as a resource of wastewater, waste oil, sludge and other waste
generated from customer production activities.
In October 2020, the Japanese government declared its commitment to achieving carbon neutrality (virtually zero greenhouse gas
emissions) by 2050 with the aim of realizing a carbon-free society. As the movement toward decarbonization spreads across theworld, there is growing demand for recycled fuel manufactured and sold by Daiseki as a substitute for coal. To meet these needs,
we are moving forward with capital investments based on long-term plans to increase the processing capacity and recycled fuelproduction capacity of each site.
In terms of people, we aim to realize comfortable workplaces for employees and operational efficiency through various measures
including paperless offices and the promotion of systematization. Going forward, we will continue to create comfortableworkplaces facilitating employee physical and mental health with the aim of being certified as an Outstanding Health &Productivity Management Company by the Ministry of Economy, Trade and Industry.
Safety and compliance are positioned as the basis of our activities. Safety efforts include the promotion of Company-wide work
accident prevention activities and safety countermeasure enhancements.
With respect to communities and society, the entire Group engages in activities that contribute to communities and societies.
For example, in FY2021, Daiseki Eco. Solution received a letter of commendation from the Minister of the Environment forassisting with the transportation of wastewater from the Diamond Princess cruise ship stranded due to COVID-19.
Regarding compliance, again in FY2021 we held study sessions for all employees on important themes in line with annual
planning. Employees conducted discussions during these study sessions, initiating an interactive approach to answering questions
raised.

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Coverage

Daiseki Five Priority Issues and Related SDGs▷

Environment

Related SDGs No.6,7,9,12,13,14,15

We strive to promote recycling based on the philosophy of “making the best use of limited resources” and work to prevent odors
and other adverse impacts and reduce burdens on the environment.

▷

PeopleRelated SDGs No.3,4,5,8

While fulfilling our responsibilities as a company involved in recycling, Daiseki promotes a work-life balance through the pursuitof meaningful work and lifestyles for all employees.

▷

SafetyRelated SDGs No.3,4Daiseki takes great care in the handling of waste containing highly dangerous and harmful chemical substances with the aim ofeliminating accidental spills and chemical reactions.

▷

Local Communities

Related SDGs No.12,17

Without understanding from the people living near our facilities, Daiseki would not be able to engage in business. We strive to
exchange opinions, engage in dialogues and perform community contribution activities.

▷

Compliance

Related SDGs No.4,10

This is the most important issue for the Daiseki Group, which operates business under a license from the local government, thus we
make an effort to provide continuous education and training to increase employee awareness.

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ESG Report Daiseki Co., Ltd.

Coverage

Proactively Communicating Company Position on Environmental and Social Contributions
from the Standpoint of ESG
The Daiseki Group is working on five priority issues from the three perspectives of ESG.
In FY2021, we disclosed information for the first time to ESG ratings agency Carbon Disclosure Project (CDP), held our first ESG
briefing for institutional investors, participated in the Virtual Japan Pavilion online environmental exhibition sponsored by the
Ministry of the Environment and made other efforts to proactively communicate Daiseki initiatives. We also publicly announced
our intention to engage in climate change countermeasures, including our endorsement of Task Force on Climate-related Financial
Disclosures (TCFD1) recommendations and participation in the Japan Climate Initiative (JCI2).
In terms of governance, in May 2020 Daiseki introduced an executive officer system, welcoming a female external director inconsideration of diversity. Additionally, in recognition of our efforts to expand employment for women and promote women tosales and managerial positions, in December 2020, the Daiseki Group was included for the first time in the MSCI Japan
Empowering Women Index (WIN), one of the ESG-related stock indexes comprising companies that excel in gender diversity.
Further, in response to Corporate Governance Code revisions in June 2021, the Daiseki Group conducted scenario analyses related
to climate change problems based on TCFD1 recommendations to begin analyzing risks and opportunities assuming a world inwhich sufficient measures are taken for relative mitigation of climate change (2°C or lower scenario) as well as a world in whichthese measures are insufficient and climate change intensifies (4°C rise scenario). We also expanded the disclosure of information
regarding Group initiatives in English.
Through the proactive disclosure of information, we want to increase the number of people who support the Daiseki Group andenhance its corporate value.
1. TCFD: Established in 2015 by the global organization Financial Stability Board in an attempt to stabilize the financial system.
Promotes the corporate disclosure of information related to the climate.
2. JCI: Network established in 2018 to enhance the dissemination of information and exchange of opinions among companies,
municipalities, research institutions, NPOs, NGOs and other organizations proactively engaged in climate change
countermeasures.

Hideki Hashira, President and Representative Director

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Coverage

Financial and Non-Financial Highlights
Consolidated Net Sales

Financial
Highlights

Consolidated Net Sales(Millons of yen)

60,00049,185 51,313

54,08851,53044,23245,00030,00015,0000Consolidated Profits(Operating profit)
10,865

10,0008,000

Consolidated Profits(Profit Attributable to Owners of Parent)
Operating Profit(Millons of yen)

12,000

10,242

9,107

8,777

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21(Millons of yen)

Profit Attributable to Owners of Parent

12,00010,000

7,120

8,000

6,000

6,000

4,000

4,000

2,000

2,000

5,833

6,110

7,044

6,521

4,132

0

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

0
FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

Consolidated Balance Sheet(Liabilities and Net Assets)

Consolidated Balance Sheet (Assets)■ Current Assets■ Intangible Fixed Assets■ Tangible Fixed Assets■ Investments and Other Assets(Millions of yen)

100,000
75,00085,522

72,403

77,20392,05095,756(Millions of yen)

100,000

10,433637■ Current Liabilities■ Net Asset Total

75,00072,403

77,20385,522■ Fixed liabilities

92,05095,75639,33450,00050,00025,00045,351

25,00000FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

80717

4170
10,868
FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

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ESG Report Daiseki Co., Ltd.

CoverageAmount of Domestic Industrial
Waste*1 Recycled by Daiseki

Non-financial
Highlights

Waste Acid(%)

Waste Alkali

14.0

15

Waste Oil

11.0

11.1

10.1

9.8
10

11.1

10.7

8.7
5

8.4

6.2
5.3

5.7

4.7

0

Amount of Recovered Resources(Useful Metals)(Thousands of Tons)

Recovered Resources

20

5.2

4.6

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

Recycled Heavy Oil andSupplemental Fuel Shipments(Thousands of Tons)

Supplemental Fuel
Recycled Heavy Oil

300
17

15
12
10

250

15
13

200
9

150

214

224

39

41

229

232
203

100
5
50
0

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

43

45

35

0
FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

Note: Resources refer to useful resources generated fromthe recycling in line with industrial waste treatment.

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Coverage

Breakdown of Overall Daiseki Group

Wastewater Purification

Scope 1, 2*2emissions (FY2021)(Thousand tons of CO2)

(Thousands of tons)

30

400

28

350

25

Wastewater treatment

373
344

344

341

314

300

20

250

15

15

200
150

10

100

5

50

0

0

SCOPE1SCOPE2

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

Note: Calculated assuming “annual neutralization treatment
volume = wastewater purification treatment volume.”

Occupational accidents(frequency rate)*3

Occupational accident rate
(intensity)*4

Manufacturing industry
Industrial waste treatment industry
DaisekiDaiseki Group

12

1.2

9

0.9

6

0.6
2.92

3

2.00

Manufacturing industry
Industrial waste treatment industry
DaisekiDaiseki Group

2.68

0.280

0.3

2.54
0

0.76

0.70

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

0.002
0.0

0.009
0.061

0.082
0.063

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

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ESG Report Daiseki Co., Ltd.

Coverage

Average number of years worked by
Daiseki Group employee gender(at end of FY2021)

Daiseki Group employees by gender(people)(%)

Male employees

1,600

Female employees(Years)Ratio of female employees 20

12

Male employees
Female employees

10.4
1,200

12.8

13.4

13.8

14.5

15.3

10
15
8

111

800

122

131

146

6.8

160
10

6
4

400
754

786

818

856

880

0

5
2
0

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

Note: The number of employees excludes those dispatchedfrom the Daiseki Group to outside the Group and includes
those dispatched from outside the Group to the DaisekiGroup.

Annual average hours of training
per Daiseki employee(Compliance study groups, etc.*5)(Hours)Annual average hours of training per employee

7.6

8

0
Male employees

Female employees

Note: Average number of years worked for full-time
employees only.

*1. Domestic industrial waste emissions taken from the
Ministry of the Environment Industrial Waste Emissions
and Treatment Status Survey Report. However, as data
for FY2021 has not yet been released, FY2020 data isused instead.
*2. SCOPE 1: Direct greenhouse gas emissions by the
Daiseki Group (from energy sources only). See Third-

6

6.0
5.5

5.9

5.4

party Verification on page 54.
SCOPE 2: Indirect emissions due to the use of electricity,heat, and steam supplied by other companies (onlyelectricity for the Daiseki Group).
*3. Frequency rate: Number of casualties due to occupational

4

accidents per million total working hours (accident
frequency).
*4. Intensity: Number of working days lost per 1,000 total

2

actual working hours (degree of accident severity).
*5. Training time includes regular compliance study sessions
and education provided upon joining the Company.

0

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

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Coverage

Value Creation Process
As the premier company in Japan’s “venous industry” (waste
management and recycling), Daiseki is engaged in thecreation of value demanded by society.
The recycling and industrial waste treatment industry is referred to as the “venous industry.” Like veins that carry blood from the heart via
arteries throughout the body, then return it back to the heart, the Daiseki Group sees its role as recycling waste generated by manufacturers’
production processes as fuel and raw materials, then returning these to the manufacturers for reuse.
Daiseki has been in business since its founding in 1958, when the word “recycle” was not commonplace, and as Japan's leading venous
industry company, we will continue to contribute to the establishment of a recycling-oriented society and create the value demanded bysociety by resolving social issues.

1. Japan-wide
network

6. Sound financial
structure

2. Extensive businesstrack record

INPUT
Contributing to Society by Creating a
Better Environment as the Foundationof Daiseki Business

5. Robust acceptancesystem3. Advanced
technologies

4. Compliance withrelated laws andregulation

1. With a network of 41 bases across Japan, the Daiseki Group provides comprehensive services related to industrial waste
treatment and resource recycling.
2. Boasting a track record of doing business with over 10,000 companies, Daiseki supports the Japanese manufacturingindustry by proposing optimal recycling methods in response to requests from customers in all industries. Daiseki Eco.
Solution conducts more than 1,000 soil surveys and soil treatments annually.
3. Within chemical pretreatment, in some cases, Daiseki may be able to treat waste that is difficult for other companies to deal
with using proprietary composite treatment technologies that reduce treatment difficulty by combining waste liquids that are
difficult to treat. So that Daiseki and Hokuriku Daiseki are able to use limited petroleum resources effectively, we outsource
the recycling of lubricating oil for our customers and collect waste oil that is processing according to its composition andproperties. As a company specializing in soil remediation, Daiseki Eco. Solution can provide optimal research methods andvarious purification technologies. Daiseki MCR recycles Japanese Industrial Standard (JIS) lead from used batteries using
cutting-edge equipment. System Kikou uses the crude oil washing (COW) method, which is the standard for sludge treatment
and crude oil tank cleaning, providing a safe, high-quality environment for the safely, quick and low-cost collection anddischarge of sludge accumulation inside tanks.
4. Daiseki staff have a deep understanding of the Waste Management and Public Cleansing Act, which is difficult to understandand differ according to the municipality handling them, enabling staff to provide accurate guidance to customers from theperspective of legal compliance. Daiseki Eco. Solution staff are very knowledgeable regarding laws and regulations including
the Soil Pollution Countermeasures Act, the Construction Industry Act, the Building Lots and Buildings Transaction BusinessAct and the Construction Material Recycling Law. These laws change frequently, thus knowledge and experience is a mustfor responding appropriately.
5. Daiseki completed preparations for an acceptance system able to process and properly dispose of more than one million tonsof waste annually. Since before the passage of the Soil Pollution Countermeasures Act, Daiseki Eco. Solution has handled
numerous decontamination projects with sales and technical staff well-prepared to meet customer needs.

