T . H A S E G AWA

Sustainability Report

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

TABLE OF CONTENTS
T.Hasegawa CO., LTD. SUSTAINABILITY REPORT 2024
CSR Policy 1 :Company overview

Company overview

2

14

Message from the President

Message from the President

3

T.Hasegawa Group’s purpose
Value creation process/Coexistence with environment and community
T.Hasegawa Corporate Code of Conduct

CSR Policy 5 :38

17Environment

Governance -- Fair corporate activities
CSR Policy 6 :CSR Policy 2 :Value creation story

5
6
7

Procurement

49

Innovation

CSR Policy 3 :23

Human rights and labor
CSR Policy 4 :Sustainability initiatives of the T.Hasegawa Group

8
12
13

32

Quality safety

Sustainability initiatives of the T.Hasegawa Group
Stakeholder engagement
Supporting and participating groups and global initiatives

About this report
The report aims to communicate the Group’s relationship and its value
creation to its stakeholders. In addition, we report on important initiatives
based on the Company’s CSR Policy, thereby continuing to promote oursustainability initiatives.
In principle, we publish a Sustainability Report once every year in May. We also prepare ESG Databook 2024 and the GRI Standards Index, which are supplementarymaterials and integral parts of this report. Furthermore, we will disclose the report
after the approval of the Strategy Committee, which consists of the representative
director and senior vice presidents appointed by the representative director.

Referenced guidelines
This report was created with reference to the GRI Standards.

FY2024 initiatives are also disclosed. Note that each fiscal year listed
in the ESG Databook 2024 refers to the year from October 1 of theprevious year to September 30 of the current year.

Organization to be reported
In principle, T.Hasegawa CO., LTD. Note that “T.Hasegawa Group,” “theGroup,” and “our Group” refer to the Company and its subsidiaries
as a whole.

For inquiries concerning this report,
contact the CSR Division of T.Hasegawa CO., LTD.
E-mail : eco@t-hasegawa.co.jp

Period covered by the report
In principle, FY2023 (October 1, 2022 to September 30, 2023). Some

Date of publication
Japanese edition : May 2024

English edition : May 2024

1

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 4 :CSR Policy 3 :Human rights and labor

Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Company overview
Consolidated performance (FY2023)(million yen)

Net sales

64,874

Operating profit

7,507

Ordinary profit

8,185

Net profit attributable to owners of parent

6,671

Segment information

120

88%

Net sales

Fragrance
Over 120 years in businessFlavor12%

No. 2 market share in Japan

2

T.Hasegawa was established in 1903, at the
beginning of the flavor and fragrance industry in Japan. Since then, we have accumulated flavor and fragrance know-how forover 100 years as a leading company.

T.Hasegawa boasts the No. 2 market share in
Japan and No. 10 in the world, with net salesof approximately 65 billion yen. We develop
various processed foods including beverages,
daily necessities, and toiletry products fromthe aspect of flavor and fragrance.

Ratio of operating
profit to sales

Ratio of overseas sales

Flavor

Applications

Beverages, frozen and other desserts, confectioneries, dairy products,
chewing gum,
instant food, retort pouch food, animal feed, etc.

Fragrance

11.6 %

46.5 %

T.Hasegawa’s ratio of operating profit to sales
has remained high, at around 10% in past
years. The company has engaged in soundmanagement with high profitability since its
listing on the stock exchange in 2000.

T.Hasegawa’s overseas sales now accountfor more than 40% of our total sales, and weare developing into an increasingly global
flavor and fragrance company.

Applications

Perfumes, skin-care products, haircare products, body-care products,
bath additives, detergents, fabric softeners, air fresheners, etc.