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Coverage

ESG Report Daiseki Co., Ltd.

OUTCOME
Creating Value through the Resolution of Social Issues

Recycling-oriented Society
Providing customers with recycledmaterials as products that conserve
resources and contribute to the creationof a recycling-oriented society.

Environmental Protection

Fossil Fuel Avoidance

By purifying waste, Daiseki
supports environmental
protection efforts by customers
who produce waste.

Daiseki manufactures and sells
waste-derived fuel in accordancewith government policies and market
needs pertaining to fossil fuelavoidance.

BUSINESS
Viewing Industrial Waste as a Resource
Aimed at the Resolution of Social Issues
DaisekiGroup companies

Waste oil

Crude oil tank

Processing and recycling

Processing and recycling

OUTPUT
Combining Various Technologies
to Convert Industrial Waste into
Resources to the Fullest Extent
Possible
Recycled fuels

Cement raw material
Waste oil treatment(vibration sieving machine)

Waste oil treatment(centrifuge)

Crude oil tank cleaning

SludgeConstruction sludge

Processing and recycling

Processing and recycling

Drying device

Dehydrator

Intermediate processingof construction sludge

Wastewater

Used batteries

Processing / recycling

Recycling

Metal slag

Inside tank after cleaning

Lead ingot

Activated sludge
treatment

Metal recovery
deviceWaste lead melting process(rotary gas melting furnace)

Arterial industries (manufacturing industries)

Sale

Product assembly

Material and parts processing

Raw material procurement

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Coverage

Environmental conservation by Daiseki
Three Pillars of Environmental Protection
Environmental Protection Pillar 1
Maintain High Recycling Rate
At Daiseki, approximately 80% of waste received from customers is recycled into metal slag, cement raw materials and recycled fuel, whichleads to recycling.

Recycling rate
(excluding drainage water)(FY2021)79.9

Recycling rate(including drainage water)(FY2021)

%

88.3

%

Note: See page 21 for recycling rate definition.

Environmental Protection Pillar 2
Reduce Fossil Fuel Consumption, Replace with Recycled Fuel
Daiseki accepts used waste oil from customers and recycles it into supplemental fuel, recycled heavy oil and other fuels.
Supplemental fuel is mainly used as a substitute for coal, while recycled heavy oil is mainly used as a substitute for Bunker A fuel oil. The
use of these recycled fuels enables reductions in fossil fuel consumption. In FY2021, we produced recycled fuels equivalent to approximately
464,000 tons of CO2.
In reporting greenhouse gas emissions based on the Law Concerning the Promotion of Measures to Cope with Global Warming, adjusted
emissions are reported together with basic greenhouse gas emissions. Greenhouse gas emissions associated with the use of waste raw
materials and fuels are deducted from the adjusted emissions. Additionally, greenhouse gas emissions associated with the use of waste raw
materials and fuel are excluded from the scope of greenhouse gas reports based on the Act on Temporary Measures for Promotion of
Rational Uses of Energy and Recycled Resources in Business Activities. Cement companies in particular are proactively promoting efforts to
reduce the use of fossil fuels through the use of Daiseki recycled fuels.

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ESG Report Daiseki Co., Ltd.

Coverage

CO₂ emissions

When using
fossil fuels

Emits464,000tons

of CO₂

Fossil fuelconsumption

Petroleumand coal tax

Equivalent toApproximately

consumption of

JPY

155,000 tonsof coal and

330mn(heavy oil andcoal total)*2

38,000 tonsof heavy oil in terms ofcalories*1

When using
Recycled fuel(Deducted from CO₂
emissions under the Act on
Temporary Measures for
Promotion of Rational Usesof Energy and Recycled
Resources in Business
Activities and adjusted
CO₂ emissions under the
Act on Promotion of Global
Warming
Countermeasures)*1. Calorie conversion value for supplemental fuel and recycled heavy oil produced by Daiseki into coal and Bunker A fuel oil

having equivalent calorific values.
*2. Taxes of JPY2,800 per kiloliter of petroleum products and JPY1,370 per ton of coal are levied on fossil fuel users (2020

Agency for Natural Resources and Energy “Taxation on Coal in Accordance with Petroleum and Coal Tax Law Revisions”).
The taxed amount includes fossil fuel usage in industries that are currently exempt.

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Coverage

Environmental Protection Pillar 3
Low-Greenhouse Gas Emissions Waste Treatment
Although incinerating untreated industrial waste emits significant amounts of CO2, Daiseki is able to dispose of untreated industrial wastewith less CO2 emissions than incinerating. For waste oil and sludge, outsourcing recycling processing to Daiseki reduces customer SCOPE 3
Category 5 (Waste Generated in Operations) to zero. *3
Outsourcing to Daiseki enables customers to also reduce greenhouse gases under SCOPE 3 when reporting to CDP and other environmental
ratings agencies.
*3. In the “Emissions Intensity Database for Corporate GHG Emissions Accounting Over the Supply Chain (Version 3.1)” published by the
Ministry of the Environment, the emissions intensity when recycling waste oil and sludge is set to zero.

Note: The following trial calculations are based on treatment results in FY2021 pertaining to Daiseki’s oil-water separator and converted fueltreatment methods. This is a theoretical value that estimates the effect of reducing CO2 emissions compared to scenarios in which thecustomer simply incinerates waste.

Comparison when processing one ton of waste oil

2,920 kg CO2

99%

102,000 tonsof CO2 reduced

reduction(estimate for FY2021)

31.3 kg CO
Simpleincineration*4

2

Daiseki's oil-water water

In FY2021, Daiseki shipped 35,000

separator and fueltons of recycled heavy oil.

conversion treatment*5(Recycling of recycled heavy oil)
*4. Calculates carbon-derived CO2 contained in waste (Source: “Guideline for Greenhouse Gas Emissions Reporting Manual,”

Ministry of the Environment).
*5. Calculated as total of 1–3 below (from Daiseki FY2021 processing results):(1) CO2 generated by fuel consumed by boilers used for oil-water separation(2) CO2 calculated from the amount of electricity used for neutralization, biological treatment and other processes.
(3) CO2 calculated by converting CH4 and N2O generated from wastewater treatment

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ESG Report Daiseki Co., Ltd.

CoverageComparison when treating one ton of waste solvent

1,491 kg CO2

437,000 tonsof CO2 reduced

99%
reduction

3.7 kg CO
Simpleincineration*6(estimate for FY2021)

2

Daiseki fuel treatment*7

Daiseki supplemental fuel(Recycled as supplemental fuel)shipments in FY2021 amounted
to 294,000 tons.

*6. Considering the shipment volumes of supplemental and other fuels in FY2021 as a mixture of 150,000 tons of waste solvent

and 144,000 tons of water, CO2 emissions during simple incineration are calculated by multiplying the waste oil emission
factor by the waste solvent ratio. These figures fluctuate every year depending on the ratio of waste solvent to water inshipments. In FY2021, the proportion of water in supplemental fuel increased 1.5% compared to FY2020, thus the figure forsimple incinerator treatment is lower than in FY2020.
*7. CO2 calculated from the amount of fuel consumed and the amount of electricity used for fuel conversion as follows (FY2021

processing results).

Equivalent to CO2 emissions*8 emitted from 190,000 households in one year.
*8. Annual CO2 emissions per household is 2.8 tCO2 / household (based on time comparison of major categories in the Ministryof the Environment Survey on Actual CO2 Emissions in the Household Sector).

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Environment

Environment

Coverage

Environment
As a venous enterprise running through society feeding into manufacturing and other arterial industries,
Daiseki recycles industrial waste to the fullest extent possible, utilizes resources effectively and strives toreduce environmental burdens in the waste treatment process.

Promoting Environmental Management
Formulation and Promotion of Environmental Policies
In formulating environmental policies and inculcating them among employees, Daiseki approaches the achievement of targets as anenvironmental company.

Environmental Policies

Establishing a Management Structure Complying with Environmental Laws and Regulations
Daiseki has acquired ISO14001 certification and manages compliance in accordance with environmental laws and regulations through ISO
activities at all business sites. In FY2021, we did not receive any administrative sanctions (orders for improvement, orders for action, or
business suspension orders) based on the Wastes Disposal and Public Cleansing Act, Air Pollution Control Act, Noise Regulation Act,
Water Pollution Prevention Act, Offensive Odor Control Act. Additionally, Daiseki incurred no fines or penalties with regard toenvironmental matters. Further, under ISO14001, no serious issues have been identified in periodic inspections conducted annually or
renewal inspections conducted once every three years.
To continuously improve ISO activities, Daiseki implements internal audits at all business sites every year to improve ISO activities at
each site. Education focused on ISO14001 is provided to newly hired employees and at compliance study sessions held annually to deepen
understanding.

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ESG Report Daiseki Co., Ltd.

Coverage

Environmental Management Structure (Non-consolidated)
Daiseki President and Representative Director
Company-wide internal auditors

General Manager, Environmental Management
Hokuriku Daiseki
Environmental Headquarters
Daiseki Eco. Solution
Environmental Task Force
Daiseki MCR
Planning Division, Planning andManagement Headquarters

System Kikou
Manager, Environmental Management

Works

Works

Works

Works

Works

Works

ManagerManagerManagerManagerManagerManager

Headquarters

Hokuriku

KansaiKyushu

Kanto

Chiba

Nagoya Works

Works

Works

Works

Works

Works

Environmental Planning and FY2021 Achievements (Non-consolidated)
In terms of environmental planning, Daiseki sets targets and engages in efforts at each business site focused on
improving recycling rates and controlling waste, preventing accidents and pollution, and halting global
warming.
Improved Recycling Rates and Reduction of Waste
FY2021 Targets

Company-wide
Targets

FY2021 Target:

569,000

Overall Company-

tons/year or

wide Recycling

more

FY2021

TargetResults

met?

498,000
tons/year

No

FY2022 Targets

Company-wide recycling

Page

P21

rate: 88.1% or higher*

Note: From FY2022, the target indicators have been changed to Recycling Rate (2) for evaluation purposes.

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Environment
Coverage

Preventing Accidents and Pollution
FY2021 Targets
Complaints fromFY2021 Achievements

Target met?

Complaints: 0

Yes

Complaints about odor or

locals: 0 at all

dust: 0 (all six works)

FY2022 Targets
Complaints:

Page

P31

0 (ongoing)

works
Monthly accidents: 0 (allAccidents in January
2021: 0six works)
Industrial accidents: 0 (allAchieved by Hokuriku

six works)

Works

Working with

Leaks and chemicalcustomers andreactions during

Achieved by all works

partner companies

collection, transport andexcept Kansai Works

to prevent

treatment: 0

accidents

Waste Data Sheet (WDS)
acquisition: 100%

No

No

No

Monthly accidents:‐

0 (ongoing)
Industrial accidents:

P40

0 (ongoing)

Leakage incidents:‐

0 (ongoing)

Waste Data Sheet

100%

Yes

(WDS) acquisition:‐

100% (ongoing)

Communication regarding
problems with received
materials and requests

Communication

100%

Yes

‐

rate:
100% (ongoing)for customers: 100%

Global Warming Prevention
FY2021

FY2021 Targets

Achievements

Target met?

FY2022 Targets

Page

27.9kg- CO2/ton orCompany-wide

CO2 emissions

Targets

intensity*

27.9kgCO2/ton or lessless

28.8kg- CO2/ton

No

Implement efforts to

P20

reduce CO2
emissions*Intensity: Calculated using the amount of waste processed by Daiseki added to the amount of petroleum products produced in the

denominator and the amount of energy used in the numerator.

Trends in total CO2 Emissions
In FY2021, Daiseki's total CO2 emissions were 31,000 tons, with an emission intensity of 28.8kg- CO2/ton. In FY2021, we continued
switch over to LED lighting and the use of fuels that emit less CO2 at all works.

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ESG Report Daiseki Co., Ltd.

Coverage

Energy Conservation Promotion
In FY2021, energy consumption* decreased 2.4% compared to the previous fiscal year, while energy intensity* increased 6.3%. The main
reason for decreased energy consumption was lower fuel consumption in line with a decline in the amount of industrial waste received dueto the spread of COVID-19 (down 99,000 tons compared to FY2020). This decline resulted in lower waste treatment efficiency and higher
energy intensity..
Energy Intensity: Includes the amount of energy used at works and in offices as well as fuel consumed in Daiseki collection,*transportation and sales activities.

Energy Consumption and Energy
Intensity (Non-consolidated)

Total CO2 Emissions and emissions
intensity (Non-consolidated)
Total CO2 Emissions

Energy intensity

Energy consumption

Emissions Intensity Value (Kg- CO2/t)(Thousands of GJ)(Thousand tons of CO2)
(Kg- CO2/t)

36

33.2

32

34
28.8
28.5

32

34

0.54

30

0.60

0.52

34
31.3

30

1,000

(GJ/t)

0.48

0.51

0.47
750
0.40
500

27.9

546

573

563

554

542

28

35

0.20
250

34
26

33
31
28

24
FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

0

FY02/17 FY02/18 FY02/19 FY02/20 FY02/21

0.00

Overall Environmental Impact of Waste Treatment Business(Non-consolidated)
Daiseki engages in the reduction of adverse environmental impacts by maintaining an awareness at all stages of thetreatment process, from the collection, transportation and processing of waste and other raw materials, to the taking
in of recycled products and final disposal.

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OUTPUT

Daiseki

INPUT

Raw Materials

Waste Treatment and Recycling

Waste, etc. (raw materials)
1,064,000 tons (down
99,000 tons year on year)

excluding drainage water・Waste oil
・Waste alkali
・Sludge・Waste acid
・Others

32.0%
25.5%
23.1%
15.6%
3.8%

Supplemental Materials

Recycling rate (1)fuels 239,000 tons
(down 38,000 tons year on year)

79.9% (up 1.4% year on year)
Recyclingx 100

Petroleum Product
Raw Materials
2,000 kL (± 0 year on year)

Mainly used by cement companies as
an alternative to coal. This has led toreductions in energy amounting to5,972,000 GJ and 464,000 tons of CO2.

[recycling + intermediate

Note: Refer to pages 14 and 26.

treatment residue (nonCement raw materials 259,000 tons
(down 16,000 tons year on year)

recyclable)]
53,000 tons(down
3,900 tons year on year)

Recycled Products

Recycling rate (2) including

Mainly used as raw material for cement

Drainage Water

Petroleum Products

88.3% (up 1.3% from FY2020)

2,000 kL (±0 year on year)

Waste – [intermediate treatment
residue (non-recyclable)]
x 100
Waste

water

Drainage(Purified to Less than Standard Values)

885,000 tons (± 0 year on

1,227,000 m3

year)
Rainwater

Lubricating oil
Waste oil

31,000 tons (up 400 tons

(down 18,000 m3 year on year)

recycled heavy oil
supplemental fuelyear on year)

Intermediate Treatment Residues(Non-recyclable Items)
Outsource

Energy542,000 GJ

Wastewater

Cement raw materials

Incineration

Purification/discharge(down 12,000 GJ year on year)
・Electricity 218,000 GJ(down 7,000 GJ year on year)
・Light oil 152,000 GJ(down 4,000 GJ year on year)
・Bunker B fuel oil (recycled heavy
oil)
59,000 GJ (up 2,000 GJ year on
year)
・City gas 51,000 GJ(up 3,000 GJ year on year)
・Bunker A fuel oil 21,000 GJ(down 4,000 GJ year on year)
・Kerosene 17,000 GJ(down 2,000 GJ year on year)
・Propane gas 14,000 GJ(± 1,000 GJ year on year)
・Gasoline 7,000 GJ(± 0 GJ year on year)
・Others 3,000 GJ(down 1,000 GJ year on year)

11,000 tons (±0 year on year)
Cement raw materials

SludgeCement raw fuelCopper slag, etc.

Waste collection

Final Disposition (Landfill)
115,000 tons (down 24,000 tons
year on year)

Atmospheric Emissions
Total CO2 Emissions

Petroleum product manufacturing31,000 t-CO2(down 1,000 tons year on year)

Recycling Rates and Recycled Product Shipment Improvements
Daiseki has proactively accepted industrial waste that is difficult for customers to dispose of in an effort to reuse it as resource. In FY2021,
recycling rate (1) increased by 1.4% and recycling rate (2) increased by 1.3% from FY2020 due to theestablishment of new recycling technologies. We will strive to further improve these recycling rates based on the idea of making the bestuse of limited resource

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Recycling rate
Recycling rate (1)

100

92.9
87.5

75

90.9

82.6

(％)

After neutralization, wastewater that arrives at Daiseki

Recycling rate (2)
88.0

87.0

79.2

78.5

Recycling Approach

88.3

meets effluent standard values set by national andlocal governments and is discharged into sewers and79.9

rivers. To ascertain results, including wastewater
treatment, which is one of the pillars of Daiseki's
intermediate treatment, we have set recycling rate (1),50

which excludes drainage water, and recycling rate (2),FY02/17

FY02/18

FY02/19

FY02/20

FY02/21

which includes drainage water.

Climate Change Problem Scenario Analysis (Consolidated)
The Daiseki Group endorses the Recommendations of the Task Force on Climate-related Financial Disclosures final report published in 2017 by
the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD) and conducted scenario analyses related toclimate change problems. Daiseki assumed two scenarios—one in which insufficient countermeasures and large greenhouse gas emissions leadto a 4.0°C rise in temperatures compared to the Industrial Revolution in the year 2100, and another where strict climate change countermeasures
are implemented, and the temperature rise in 2100 is limited to well below 2°C. We conducted financial impact analyses on the physical andtransition risks posed by climate change, evaluated the impact on the business and examined countermeasures.

Scenarios well below 2°C
Scenarios

Impact on the Daiseki Group

Tightening regulations to promote decarbonization and low-

Low-carbon needs

carbon initiatives●Growing customer needs for the Daiseki Group treatment of●Tougher measures including carbon taxes, emissions trading
and carbon pricing systems●Increasing customer preference for low-carbon andindustrial waste with low CO2 emissions●Increasing customer needs for recycled fuels offering low
CO2 emissions produced and sold by the Daiseki Group●Increase in Daiseki Group electricity and fuel usage costs

decarbonization●Technological developments targeting low-carbon anddecarbonization initiatives such as CCUS and hydrogen●Need to consider new businesses contributing to the lowcarbon shift and decarbonization into the future

utilization●Increasing need for modes of transportation with low CO2
emissions
Negatives (Issues)

Advantages (Opportunities)

Increased costs and business disruption

Building the foundation of sustainable business●Increased costs due to carbon taxes and energy source●Increased demand for Daiseki Group recycled fuels aimed atswitchover●Decreased asset value of existing vehicles and equipment●Increased costs due to delayed introduction of low-carbon
vehicles●Increased R&D expenses and capital investment in line withthe development of new technologies

reducing carbon tax liabilities due to low carbonization●Improved operational efficiency due to vehicle andequipment upgrades●Positive customer evaluations in line with the low-carbon
shift and decarbonization●Profit growth driven by new businesses

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4.0°C Temperature Rise Scenario
Scenarios

Impact on the Daiseki Group

Acute physical risks (natural disasters)

Necessary preparations for disaster (natural disasters)●Increase in typhoons and other extreme weather●Increased possibility of damage to Daiseki Group bases●Intensification of natural disasters such as torrential rainfall●Increased likelihood of damage to customer factories●Increased likelihood that Daiseki Group will receive requests

Chronic physical risks (changes in the natural environment)for disaster relief●Changes in the terrestrial environment●Changes in the marine environment

Response to ocean surface area expansion (changes in the●Sea level risenatural environment)●As the surface area of oceans expands, countermeasures
may be necessary at Daiseki Group coastal factories.
●Customer coastal factories may become inoperable due toincreased ocean surface area
Negatives (Issues)

Advantages (Opportunities)

Decreased profits, increased costs

Building disaster-resistant systems●Potential for decreased profits due to shutdowns at Daiseki●Increased demand for support in line with enhancements toGroup or customer factories●Potential for cost increases due to levee protection andsystems providing immediate support in the event of a disaster●Expansion of disaster waste treatment business

regrading efforts

Scenarios Other than Climate Change
Scenarios

Impact on the Daiseki Group

Various environmental impacts

Need to prepare for tightening regulations●Harmful waste emissions●Hazardous waste emissions regulations may tighten●Loss of biodiversity●Regulations may tighten to maintain biodiversity●Depletion of fossil fuels and natural resources●Regulations on the use of natural resources may tighten

Negatives (Issues)

Advantages (Opportunities)

Higher requirements for industrial waste treatment

Growing demand for recycled products●Higher standards will be required for the treatment of●Daiseki Group's recycled fuels, cement raw materials andindustrial waste, which may increase treatment difficulty.

other recycled products may increase in demand asalternatives to natural resources

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ESG Report Daiseki Co., Ltd.

Strategy: Analyze the impacts of risks and opportunities on
business (consolidated)
Risks and opportunities associated with impact on businessBusiness
impactLarge■: Risks ■: Opportunities
Laws and regulations

Markets

Technologies■Tightening regulations including■Increasing demand for recycled

carbon taxes, emissions trading

fueland carbon pricing systems■Launch of new low-carbon
businesses■Increased technology■Suspension of deliveries anddevelopment costs and capital

shipments due to customer

investment costs for low-carbon

damagetechnologies■Increased demand for the■Higher standards required forsupport and strengthening ofindustrial waste treatment andrapid response systems in theincreased processing costs

event of a disaster■Reduced tax burden via low■Improved operational efficiency■Delayed introduction of low-

carbonization

with updated vehicles andcarbon vehicles and equipment

equipment

hinders delivery operations and■Decrease in asset value of

reduces profits

MediumSmallexisting vehicles and equipment

Business
impactReputation

Physical risks (acute)■Improve customer evaluations■Recovery costs associated withthrough low carbonization

damage to Daiseki Group■Reputation worsens due to lackfactories

Physical risks (chronic)

Large

Mediumof low-carbon efforts

Small■Cost increases due to levee
protection and regrading efforts

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ESG Report Daiseki Co., Ltd.

Risk Management: Risk and opportunity management process (consolidated)
Risk and opportunity items

Daiseki Group response status

Introduction of carbon taxes,

The Daiseki Group carefully investigates trends and impacts regarding laws

Laws andemissions trading and carbon

and regulations related to carbon taxes, emissions trading and carbon

Regulations

pricing systems

pricing systems, and deliberates appropriate responses.

Tightening regulations on

We disclose information on Daiseki Group efforts regarding the treatment ofindustrial waste treatment

harmful waste and biodiversity protection in the ESG report.

Low-carbon technology

We have no plans for large-scale, technological developments or capital

technical developments andinvestments at this juncture. However, we are considering specificcapital investments

measures in the future to achieve our long-term goals by 2030.
We have set a goal to reduce SCOPE 2 emissions to zero by 2025 byTechnologies
Upgrading of vehicles andswitching to CO2-free electricity. Additionally, we will increase the number of

equipment to reduce carbon

commercial hybrid vehicles from one-third as of 2020, to one-half by 2023 toreduce SCOPE 1 emissions.