2

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Message from the President

Food (flavor)

In the Flavor Sector, we will continue to develop flavors by pursuing
an ongoing expansion of health consciousness in society, whichbrings delicious taste to low-sugar, low-salt, and low-fat foods, aswell as flavors that are stable and long-lasting, thereby ensuringsafety and security as our first priority. In addition, we will focus oureﬀorts on the development of flavors that can be used as substitutes for food materials to solve social challenges, such as the shortage of food resources.
Fragrance▲

In order to pursue future growth of the Group, we need to build aresilient organization that can flexibly respond to changes in thebusiness environment and unforeseen circumstances and strengthen its global expansion further while striving to expand its market
share in the domestic market, which is maturing due to the declining birthrate and aging population. We will efficiently allocate management resources to the United States, is our priority region, andto Asia, centering on China and Southeast Asia, to capture market
growth potential and consumer preferences accurately. Furthermore, we will formulate and implement business strategies in response to changes in the business environment. We will also makeinvestments to achieve sustainable growth in the future and aim to
expand our business performance in overseas markets.

outside knowledge and promoting technological innovation throughthe sharing and integration of intellectual assets. Furthermore, we willcontribute to solving challenges facing society by utilizing the technologies we have developed in the flavor and fragrance business.
▲

Since its foundation, the Group has focused on developing diﬀerentiated products with special features by further enhancing its
research and technological development capabilities in light of its
corporate motto of being “A Foundation in Technology.” Throughthese eﬀorts, we aim to contribute to solving social challenges, suchas food shortages, by developing flavors and fragrances used asa substitute for depleting food materials and responding to healthconsciousness.

In the Fragrance Sector, we will work to continue expanding ourmarket share in Japan by conducting thorough basic research andcreating new fragrances with superior safety and stability. Overseas,
we will endeavor to create fragrances preferred by local consumers
based on the results of market research and preference surveys.

Sales

Improving corporate value and solving social
challenges

Takao Umino
President & CEO

Sustainability at the T.Hasegawa Group
Global climate change and natural disasters have exacerbated awide range of social challenges, such as poverty, food shortages,
and increasing income disparity between people all over the world.
Furthermore, the flavor and fragrance industry is greatly aﬀectedby the declining birthrate and aging population in Japan, changes
in consumer needs, and so on. Specifically, abnormal weather andloss of biodiversity due to climate change are expected to have asignificant impact on the yields and quality of natural raw materials
derived from plants and animals, but also on changes in customer
needs and consumer trends as a result of temperature rises.

Our Group’s vision is to contribute to the creation of an enriched society through flavors and fragrances. By creating new value throughinnovation and using flavor and fragrance technologies to solve thechallenges faced by society, we will strive to realize our vision whileaiming to achieve sustainable growth and improve the corporate
value of our Group.

Research
In Japan, under the Business Solution Division, which oversees sales,
research and marketing, we are attempting to refine existing technologies and develop new technologies by clarifying priority areas in orderto promote strategic research and development. Our aim is to improve
our technological development capabilities, which will contribute to
the sustainable growth of our Group. In addition, we will enhance ourbusiness acumen to capture market trends and our competitive mindset through collaboration with sales and marketing and diﬀerentiate
ourselves from our competitors by developing products with uniquecharacteristics. We will then focus on creating new value by leveraging

By collaborating with research and marketing, we will strive to understand the potential customer desires by utilizing market research
and analysis, thereby providing the right solutions that leverage ourcomprehensive strengths. Through these eﬀorts, we aim to establish ourselves as a trusted partner to our customers, expand sales,
and increase our sales share by contributing to customer success.
We will also strengthen our search for and development of new
customers and expand our sales base to support our future growth.

Procurement
To realize stable procurement of high-quality and price-competitive
materials, we promote procurement activities that take into consideration resources, the environment, and human rights. We will
engage in dialogue with our suppliers through supplier assessments
and other means related to human rights, labor, the environment,
fair corporate activities, quality and safety, information security, supply chain, local communities, and corporate governance.