Increasing demand forrecycled fuelNew low-carbon business

Markets

Recycled fuel can reduce CO2 emissions compared to virgin fuel. Daiseki
will promote the benefits of recycled fuel among customers and expand theirapplication.
As an environmental business company, Daiseki will consider new
businesses that can contribute to the low carbonization of our customers.

Suspension of deliveries andWe establish business relationships with a large number of customers toshipments due to customer

reduce the risk of business interruption.

damageAccelerating disasterLeveraging Daiseki experience with support efforts in the event of a large-

responses, increase demandscale disaster, we are always prepared to respond promptly whenfor support

necessary.

Delays in introducing low-

Since FY2021, we have been examining the introduction of low-carbon

carbon vehicles andvehicles. As there are no low-carbon vehicles on the market at this time, we

equipment

will switch from potential equipment to low-carbon specifications.
While supporting customer low-carbonization efforts, Daiseki will also

Reputation

Reputation among customers

promote low carbonization throughout the Daiseki Group. We will strive to

due to low-carbonization

earn the trust of customers through the positive evaluations of international
environmental rating agencies such as CDP.

Physical risks(acute)Recovery costs associatedwith damage to Daiseki Groupfactories

Impacts are estimated based on the cost of factory shutdowns andrestorations when Daiseki factories were damaged by typhoons and otherdisasters in the past. We will implement disaster prevention measures tominimize the damage in the event of a disaster.

Cost increases due to levee

Daiseki recognizes that, if sea levels rise due to climate change, levee

Physical risks

protection and regrading

protection and regrading efforts will be required at factories located in(chronic)

efforts

coastal areas. However, at present the impact is considered minor.

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Governance: Climate Change Risk and Opportunity Monitoring
System (Consolidated)
Scenario analysis reporting tosenior management

Management policy

Internal developments andIncorporate climate change

assigned department

problems into medium-term

initiatives

business planning

Formulate medium-term
・Scenario analysis results
reported at Environmental
Headquarters of theManagement Meeting

Climate change-related

Response toNote: The Environmental

risks andHeadquarters is a council

opportunities

comprising Daiseki and Group・Conduct Company-widebusiness plans

scenario analysis
・Formulate a concrete plan
to capitalize on risks andopportunities
・Utilize ISO 14001
organizational systemcompany management teams.
Meetings are held twice a year
to formulate and monitor
environment-related strategies,

・Monitor plan progress atmonthly management

including climate change

Promotion ofissues. The person in charge

scenarioof climate change issues is theanalysesPresident of Daiseki.

・Examine indicators

meetings at Daiseki Groupand targets linked tocompanies

medium-term business

・Report scenario analysis
status at Daiseki Board of
Director meetingsplans
・Conduct ongoing
monitoring

Decarbonization and Low-Carbonization Initiatives (Group
Companies)
At the Climate Change Summit held in April 2021, Prime Minister Suga declared Japan would achieve a 46% reduction in greenhouse gases by2030 with the aim of achieving carbon neutrality by 2050. In response, Daiseki is considering a 30% reduction in SCOPE 1 + SCOPE 2 by 2025
across the entire Group. To achieve this goal, we are specifically promoting the following initiatives.

Switching Over to Electricity Emitting Zero CO2Group-wide CO2 emissions in FY2021 were 28,000 tons of CO2 emitted under SCOPE 1 and 15,000 tons of CO2 emitted under SCOPE 2.
The Daiseki Group will continue to reduce CO2 emissions with the aim of receiving reduction target certification under SBT*. We will
examine switching over to electricity with zero CO2 emissions by 2025, reducing SCOPE 2 emission to zero and reducing SCOPE1 and
SCOPE 2 emissions 30% across the entire Group. To reduce SCOPE 1 emissions, Daiseki is examining the introduction of large vehicles
with low CO2 emissions. As EV tanker trucks are not on the market at present, we will first aim for the low-carbon shift by replacing ourvehicle fleet for sales activities with hybrid vehicles. At present in FY2021, the ratio of hybrid to gasoline-powered vehicles is about onethird and expected to increase to one-half by FY2024. Daiseki is also upgrading to equipment that emits less CO2, switching to fossil fuelalternatives and installing LED lighting. In FY2022, the entire Daiseki Group identified what it can do to reduce carbon and verify theeffects. From FY2023, we will set numerical targets and monitor our progress toward them.

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Note: SBT (Science-Based Target) is a greenhouse gas reduction target set by companies looking 5–15 years ahead that conform to levels
required under the Paris Agreement.

Industrial Waste Processing Business with Low CO2 Emissions
To understand how much CO2 could be reduced within oil-water separation and fuel conversion—Daiseki’s main methods of treatment—
compared to cases where the customer simply incinerates waste, we calculated a theoretical value based on FY2021 treatment volumes,
resulting in a reduction effect of 539,000 tons of CO2 (see details). In terms of waste oil and sludge, SCOPE 3* Category (5) (waste) that is
outsourced to Daiseki for processing reduces customer emission to zero. Customers who outsource waste disposal to Daiseki can reduce
the amount of SCOPE 3* greenhouse gas emissions reported to the CDP and other environmental rating agencies.
Note: SCOPE 3 Refers to other indirect greenhouse gas emissions, and in particular, greenhouse gas emissions during the manufacturing ofgoods purchased by the company, greenhouse gas emissions when consumers use the products and greenhouse gas emissions whenwaste istreated. In the Database on Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations

Throughout the Supply Chain (Ver. 3.0) published by the Ministry of the Environment, emissions intensity is set to zero when wasteoil, sludge and other waste is recycled.

Reducing CO2 Emissions with Recycled Fuel
Daiseki collects used waste oil from customers and recycles it into recycled fuel such as recycled heavy oil and supplemental fuel. In using
recycled fuel, customers are using waste instead of fossil fuel, which contributes to the reduction of CO2 emissions from energy sources.
Greenhouse gases can also be reduced when reported based on the Act on Temporary Measures for Promotion of Rational Uses of Energy
and Recycled Resources in Business Activities*. In FY2021, Daiseki produced recycled fuel equivalent to approximately 464,000 tons CO2(see page 13 for details). Recycled heavy oil produced by Daiseki was equivalent to about 38,000 tons of Bunker A fuel oil, while
supplemental fuel was equivalent to approximately 155,000 tons of coal. This use of Daiseki's recycled fuel enables fossil fuelconsumption to be reduced as indicated above. Additionally, taxes including JPY2,800/kl for petroleum products and JPY1,370/ton forcoal are levied on users of fossil fuels, but not recycled fuel as it is not fossil fuel (Regarding Taxation of Coal in Accordance with
Revisions to the Petroleum and Coal Tax Act, Agency for Natural Resources and Energy, 2020). If all the recycled fuel produced by
Daiseki in FY2021 had been converted from fossil fuels, a petroleum and coal tax of approximately JPY330mn could have been avoided.
Note: According to the Act on Temporary Measures for Promotion of Rational Uses of Energy and Recycled Resources in
Business Activities (Ministry of Economy, Trade and Industry, Agency for Natural Resources and Energy, 2018), business fields
directly regulated by the Act on Temporary Measures for Promotion of Rational Uses of Energy and Recycled Resources in
Business Activities applicable to energy users include factories, business establishments and the transportation field. Businesses of acertain size or larger are required to report information such as energy usage status, and if efforts are insufficient, guidance, advice
and instructions for creating a rationalization plan are provided. The act applies to energy, including fuel, heat and electricity. It does
not apply to energy recovered from waste and non-fossil energy, such as wind and solar power.

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Indicators and Goals for Evaluating and Managing Climaterelated Risks and Opportunities
Having evaluated emissions, we learned that SCOPE1 emissions are high and identified the reduction of CO2 emissions associated with the useof tanker trucks and other large vehicles as an issue. However, as there are no large vehicles with low carbon specifications on the market at thistime, we will engage in SCOPE 1 countermeasures to the extent possible.

Breakdown of FY2021 Daiseki Group SCOPE1-2-3 Emissions
See Third-party Verification on page 54.
(Thousand tons of CO2)SCOPE 1SCOPE 2SCOPE 3

Direct emission ofIndirect emissions from use of

Indirect emission other thangreenhouse gases by theelectricity, heat and steam

SCOPE 1-2 (emissions ofDaiseki Group (energy-

supplied by other companies

other companies related toderived emissions only)(electricity only at the Daisekibusiness activities)

Group)
Daiseki Group emissions

28

15

106

66%

34%

-

(thousand tons of CO2)
Ratio

(Tons of CO2)

1,237

1,181

918

833

10
12,584

Light oil
City gas
Bunker B fuel oil

1,632

4,196

Bunker A fuel oil

SCOPE 1
Breakdown

Alternative fuel (heavy machinery fuel)Kerosene
Gasoline
Propane gas

4,557

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Initiatives toward a Recycling-oriented Society (Nonconsolidated)
To create a recycling-oriented society, Daiseki is engaged in the development of treatment technologies that
effectively utilize resources and improve the recycling rate of waste shipments.

Recycling Promotion Efforts (Non-consolidated)
Trends in Raw Material Recycling
In addition to providing sludge as a raw material for cement meeting individual user standards, Daiseki promotes a wide range of othereffective uses for sludge as solid fuel combining wood chips and oil mud to cement companies. Raw material recycling in FY2021
decreased by 16,000 tons year on year, to 259,000 tons. This reflects a decrease in the amount of waste received due to the impact of the
COVID-19 pandemic.

Trends in Fuel Recycling
Daiseki manufactures recycled heavy oil and supplemental fuel using waste oil from customers, which is then delivered to cement makers
and a variety of other companies. In FY2021, fuel recycling decreased by 40,000 tons year on year, to 239,000 tons. As with raw materials,
the COVID-19 pandemic had an adverse impact on the amount of waste received, while a drop in crude oil market prices has dampened
demand for recycled heavy oil.

Raw Material and Fuel Recycling
Raw Materials(Thousands of tons)

300

244 254249

267

263 272

275 277

FY02/17

FY02/18

FY02/19

FY02/20

259

Fuel

239

200

100

0

FY02/21

Eliminating the Generation of Waste (Non-consolidated)
Waste generated by Daiseki includes mainly the packaging in which waste arrives, used personal protective equipment and residue fromintermediate treatment of industrial waste. A portion of intermediate treatment residue is outsourced to landfills and incinerators amid
ongoing efforts to reduce the amount outsourced. Outsourcing to landfills mainly involves sludge, while outsourcing to incinerators
involves waste oil and flammable waste oil.
In FY2021, although the amount of sludge disposed in landfills decreased in line with lower volumes of waste received due to the
COVID-19 pandemic, we are receiving increasingly larger volumes of waste that cannot easily be recycled into raw materials for cement,
thus landfill sludge has been on the rise in recent years. Daiseki is engaged in a variety of initiatives including the use of waste as a
substitute for solidifying agents to reduce the amount of sludge disposed in landfills.

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7.2%

Waste consignment amount
Landfill(Thousands of tons)

150

130

Incineration

1.7%

17.9%

139

Outsourced
Waste(FY2021)

115

102
100
65
50
6

7

10

12

11

FY02/17

FY02/18

FY02/19

FY02/20

FY02/2173.2%

0SludgeWaste alkali

Waste oil

OthersSpecial Control Industrial Waste Emissions (Consolidated)
Among the waste generated by the Daiseki Group, the amount of specially controlled industrial waste discharged was 12,069 tons. In termsof items, this comprised paint residue, corrosive waste alkali and other flammable waste oils. While the Daiseki Group recycles to the full
extent possible in an attempt to reduce the amount of intermediate treatment residue outsourced for disposal, specially controlled industrial
waste, which is unavoidable in the waste treatment process, is outsourced for incineration.

Special Control Industrial Waste by Emission Item (Consolidated)
Unit (tons)
Emitted Items in FY2021

Emissions

Flammable waste oil

3,031

Specified hazardous waste oil

253

Corrosive waste acid

312

Specified hazardous waste acid253

Corrosive waste alkali

8,452

Specified hazardous sludge

18

Total

12,069

0.2%

25.1%

Emissions ofspecially controlledindustrial waste by
category
70.0%

2.1%
2.6%

0.0%

Flammable waste oil

Specified hazardous waste oil

Corrosive waste acid

Specified hazardous waste acid

Corrosive waste alkali

Specified hazardous sludge

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Efforts to Prevent Odors and Conserve Biodiversity (Nonconsolidated)
Daiseki recognizes the prevention of odors and noise as important issues connected to the recycling of waste, thus
we have introduced various equipment and make ongoing efforts to manage and counter their impact. We also strive
to protect biodiversity and the natural environment.

Odor and Dust Countermeasures
Odor Complaint Status and Response
In FY2021, there were no complaints about odors at any business site. Most of the wastewater, sludge, and waste oil handled by Daiseki
has a distinctive odor, and if mistakes happen, there is a risk of adversely affecting the lives of local residents. For this reason, Daiseki
employees at each business site regularly conduct odor patrols in and around the site to confirm there are no offensive odors. Based on
pollution control agreements with local communities, Daiseki created a system whereby worksites regularly measure odors and anothersystem in which local residents can contact us as “odor monitors” if they sense something is amiss.

Odor Countermeasures for Received Waste
In terms of odor countermeasures for waste received, waste samples are analyzed in advance to determine whether or not to accept delivery
and how to dispose of the waste if it generates significant odor. If odor is present when picking up at the customer site or unloading at a
Daiseki storage facility, we use deodorizer to prevent the odor from spreading. To prevent odors in works, we installed fans that sprays
deodorizer on storage pits and the yard apertures. Additionally, scrubber systems, activated charcoal absorbers, combustion deodorizers
and other odor-removal equipment have been installed at all works to appropriately handle odors regardless of type or degree of intensity.

Treatment of Easily Dispersible Pulverulent Body Waste
Customer pulverulent body waste is delivered to Daiseki in flexible container packs and bags that generate fine particles when opened. To
prevent these particles from dispersing, we installed an apparatus that automatically humidifies pulverulent body waste inside theprocessing equipment as well as large dust collectors combining bag filters and mist sprayers at facilities where sludge is treated. Dustcollectors are being installed or upgraded at all works to improve dust collection capabilities.

Noise and Vibration Prevention
With regard to noise and vibrations, Daiseki submits reports from all works and applicable facilities in accordance with laws andordinances. Daiseki facilities are designed to be sound- and vibration-proof, with no complaints thus far.
To prevent noise and vibrations, we inspect, manage and monitor equipment on a daily basis, measuring noise and vibrations based onagreements with local communities.

Support for Biodiversity
Daiseki contributes to the preservation of biodiversity through business activities as follows.
1. We strive to reduce environmental burdens and manage environmental risks associated with the collection, transportation and treatmentof waste.
2. Our wastewater purification treatment efforts contribute to the improvement of animal and plant habitats and growth environments.
3. We strive to reduce adverse impacts on biodiversity through the reduction of greenhouse gas emissions and the provision of recycled
fuel and other recycled products.

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4. We strive to beautify and green all Daiseki facility premises and surroundings and promote the protection of local flora and fauna.

Topics: Environmental Ratings Agency Score
Daiseki Group management discusses specific plans pertaining to climate change, pollution and other environmental issues, confirming the
progress of these plans at meetings (for details, see P26). We are promoting initiatives that contribute to environmental conservation and
Daiseki Group business expansion, and in FY2021, we disclosed the status of these efforts to CDP* and obtained a score. In FY2022, wewill continue to promote environmental conservation efforts to obtain an even higher score.
Note: CDP(Carbon Disclosure Project)This project publicly announces corporate efforts to respond to climate change and reduce greenhouse gas emissions. Companies
answer a set of questions and CDP evaluates, scores and makes public their efforts. The CDP is an important indicator of corporate
value.

Environmental Pollution Prevention and Water Resource
Conservation (Non-consolidated)
Daiseki thoroughly controls exhaust gas and wastewater discharged from works and prevents soil and groundwater pollution as the basis ofenvironmental management efforts. We are also working to conserve water resources through wastewater treatment and purification.

Controlling the Emission of Air Pollutants
Daiseki outsources the incineration of residue left over after recycling waste into recycled fuel as we do not own incineration facilities
covered under the Air Pollution Control Act and the Act on Special Measures against Dioxins. At the same time, all works have small
boilers, so we measure SOx, NOx and other air pollutant emissions biannually. In FY2021, all works maintained emissions at or below
standard values.

Managing the Quality of Drainage Water and Recycling Water Resources
After neutralizing, coagulating and dehydrating wastewater, it is treated biologically using the activated sludge method and discharged intosewers or rivers. In terms of managing drainage water quality, Daiseki uses activated sludge to manage water quality at each worksite andis creating a system for the rapid detection of abnormalities. Additionally, we established drainage water release standards that are stricter
than legal requirements and formulated emergency response procedures for when there is a risk of falling short of our own standards. In
FY2021, no Daiseki worksites failed to meet these standards.
In FY2021, Daiseki purified approximately 341,000 tons of wastewater, contributing to the recycling of water resources. Further, toreduce the amount of groundwater, industrial water, clean water and other water resources used at our worksites, the Nagoya and Kanto
works collect and utilize rainwater. The amount of rainwater collected and used in FY2021 amounts to 31,000 m3, which is approximately
3.4% of overall water resources used by Daiseki.

Trends in Wastewater Purification Volumes over the Past Five Years (Non-consolidated)
Unit (thousand tons)

Purification process volume

FY2017FY2018FY2019FY2020

FY2021

314

344

373

344

341

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Management of Chemical Substances Subjected to the PRTR System
Daiseki ascertains and reports the amount of chemical substances handled based on the Pollutant Release and Transfer Registers (PRTR)
system.*Note: The PRTR System is a mechanism enabling the national government, business groups and other institutions toascertain, aggregate and publicize information regarding the source, environmental emission and offsite movement of harmful
chemical substances.

Reporting Chemical Substances Used as Fuel
● Nagoya Works: Kerosene (xylene, 1,2,4-trimethylbenzene)● Hokuriku Works: Bunker A fuel oil (methylnaphthalene)● Kyushu Works: Bunker A fuel oil (methylnaphthalene)● Kanto Works: Kerosene (xylene, 1,2,4-trimethylbenzene)
In addition to the above, Daiseki reported nine substances from the Hokuriku Works.

Annual Discharge to Public Waters and Average Effluent Concentration (Non-consolidated)
Annual discharge (kg)FY2021 Effluent
Drainagestandard (mg / L)

Averageconcentration (mg / L)

140

3

0.5

76

35

2

0.1

34

52

30

10

0.1

990

1,148

1,200

790

8

2.8

740

971

510

440

10

1.5

3.7

8.5

0.6

0

1.3

2

<0.025Hexavalentchromium

2.4

4.2

0

0

0.9

0.5

<0.025

1,4-dioxane

0.3

8.7

5.6

1.7

1.6

0.5

0.01

Benzene

0.3

0

0

0

0

0.1

<0.001FY2017FY2018FY2019FY2020

Copper

180

120

72

140

Zinc

71

64

65

Manganese

18

49

Fluorine

690

Boron

940

Total
chromium

FY2021Preventing Outside Leakage from Worksites
Daiseki installs dikes around storage tanks to prevent waste liquids from seeping into to the soil, groundwater or offsite. Works are pavedwith concrete to prevent waste liquid from seeping into the soil or underground. To prevent the offsite leakage of waste liquid, we installed
gutters, emergency storage tanks for waste liquid and oil-water separation tanks at all Daiseki works. Storage tanks are managed daily todetect and repair aging parts as soon as possible.
To prevent leakage during waste collection and transportation, we inspect the exterior of drums and other containers before loading them
onto trucks or having a partner company collect and transport them. For items that have deteriorated or are in danger of leaking fromcontainers during transportation, we take measures such as replacing containers to ensure safety before transporting.

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PeopleTo continue growing 100 years from now, we strive to create a Company where all employees can work long-term in a healthy and fulfilling
environment, develop human resources and promote diversity.

Supporting the Realization of a Work-Life BalanceTo support employees in balancing work and family, Daiseki established childcare leave and nursing care leave systems in accordancewith laws and regulations so that employees can take leave for childcare, nursing care and infant nursing. In FY2021, five Daiseki
employees utilized childcare leave, of which two were male employees. Additionally, in terms of COVID-19 countermeasures, we
introduced a staggered commute system, a telework system and a special leave system for employees with young children who need tocare for them at home due to kindergarten and elementary school closures.

Acquisition of Paid Leave and Maternity/Childcare Leave (Non-consolidated)

FY2017FY2018FY2019FY2020

FY2021

Paid leave acquisition rate (%)

48.7

49.8

53.9

66.0

61.9

Utilized maternity leave (people)

1

1

3

2

3

Utilized childcare leave (people)

0

1

4

2

5

Overwork Countermeasures
In FY2016, Daiseki introduced an overtime work goal management system as an employee overwork countermeasure. In February 2019
we introduced a new attendance system enabling employees to apply and receive online approval facilitating paperless workplaces andhigher efficiency. It also enables us to visualize overtime work, making it easier to reduce long working hours.

Working Hours (Non-consolidated)
Unit (Hours)
FY2017FY2018FY2019FY2020

FY2021

47

49

50

48

45

Average annual overtime

36 Agreement (Non-consolidated)

Scheduled working hours

Crew

Non-crew

Eight hours/day

Eight hours/day

Seven hours/day
Number of hours
exceeding legal
working hours

10 hours/day

50 hours in two weeks
One month

80 hours

45 hours

One year

960 hours

360 hours

One day every two weeks

Four days/month

Number of legal holidays on which employees can work

Note: Excluding special provisions

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Introduction of Employee Health Consultation Services
Daiseki provides health consultation services for its employees. This service enables employees and their families to receive (1) 24-hour
telephone consultations regarding health, medical care, nursing care and childcare, (2) mental health counseling, and (3) second opinion
services. The Daiseki Group is continuously enhancing welfare programs so that employees can work in good health on a daily basis.
While our employee turnover rate is already relatively low, we will continue striving to create an environment in which employees canwork with peace of mind over the long term.

Turnover Rate (Consolidated)
Unit (%)
Turnover Rate

Personal reasons

Company reasons

2.4

0

Note: The turnover rate is a ratio comparing the number of employees who resigned in FY2021 to the number of regularGroup employees as of February 2021.

Enhancing Employee Welfare Systems
To enhance our employee welfare program, the Daiseki Group is a member of the Life Support Club, which enables members to takeadvantage of contracted hotels, golf courses and other recreational facilities throughout Japan. These are used by many Daiseki employees
every year, providing them with relaxation and fun. Further, all officers and employees are eligible to participate in the employee stock
ownership program, which is advantageous as Daiseki provides subsidies to participating employees.

Welfare System (Consolidated)
Unit (people)
Total Number of Life
Support Club Users

FY2017FY2018FY2019FY2020

FY2021

823

1,493

2,224

3,001

2,019

Employee Stock Ownership Program Membership (Consolidated) at FY2021 End
Unit (people)
Employees

Eligible employees

Members983

625

Creating Workplaces Where Women Play Active Roles andPromoting Diversity
Daiseki is engaged in providing employment environments and creating workplaces where women are able to play
active roles and promoting diversity.

Initiatives Supporting the Active Participation of Women (Non-consolidated)
Having achieved the objectives as an action plan to promote women’s active participation, in FY2022 Daiseki formulated two new actionplans targeting 10 or more women working in sales positions and a difference in average number of years worked between men andwomen of less than three years. As of the end of FY2021, Daiseki had 74 sales positions for men and 5 for women, and the average lengthof service was 11.9 years for men and 7.5 years for women (consolidated: 10.4 years for men and 6.8 years for women).