Production and quality control
We will promote further safety measures and develop an occupational
health and safety system. We will also restructure our factories and inte-

3

CONTENTS

Company overview

Message fromthe President

Value creation
story

grate production equipment to accommodate changes in production
items. Furthermore, we will promote coexistence with local residents
by preventing the spread of odors around the factories and reducing
GHG emissions over the long term. Eﬀorts to improve manufacturingmethods, review distribution systems, and optimize inventories will also
continue to reduce manufacturing costs.
We will continue to place the highest priority on complete quality
control and assurance of safety and attempt to provide safe andreliable products that satisfy our customers under a comprehensive
quality assurance system covering research and development, rawmaterials procurement, production, and sales under the leadershipof the Quality Assurance Division, which communicates directly with
the President & CEO.

Overseas expansion
We are expanding our overseas operations based on a strategy ofefficient investment of management resources and steady global
development.
In the United States, we will continue to promote proactive sales
activities for local customers to improve our business performancein the US market. In addition, we will make use of the Rancho Cucamonga, California factory, which commenced operation in June
2023, to increase production capacity and production efficiency in
the United States.
In China, we will focus on developing new customers and cultivating existing customers through strategic sales activities utilizing ourmarketing function. At the same time, we will manage profits withutmost diligence, aiming to expand our business performance interms of both sales and profits. Meanwhile, the new research building was completed in December 2023. We will maximize the functions of the new research building to strengthen our research anddevelopment capabilities and improve the efficiency of our operations.
Under the overall sales strategy for the regions in Southeast Asia,
we will strengthen our sales activities and aim to expand our business performance by collaborating with sales representatives at oursites in Malaysia, Thailand, and Indonesia, as well as in neighboring
regions, and by utilizing our application laboratories. In anticipationof expanding our business performance and increased demand forflavors and fragrances in the future, we will move forward with theplan to construct a new factory in Malaysia.

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

Sustainability
There is a greater demand for initiatives that not only pursue thegrowth of one’s own company but also build a sustainable society
with a greater focus on its stakeholders. Amid these circumstances,
we first organized CSR activities that we have engaged in for many
years. Next, we expressed our support for the IFRA-IOFI Sustainability Charter and the UN Global Compact, which were both signed in2020. Finally, we determined that our materiality is categorized into
two types: solving social issues through our business process andby our products. Then, based on the materiality set forth, we havestipulated six CSR policies (“Procurement,” “Environment,” “Humanrights and labor,” “Quality safety,” “Governance̶Fair corporate activities,” and “Innovation”) in 2020.
In order to promote organizational initiatives for sustainability thatare integral to the business strategy, we established a Sustainability
Committee in 2021.
In March 2022, we endorsed the recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD) to continue
promoting responses to climate change. Considering the stableprocurement of natural raw materials, we have started to consider
implementing biodiversity initiatives in FY2023 for disclosure basedon the Task Force on Nature-Related Financial Disclosure (TNFD).
We have also identified human rights risks that should be dealt withto prevent or mitigate the negative impact of business activities onhuman rights. We take measures to address identified risks and regularly monitor and disclose information to improve our eﬀorts.

Human capitalAs the external environment changes on a daily basis, it is necessary
to hire and develop human resources who can flexibly respond tochange (without regard to race, nationality, gender, religion, disability, or other attributes) and enhance our human capital in order tosolve a range of problems facing the world.

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

an energetic corporate culture in which human resources can growand maintain their motivation. We are committed to providing employees with opportunities to advance their careers fairly.

Gaining and strengthening trust withstakeholders
As a member of society, the Group strives to gain and strengthen
relationships of trust with each of its stakeholders.
For example, to ensure timely and appropriate information disclosure, transparency, and accountability to shareholders, we arestrengthening IR activities by holding individual meetings with analysts and institutional investors, holding financial results briefings for
institutional investors, and enhancing information disclosure.