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In FY2021, Daiseki welcomed a woman director from outside the Company who will promote diversity. Additionally, two general office
employees were converted to career-track positions. In FY2022, we promoted one woman to a managerial position. Going forward, we
will continue to create internal systems and work environments making it easy and comfortable for women to work after marriage orchildbirth, while striving to achieve the aforementioned action plans.
Daiseki is involved in the Aichi Women’s Active Participations Promotion Project led by Aichi Prefecture, the details of which are as
follows.

Declaration of Support for the Active Participation of Women Details
Based on the philosophy of contributing to society by creating a better environment, Daiseki is proactively engaged in creating workplaces
enabling the active participation of women by actively increasing the number of female employees hired or promoted to important
positions.

Promotion of Diversity (Consolidated)
At the Daiseki Group, we are increasing the number of women hired, while actively hiring mid-career employees for management
positions.

Employees by Gender (Consolidated)

Managers by Gender (Consolidated)

826

157

3
184

FY2021 end

Men

Women

FY2021 end

Note: Full-time

Note: Full-time

employees only

employees only

Men

New Graduate and Mid-Career Managers(Consolidated)

Women

Hires by Gender (Consolidated)（New Graduates）

31

14

FY2021 end

12

FY2021 end

156
Note: Full-time

New graduates

Mid-career

employees only

Note: Full-time

Men

Women

employees only

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Average Years Worked by Gender(Consolidated) at FY2021 End

Average Annual Salary by Gender(Consolidated) at FY2021 End(Years)(Ten thousand yen)

15

800
675

10.4
10

600
6.8

432

5

400
Note: Full-time

Note: Full-time

employees only

employees only

200

0
Men

Women

Men

Women

Female Sales Personnel (Non-consolidated)
Unit (people)
FY2017FY2018FY2019FY2020

FY2021

1

1

2

5

5

Female Sales Personnel

Female Employees Converted to Career-Track Positions (Non-consolidated)
Unit (people)
FY2017FY2018FY2019FY2020

FY2021

1

4

3

1

2

Female Employees Converted
to Career-Track Positions

Efforts to Balance Work and Childrearing
To makes it easier for employees to balance work and childrearing, Daiseki formulated an action plan enabling employees to fully
demonstrate their abilities by creating an environment where all employees can work comfortably. To make it even easier for employees totake maternity and childcare leave or paid holidays, during the five-year period starting in FY2022 we will engage in the following
activities.

Duration:

Five years, from May 16, 2021, to May 15, 2026

Goal 1:

Provide and disseminate information on maternity leave, childcare leave, childcare leave benefits and exemptions fromsocial insurance premiums while on childcare leave to create an environment in which male and female employees caneasily utilize childcare leave.

Measure 1:

Starting in May 2021: Examine various systems based on the law Starting in March 2022: Distribute pamphlets aboutsystems to employees

Goal 2:

Increase annual utilization of paid leave to 70% or more

Measure 2:

Starting in May 2021: Understanding current utilization rates
Starting in March 2022: Annual training for managers to encourage regular utilization

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Human Resource Development and Workplace Improvement Efforts
Daiseki strives to enhance training for the development of human resources who will lead the future. We provide training in accordancewith each skill and experience level, including new employee training, skill enhancement training conducted several years after employees
join the company and training for new managers appointed for the first time.
Further, we conduct monthly compliance study sessions in which all employees participate, safety education for employees involved inwaste treatment and training for Vice Office Managers on how to conduct individual employee interviews.
Starting in FY2022, we are utilizing e-learning to conduct training for Vice Office Managers and Factory Directors to inculcate
organizational, leadership, strategic, marketing, business ethics, accounting and finance and other skills necessary in their future role ofmanager. Going forward, we will further refine the scope and enhance the content of training programs to develop human resources
capable of driving the future of Daiseki.

Promoting the Employment of Diverse Human Resources
Daiseki regards ongoing hiring and retention of employees as an important management issue. We have never reduced our number of
employees even once in the past, and we regularly hire new graduates. We are also engaged in ongoing efforts to hire people withdisabilities to ensure sufficient human resource diversity. At Daiseki, rather than establishing a special subsidiary where people withdisabilities engage in non-core business activities, they are given the same tasks as regular employees, whom they work alongside on adaily basis.
For employees who wish to be rehired after retirement and meet conditions established by the Company, we established a reemployment
system enabling employees to continue working with peace of mind until they reach 65 years of age.
At present, although Daiseki does not employ any foreign nationals, we have plans to hire foreign nationals as needed when expanding
overseas in the future.

Employment of People with Disabilities and Rehired Employees (Non-consolidated)

Number of Employees with
Disabilities (people)
Employees Seeking to Be
Rehired After Retirement (%)
Rehired Employees (%)

FY2017FY2018FY2019FY2020

FY2021

13

12

12

12

13

100

100

75

100

92

100

100

100

100

100

Work Environment Improvement Project Activities
Since FY2020, Daiseki has been engaged in the Work Environment Improvement Project. This involves in-house improvement activities
aimed at creating a workplace where all employees can work in health and safety. Improvement proposals are posted on the Daiseki inhouse bulletin board as improvement reports for all employees to review. In FY2021, we streamlined shipping operations by converting
paper delivery documents to PDF, revised document storage limit requirements to sort out unnecessary documents, expanded subsidies forflu shots, systematized our year-end tax adjustment application and outsourced confirmation work, created a manual for handlingunwanted phone calls and established a safety management system to safely check incoming industrial waste. In FY2022, we introduced
air-conditioned suits to prevent heatstroke and established a system granting special leave for COVID-19 vaccinations. We want to make iteven easier for employees to work so Daiseki can grow sustainably. Going forward, we will continue responding to employee requests andfeedback leading to a better Daiseki.

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SafetyTo ensure employee safety, we are revising our safety management system and expanding safety and health activities.

Safety and Health Efforts
Daiseki established a safety and health policy and management
system with the President in charge that conducts activities suchas safety competitions, unsafe incident scenario training and risk
assessments at all business sites.

Safety and Health Policy

Safety and Health Management System

President and Representative Director

Headquarters of Business Generalization

Delegation of authority regarding safety
management
Safety Management Department

Cooperate

Works Manager

Safety Promotion Manager
Safety Promotion Office

Health Supervisor

Safety and Health Committee Member

Safety Manager

Note: At the Chiba Works, which has less than 50 employees, it is not necessary to appoint a Safety and HealthManager, thus a Safety and Health Promoter has been appointed.

Safety Promotion Manager Appointment
Safety Promotion Offices have been established at each business site managed by Safety Promotion Managers appointed to promote
safety. The President delegates the authority to promote safety to a person in charge at each worksite who provides guidance to staff
and implements various safety measures.

Safety Promotion Manager

Danger Prediction Training

appointment (Hokuriku Works)(Kansai Works)

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Safety Promotion Efforts Led by the Safety Promotion Office
At Daiseki, Safety Promotion Offices at each business site play a central role in accident prevention efforts. To prevent accidents during
waste collection and cleanup at the customer worksites, since FY2021 we have invited professional outside lecturers to all business sites,with a total of 84 employees educated on the correct danger prediction (“kiken yochi”: KY) procedures (in FY2022, Daiseki employees
will acquire instructor qualifications to serve as instructors providing in-house training on danger prediction). Additionally, Safety
Promotion Office staff accompany collection teams to customer sites and confirm dangers at pick-up locations. Details are then provided
to sales staff, enabling us to share workplace information and request customers make improvements. If an accident occurs, the Safety
Promotion Office conducts in-depth inquiries into causal factors and persons involved in the accident, establishing systems leading to theexamination of effective countermeasures.
Daiseki holds regular safety meetings attended by Safety Promotion Managers who share the progress of safety activities at eachbusiness site. At these meetings, opinions are exchanged on progress and problems related to the promotion of safety and healthactivities and the prevention of accident recurrence at all business sites.

Work-related Safety and Health Initiatives
Daiseki strives to create a safe working environment through efforts to prevent work-related accidents and ensure the physical and mental
health of all employees.

Work-related Accidents in FY2021
In FY2021, there were eight accidents accompanied by lost worktime and one accident not accompanied by lost worktime in the DaisekiGroup. Work-related accidents include falls and fractures occurring during pickup work. The majority of work-related accidents are caused
by unsafe behaviors, such as the failure to confirm safety before engaging in work.

Work-related Accidents (Consolidated)

Unit (accidents)
FY2017FY2018FY2019FY2020

FY2021

Fatalities

0

0

0

0

0

Accidents accompanied by lost worktime

7

7

5

7

8

Accidents not accompanied by lost worktime

10

10

12

4

1

Unsafe Incident Proposal System
Daiseki has an unsafe incident proposal system and implements risk assessments every month. In FY2021, there were 6,531 proposals
and 31 serious unsafe incidents at a monthly submission rate of 84.9%. Of the proposed unsafe incidents, those posing the highest risks
are addressed by the Safety Promotion Office, which monitors the progress of swift countermeasures.

Concerns for Healthy Employee Minds and Bodies
Regular Medical Checkups and Comprehensive Health Examinations
Daiseki continues to provide medical exams for all employees to maintain and improve health. We also facilitate comprehensive healthexaminations for employees aged 35 and over to ensure the early detection and treatment of illness.

Stress Checks
Daiseki has been conducting stress checks at all business sites since FY2017. Employees experiencing high levels of stress arereassigned appropriately based on their requests as well as interviews and consultations with physicians.

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Unit (%)
FY2017FY2018FY2019FY2020

FY2021Stress check implementation rate

97.4

99.3

99.8

99.1

99.3

Proportion of highly stressed employees

7.6

7.0

5.9

3.7

4.5

Preventing Vehicle Accidents, Promoting Security andDisaster Prevention
Emphasizing impacts on communities and the natural environment, Daiseki strives to prevent environmental pollution accidents during
the collection and transportation of waste to ensure safety and prevent disasters.

Vehicle Accident Prevention Initiatives
Daiseki uses a variety of heavy machinery and commercial vehicles in waste collection and sales activities and takes the prevention ofdriving accidents seriously. Tanker trucks, vacuum trucks and other large vehicles are regularly inspected on both a daily and quarterly
basis. In an effort to prevent accidents, Daiseki employees carry yellow safety cards and a copy of business work standards that include
emergency contact information as well as cargo product names and associated hazards.
In FY2021, Daiseki equipped all vehicles with dashcam recorders to regularly monitor employee driving habits to ensure safe
driving. Additionally, we installed digital tachographs in large vehicles to evaluate employees driving and eliminate dangerous driving
habits.
Subcontractors that collect and transport waste are asked to attend Safety Council meetings held regularly at all business sites toenhance safety awareness.

Promoting Security and Disaster Prevention
Daiseki operates hazardous material facilities at each worksite and makes every effort to ensure the safety and prevent accidents inaccordance with to the Fire Service Act. To prepare for the Nankai Trough megathrust and other major earthquakes, disasterprevention drills are held annually at all worksites assuming tsunami and fire scenarios. From FY2022, we conduct launch training toready the Disaster Response Headquarters at the Head Office. The purpose of this training is to ascertain damage at each business siteand smoothly provide instructions in the event of a disaster. Further, Daiseki introduced a safety confirmation system enabling theCompany to confirm the location and safety of all employees. Satellite phones were also installed at all works to quickly ascertain
employee safety and confirm damage to facilities. Emergency food and survival equipment are always available at all business sites in
preparation for accidents or natural disasters.
As an industrial waste disposal company, the rapid restoration of facilities is critical for promptly providing reconstruction support that
includes the disposal of rubble, debris and other waste generated when disasters occur. Additionally, all Daiseki worksites formulate
business continuity plans (BCP)* and remain prepared to respond in the event of a disaster. In particular, with regard to themaintenance of activated sludge facilities critical to waste treatment, mobile generators and generator connection switching equipment
have been installed at all works so Daiseki facilities can quickly resume operations when a disaster strikes. Small generators are
installed in offices so that administrative operations can also be quickly restored.

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Note: Business continuity plans set forth actions to be taken in normal as well as emergency
operation scenarios in the event a company is affected by natural disasters,
catastrophes, terrorist attacks or other emergencies, enabling business to continue orquickly recover with minimal damage to business assets.

Fire Extinguisher Training(Nagoya Works)

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Local Communities
The understanding of neighboring communities and businesses is essential for the operation of an industrial waste treatment business. While
striving to engage in proactive dialogues and exchanges, Daiseki is also engaged in social contributions leading to the invigoration of local
communities.

Conducting Tours at Daiseki Works
Daiseki conducts tours at its works, mainly for customers that generate industrial waste, on an irregular basis. In FY2021, 1,029 people
from 652 companies participated in these tours. Tour attendees are asked to participate in a survey evaluating the works in terms oftidiness and organization, safety conditions, employee attitudes and other factors on a scale of 0–5 points. Respondents gave Daiseki anaverage high rating of 4.6 or more points between March–June 2021. We make an effort to incorporate the results of this survey into ourbusiness by sharing them with employees, identifying issues that need to be addressed and providing recommendations for improvement
to relevant employees. In addition to customers, every year Daiseki invites local residents and odor monitors to tour our facilities so we
can explain our activities and initiatives. Going forward, we plan to hold video tours for customers who have difficultly visiting Daiseki
works due to the COVID-19 pandemic.

Tour for local residents (Nagoya Works)

Odor monitor roundtable (Hokuriku Works)

Support for Recovery from Environmental Pollution and Other Accidents Caused by Natural
Disasters
Each Daiseki business site engages in recovery activities in the event of environmental pollution accidents that occur at nearby
factories, on roads, in rivers or other locations due to typhoons and other natural disasters. In FY2021, the Hokuriku Works collected
and treated approximately 150 tons of waste liquids that flowed into a regulating pond at a nearby factory in support of resuming its
operations. Further, at the Kanto Works, waste liquids were collected and processed from factories in areas where power outages
occurred due to the February 2021 Fukushima Prefecture Offshore Earthquake. Going forward, Daiseki will continue to improve thesesystems to contribute to rapid recovery after environmental pollution accidents caused by natural disasters.

Disseminating and Exchanging Information with Local Communities
Daiseki makes an effort to engage in dialogues with residents living near our facilities, participating in and sponsoring local
revitalization, cleanup and beautification activities. We also strive to disseminate information through events that attract attention
related to the environment and briefing sessions for investors and other stakeholders.

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ESG Report Daiseki Co., Ltd.

Industry-Academia Collaboration Efforts with Universities
In April 2020, a group from the Urban Infrastructure Planning
Laboratory at the Nagoya Institute of Technology led by Professor
Hideshima visited Daiseki to inspect our works and exchange
opinions on Daiseki's industrial waste treatment and recycling
initiatives. Going forward, Daiseki will proactively promote industryacademia collaborations.

Group from the Urban Infrastructure Planning Laboratory,
Nagoya Institute of Technology

ESG Briefings for Institutional Investors
For the first time in 2021, we held an ESG briefing session for
institutional investors to explain Daiseki's ESG activities. Our aim is tohelp people understand that Daiseki contributes to society from theperspective of the SDGs by reducing greenhouse gas emissions,purifying water, recycling resources and providing disaster relief. At thisyear’s briefing, concrete examples of Daiseki’s environmental (E) efforts,
which are a noteworthy feature of Daiseki ESG activities, were
presented. Through these efforts, we hope to increase the number of

ESG briefing slide

people who understand and support our business.

Virtual Japan Pavilion Exhibition
In March 2021, Daiseki exhibited at the Virtual Japan Pavilion,
organized by the Ministry of the Environment and positioned as a COP26
preparatory event. Daiseki's recycled products include recycled fuel andcement raw materials. Although large amounts of coal and limestone(including natural resources such as clay) are used in cement production,
the amounts used can be reduced by substituting coal for recycled fueland limestone for cement raw materials. In this way, Daiseki works withcement companies to contribute to reduced fossil fuel usage and thecreation of a recycling-oriented society.
Virtual Japan Pavilion slide

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GovernanceCoverageCompliance
For the Daiseki Group, which operates under licenses, ensuring thorough compliance and fulfilling social and public responsibilities is ourmost important management issue.

Basic Approach to Corporate Governance
Daiseki positions corporate activities that comply with laws and social norms as the most important issue for improving transparency
and soundness in corporate management. We adopted the Company with Audit and Supervisory Committee system, with an Audit andSupervisory Committee comprising three outside directors, further enhancing the supervisory function of directors. Further, one
director is a woman, who offers recommendations from a feminine perspective.
In May 2020, Daiseki introduced an executive officer system with the aim of clarifying business execution responsibilities,
streamlining management and accelerating decision-making. Further, the authority necessary for conducting daily corporate activities
is delegated to the works managers at each of the six worksites and the presidents of six Group companies, with the Management
Meeting held with the participation of directors, executive officers, works managers, directors of consolidated subsidiaries and otherstaff.
The Board of Directors passed a resolution to establish the Internal Control Basic Policy, a system for ensuring appropriate Daiseki
operations.

Corporate Governance System
The following chart shows the status of Daiseki management decision making, internal control and corporate governance systems.

Corporate Governance System
General Meeting of Shareholders
Appoint/Dismiss
Appoint/Dismiss
Board of Directors
Accounting audits
Directors

Audit and Supervisory Committee(excluding Audit and Supervisory

Advice/Guidanc

Audit

Accounting auditor
General Counsel

Committee members)

Appoint/Dismiss/Supervise
ReportRepresentative Director
Internal Control System Promotion Committee
Compliance Committee

Cooperation

Risk Management Committee

Directors

Management Meeting(directors, executive officers, works managers,
directors of consolidated subsidiaries and other staff)

Deliberation regarding
execution of duties

Divisions, Works and consolidated subsidiaries

Audit OfficeInternal audits

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Basic Approach to Internal Controls
Based on the Companies Act and the Ordinance for Enforcement of the Companies Act, Daiseki established the following system forensuring the appropriateness of operations (hereinafter, the "internal control system").
Note：see Page 50 for details
1. Within the Daiseki Ethics Charter, Daiseki established three guidelines for corporate behavior that convey its stance on growing anddeveloping alongside society: Social roles and responsibilities, compliance with laws and regulations, respect for human rights andthe fostering of a free and open corporate culture. To achieve perpetual development as an industry leader, Daiseki has developed aninternal control system and strives to embody its Ethics Charter.
2. The Board of Directors formulates basic policies for internal control, provides instructions and supervision on the implementation
status of internal controls, confirms maintenance and operational status and reviews basic policies and countermeasures whennecessary.
3. Daiseki established the Internal Control System Promotion Committee chaired by the President and Representative Director toensure reliable financial reporting through the establishment and maintenance of internal control system programs.

Risk Management
Daiseki established Risk Management Regulations in 2006 to address various risks including earthquakes and other natural disasters,
occupational accidents and information leaks. Additionally, we created a risk map and established a response system defining
responsible departments for each risk classification.
The Risk Management Committee, which plays a central role in risk management, is chaired by the President and Representative
Director and manages risks facing the Daiseki Group thoroughly and comprehensively. We determine countermeasures for risks ofhigh importance and strive to control risks, review the risk map every year and promptly determine the department in charge torespond to newly identified risks. The Audit Office audits the risk management status of each department, reports the results to the
Risk Management Committee and the Board of Directors on a regular basis, and deliberates and decides on improvement measures.
In FY2022, the Daiseki Group began discussing risk analysis in light of climate change based on TCFD recommendations at theEnvironmental Headquarters and Risk Management Committee meetings, with progress confirmed at Management Meeting andresults reported to the Board of Directors.
Note：see Page 26 for details

Compliance System
Daiseki established a Compliance Committee in May 2002 and formulated an Ethics Charter announced within and outside theCompany. Environmental laws and regulations related to the Waste Management and Public Cleansing Act are observed in thecollection, transportation and intermediate treatment of industrial waste, while the Fire Service Act is observed in the manufacture andsale of waste oil and petroleum products.
Daiseki also stipulates the “handling of transactions with public institutions, political contributions, donations, etc.” in its code of
conduct, and takes rigorous measures to avoid entertaining or giving gifts to officials of public institutions (including former officials),
except items permitted by law.

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GovernanceCoverageCompliance System

Compliance Committee
Objective

To plan various measures fostering compliance awareness throughout the organization and confirm thestatus of awareness among employees.

Composition

Chairman: President and Representative Director

Vice Chairman:General Manager, Headquarters of Business Generalization;
General Manager, Headquarters of Planning and Management

Committee members: Director in charge of Headquarters of Business Generalization;
Managers of Departments of Headquarters; Manager of Audit OfficeSecretariat
Chief Secretary: General Manager, Headquarters of Planning and Management
In charge: Headquarters Compliance Promotion Officer

Compliance Officer: Department Managers and Heads of Works(ultimate authority in departments and works)

In charge of compliance: Those in authority higher than Vice WorksManager or Deputy Manager

Employees

Whistleblower Protections
The Daiseki Group established and operates an internal reporting system that is easy for employees to use. The Daiseki Human
Resources Department and corporate lawyers serve as contact points for reporting and the Compliance Committee manages thewhistleblowing system to receive reports from employees. Employees are asked to use the internal reporting system to report all noncompliance. The whistleblowing system stipulates the protection of whistleblowers so that employees who make report suffer noadversity, with all information from whistleblowers handled in the strictest confidence only by those who respond in the whistleblower
system so no information is leaked to the outside. When a report is made, in addition to information provided by the reporting
employee and hearings conducted with the employee who was reported on, Daiseki confirms facts based on eyewitness reports fromsurrounding employees and the investigation of objective facts to resolve issues from the standpoint of fairness.

Information Protection and Management
In 2005, Daiseki formulated Personal Information Protection Rules to ensure all officers and employees maintain a thoroughunderstanding of appropriate personal information protections in an effort to strengthen management.
Based on the Information Security Basic Policy formulated that same year, we strictly manage and control the creation, use, removal
and storage of information. We also prohibit the leaking of insider information to third parties or for personal use. In FY2021, there
were no incidents involving the leak of personal information.

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ESG Report Daiseki Co., Ltd.

Respect for Intellectual Property Rights
Daiseki formulated employee invention regulations to address inventions and other intellectual property created by employees whileon the job. By clarifying the attribution of rights to employee inventions and guaranteeing inventor rights, we are working to increase
motivation for research and development.

Compliance with the Excellent Industrial Waste Disposal Company Certification System
The purpose of this system is to create an environment in which generators of industrial waste can easily outsource treatment toexcellent certified businesses and to promote the proper treatment of industrial waste. If an industrial waste disposal company with atrack record of five years or more meets certain standards, a seal of excellence will be printed on the permit and introduced on the
Industrial Waste Information Net website.
Ensuring business transparency is one of the criteria for certification as an excellent industrial waste disposal company. To this end,
Daiseki regularly discloses details including business summaries and overviews of processing capacity and processes on the Industrial
Waste Information Net website.
Daiseki was the first operator to be certified under this system by the city of Nagoya in 2011, and as of February 28, 2021, we werecertified as excellent by a total of 48 local governments (44 prefectures and four cities).

Compliance Study Sessions
To fulfill our social role and responsibilities, comply with laws and regulations, respect human rights and cultivate a free and open
corporate culture, Daiseki Ethics Charter stipulates the following guidelines. Additionally, compliance study sessions are held every
month at all works to ensure employees maintain daily mindfulness of the Ethics Charter, and all employees receive education ondifferent themes set by the head office each month. Daiseki education activities are presented in a debate format to ensure everyone
takes an interest.

Developing Sound Corporate Activities
Daiseki corporate activities are built on relationships with a large number of stakeholders, including business partners, shareholders
and local communities. We are responsible for meeting stakeholder expectations through sound corporate activities, compliance with
relevant laws and regulations and fair business relationships.
(1) Engage with all business partners in good faith, justly and fairly.
(2) Establish mutually beneficial relationships with business partners and aim for stable growth and development.
(3) Conduct corporate activities in accordance with social norms and standard business practices.
(4) Build an internal control system for the purpose of ensuring the reliability of financial reports.
(5) Aim to enhance shareholder returns as profits grow.

Respect for the Global Environment
The global environment is irreplaceable for human beings. Daiseki conducts business activities using both resources and energy
required for production as well as the great natural abundance of nature and the Earth in a variety of respects. As long as the Earth's
resources and environment remain limited, environmental conservation will be a perennial challenge for mankind. Daiseki considers
proactive efforts toward protection of the global environment to be its corporate responsibility and positions such efforts as amanagement priority.

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GovernanceCoverage(1) Strive to conserve resources and energy through business activities and reduce adverse environment impacts through waste control
and awareness the promotion of recycling.
(2) To contribute to the realization of a sound recycling-oriented society with fewer environmental burdens, Daiseki will strive to
reduce and prevent environmental burdens through our business activities and continuous environmental improvements.
(3) Create and maintain an environmental management system and continuously engage in improvements.
(4) Comply with required standards such as environmental laws, regulations and agreements.

Observing the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade
Based on the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, which is the basic rule formaintaining fair competition in a free economy and society, Daiseki has established and adheres to the following rules.
(1) Do not discuss or enter into agreements that mutually restrict free corporate activities.
(2) Do not use one’s position to influence business transactions.
(3) Do not make inappropriate displays or provide excessive gifts or prizes.

Treatment of Entertainment and Gifts
Daiseki’s basic stance is to never engage in any acts of bribery, corruption or acts that deviate from general business practices. To thisend, Daiseki complies with the following guidelines.
(1) Due to social conventions, we will not entertain or give gifts to business partners and other stakeholders who are beyond the scopeof such courtesies.
(2) We will not entertain or give gifts to current or former civil servant employees, except when permitted by law.
(3) Due to social conventions, Daiseki shareholders must not be provided with entertainment or gifts that exceed the scope of common
courtesy.
(4) Daiseki does not give any favors to antisocial forces (extortionists).
Regarding business dinners and entertainment, at Daiseki we established rules for handling entertainment expenses, including thesubmission of a prescribed application form in advance in order to receive approval from a supervisor, which are regularly
reviewed by the Audit Office to confirm the status of compliance by internal audit.

Transactions with Public Institutions, Handling of Political Contributions and Donations
Transactions with public institutions, as well as political contributions and donations, are handled as follows in compliance with
relevant laws and regulations.
(1) Act with thorough consideration for sociality, commonality, necessity, etc.
(2) Do not make illegal political contributions.

Protecting Human Rights
Daiseki respects the basic human rights of its employees and strives to prevent discrimination and human rights violations on thebasis of race, beliefs, gender, physical disabilities or other anomalies. To this end, power harassment workshops for all managers are
conducted regularly by an outside lecturer. Additionally, we have conducted training for new managers every year since FY2017(with a total of 88 employees completing the course as of the beginning of FY2022), while also conducting training aimed at

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Coveragepreventing sexual and power harassment. Further, the Human Resources Department regularly interviews employees to monitor forhuman rights violations.
(1) Respect the basic human rights of employees, do not discriminate on the basis of race, creed, gender, physical disability, or forother reasons under any circumstances.
(2) Protect personal privacy.
(3) Do not engage in sexual harassment or other acts that violate human rights.
(4) Create a corporate culture in which employees have mutual respect for one another.

Internal Control Basic Policies
Based on the Companies Act and the Ordinance for Enforcement of the Companies Act, Daiseki has established the following systemfor ensuring the appropriateness of operations (hereinafter, the “internal control system”). The Internal Control System Promotion
Committee, chaired by the Daiseki President and Representative Director, has been organized to carry out concrete developments
centered on ensuring the reliability of financial reporting through the implementation of internal control system programs.

(1) System ensuring the execution of duties by Daiseki directors, executive officers and employees is compliant
with laws, regulations and the Articles of Incorporation.
1. Under the strong leadership of the President and Representative Director, all Daiseki officers and employees repeatedly study the
Code of Ethics (Management Philosophy) (Ethics Charter) (Code of Conduct) established by Daiseki, maintain an awareness ofour social role and responsibilities as a company and ensure all employees adopt the basic stance of growing and developing
together with society.
2. A Compliance Committee chaired by the Daiseki President and Representative Director has been organized to establish a
Company-wide compliance system and identify problems. The Committee will analyze compliance risks specific to eachdepartment and implement countermeasures.
3. Daiseki established a system for the prompt reporting of compliance issues discovered by Daiseki directors, executive officers or
the compliance officers in each department to the Compliance Committee, which works to ensure countermeasures arethoroughly implemented. The Company inculcates a detailed understanding of the significance of the compliance consultation
desk (corporate ethics hotline) and a recognition that it enables employees to directly report issues and receive consultation. Upon
receiving a report or consultation, the Compliance Committee investigates the details, determines recurrence prevention measuresin consultation with the department in charge, and thoroughly implements recurrence prevention measures Company-wide. For
those who submit reports or seek consultation, the Company responds in accordance with the Internal Reporting and Consultation
Regulations established separately. Depending on the reported content, information is disclosed when appropriate.
Note：see Page 47 for details
4. The Daiseki Audit Office, in cooperation with the Compliance Committee, audits the status of compliance.
5. Regarding violations of laws, regulations or the Articles of Incorporation by Daiseki Group employees, the Compliance
Committee asks the Human Resources Department to administer penalties. With regard to violations of laws, regulations or the
Articles of Incorporation by directors, the Compliance Committee recommends specific disposition measures to the Board of
Directors.

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6.The department in charge of responding to unreasonable demands by antisocial forces shall be the General Affairs Department andDaiseki shall prepare and educate response manuals and respond resolutely to antisocial forces in cooperation with the police andother related organizations.

(2) System for storing and managing information related to the execution of duties by directors
1. The Daiseki President and Representative Director instructs the director in charge of the General Affairs Department to store andmanage information related to the execution of duties by directors (excluding directors who are Audit and Supervisory Committee
members). In accordance with Company-wide document management and information security management regulations,information related to the execution of duties is recorded and stored in printed document form or digital media.
2. Directors shall be able to view these documents as necessary.

(3) Daiseki regulations and other systems for managing loss risks
1. The Daiseki Group formulates Risk Management Regulations, creates risk maps and categorizes risks according to thedepartment responsible for their mitigation. A Risk Management Committee, chaired by the Daiseki President and Representative
Director, shall be organized to thoroughly and comprehensively manage risks faced by Daiseki. For risks of high importance,
countermeasures are formulated in an effort to effect risk control. For newly identified risks, the departments in charge shall beassigned promptly.
2. The Audit Office audits the status of risk management by each department, reports the results to the Board of Directors of the
Risk Management Committee on a regular basis, and deliberates and decides on improvement measures.

(4) System for ensuring the efficient execution of duties by Daiseki directors
Engaging in detailed business management as described below, the Daiseki Group attempts to enhance the efficiency of duties
executed by directors (excluding directors who are also Audit and Supervisory Committee members. The same applies throughout
the remainder of this section).
1. Clarify authority and decision-making rules by reviewing rules pertaining to the Board of Directors, the organization, the divisionof duties and work authority.
2. Enhance the Management Meeting comprising directors, executive officers, works managers, subsidiary directors and others bysetting performance targets and budgets for each business division and thoroughly managing monthly and quarterly performanceutilizing IT.
3. Review monthly performance at Management Meeting and Board of Directors meetings, and implement improvement measures(5) A system for ensuring the appropriateness of corporate operations comprising Daiseki and its subsidiaries
and a system for reporting matters related to the execution of duties by subsidiary directors to Daiseki.
1. With the aim of creating internal controls within Daiseki and its subsidiaries, the Company shall create a system in which the
Headquarters of Business Generalization manages operations and the Headquarters of Planning and Management manages
compliance, with instructions and requests efficiently transmitted through monthly sessions of the Management Meeting.
2. Daiseki directors (excluding directors who are Audit and Supervisory Committee members), executive officers, works managers
and subsidiary presidents have the authority and responsibility to establish and operate internal controls to ensure theappropriateness of business execution in each department.

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3. The Daiseki Audit Office conducts internal audits of Daiseki and its subsidiaries, reports results to the department in charge andthe person in charge of the department, and provides guidance, support and advice on measures to improve internal controls at
the Management Meeting, etc.
4. The Company shall establish Affiliated Company Management Regulations that clearly define items for which prior consultation
and reporting is required of subsidiaries, establishing a consultation and reporting system.

(6) Matters concerning directors and employees who should assist Audit and Supervisory Committee duties,
matters concerning independence of the directors and employees from directors, and matters concerning
ensuring the effectiveness of instructions given to relevant directors and employees of the Audit andSupervisory Committee.
1. Daiseki will not appoint a director or employee to assist in the foreseeable future. However, if the Audit and Supervisory
Committee deems it necessary and there is a request for such an appointment, it will be resolved promptly. Additionally, directors
and employees shall be independent of the internal organization.
2. The Audit and Supervisory Committee can order the Audit Office staff to carry out matters necessary for auditing, while Audit
and Supervisory Committee members who received orders necessary for auditing shall be exempt from instructions and orders bydirectors (except for directors who are members of the Audit and Supervisory Committee. The same shall apply hereinafter in thissection). Additionally, directors and employees shall cooperate to ensure that the directors and employees under Audit andSupervisory Committee Audit execute their instructions.

(7) Audit and Supervisory Committee reporting system for directors, executive officers and employees of Daiseki
and its subsidiaries, or those who receive reports from these persons and a system ensuring no one istreated unfavorably because of reported content.
1. Discuss with the Audit and Supervisory Committee rules that determine matters to be reported to the Audit and Supervisory
Committee, with directors (excluding directors who are Audit and Supervisory Committee members) and executive officers
reporting on the following matters to the Audit and Supervisory Committee.
・Matters that may cause significant damage to the Company
・Important matters concerning monthly business conditions
・Important matters regarding internal audit status and risk management
・Serious violations of laws, regulations or the Articles of Incorporation
・Reporting and/or consultation status and details from the Compliance Consultation Desk (Corporate Ethics Hotline)
・Other important compliance matters
2. If employees discover a material fact regarding (1) and (4) above, he or she may report it directly to the Audit and Supervisory
Committee.
3. The Company shall ensure that employees making reports are not treated unfavorably in accordance with the provisions of theInternal Report and Consultation Regulations established separately.

(8) Prepaid or redemption procedures for expenses incurred in the execution of duties by directors who are Audit
and Supervisory Committee members, and other matters related to policies related to the processing ofexpenses or debts incurred in the execution of such duties.

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Regarding costs and other expenses incurred in the execution of duties by directors who are Audit and Supervisory Committee
members, said directors may request reimbursement from the Company in accordance with the Audit and Supervisory Committee
Audit and Supervisory Regulations established separately, bearing in mind efficiency and appropriateness.

(9) Other systems to ensure audits by the Audit and Supervisory Committee are carried out effectively
The division of duties according to Audit and Supervisory Committee Regulations, the regular exchange of opinions with Daiseki
representative directors, accounting auditor audits and the regular exchange of information are facilitated through the Management
Letter and other means. Additionally, the Company shall create a system enabling the receipt of advice from legal consul whennecessary.

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Third-party Assurance

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