Conclusion
In considering the sustainable growth of the Company and the realization of a sustainable society, we must look not only one or two
years from now but also evolve with a broader perspective of morethan 100 years into the future. The world of flavors and fragrances
still leaves uncharted territory, but we have the latest science andthe sensibilities we have inherited from more than a century of history. To pursue the limitless possibilities of flavors and fragrances,
we aim to make proposals that exceed expectations as a partner inmanufacturing by analyzing flavor and fragrance trends, developing
new technologies, and strengthening our ability to make proposals
that anticipate potential needs.
In addition, the world is facing a variety of challenges, such as worsening global environmental problems, maturing and diversifying
markets, aging societies, and food resource shortages. By using
flavor and fragrance technologies to solve these problems, we willcontribute to the creation of an enriched society.

The Group considers human resources as capital and promotes
human capital management. This approach aims to maximize thevalue of human resources and increase corporate value over the
medium to long term by continuously considering and implementing improvement measures.
In accordance with the management policy of creating a safe andcomfortable work environment for our employees as well as linking
the management and human resource strategies, we seek to create

4

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

T.Hasegawa Groupʼs purpose
Embracing the corporate motto of being“A Foundation in Technology,”we strive tocontribute to the creation of an enriched society
through flavors and fragrances.

Our corporate motto reflects the T.Hasegawa Group’s desire to provide customers with safe and reliable products. Our divisions
constantly collaborate and work hard together while also engaging in partnerships and joint research with external parties. As amanufacturing partner, we provide proposals that will lead to customer success by exceeding their expectations and identifying
the needs and latent demands of consumers. As a member of society, we will not only work to build and strengthen the relationship with each of our stakeholders but also contribute to the creation of an enriched society using flavor and fragrance technologies to solve the challenges faced by society.

The T.Hasegawa Approach

Our stakeholders

Company Creed

Local communities“A Foundation in Technology”

Management policies

Government
NGOs

Naturalenvironment

Strive to achieve stable and appropriate profit
return to improve corporate value and increase
shareholder profit.
Realize our corporate social responsibilities
by being thoroughly compliant with laws andregulations.

Suppliers

Consumers

Create a safe and comfortable work environment for our employees.

The T.Hasegawa
GroupWork to resolve social issues and contribute to the creation of a sustainable society.

VisionContribute to the creation of an enriched society through flavors and fragrances

Customers

Joint research
partners:

Shareholders
Investors

Universities andresearch institutes

Employees

5

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :CSR Policy 3 :Environment

Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :CSR Policy 6 :Governance

Innovation

Value creation process/Coexistence with environment and community
While realizing an enriched and healthy life throughflavors and fragrances, we contribute to establishinga sustainable society by solving social issues.

Through our value-creation process which consists of “Creation” of unique flavors and fragrances in the world and “Production” of high-quality and safe products, we will contribute to the realization of affluent and healthy living by providing highvalue-added products. We will also use flavor and fragrance technology to solve social challenges and contribute to building
a sustainable society.

Input

Business model

OutputOutcome(financial and non-financial capital)(value creation)(products and services)(environmental value and social value)

High-quality, safety productSafe, reliable and stable quality
Solving social issues through innovation

Natural capitalRaw material and supply
procurement based on supply
chain evaluations

Human capital“Production”

Human resources specializing inflavors and fragrancesIntellectual capital
Accumulate knowledge throughmany years of business continuity
and use of intellectual properties

Manufacturing capital
Integrate system from R&D to
production

Procurement

R&D

Production

The powerof flavor andfragrance
creation
Sales andMarketingBased on thorough basic research, focus
on creating flavors and fragrances withexcellent safety and stability
Develop flavors that bring deliciousness tofoods and fragrances that add color tovarious aspects of life

Environment
SocialNaturalenvironment

Local
communities

Consumers

Realize a rich and healthy life
through flavors and fragrances
Contribute to creating a sustainable society
Responding to health consciousness

Products

Contributing to foodtech
Providing health and enrichment
Solution for an aging society

Social and relational capitalGain strong trust from customers
Collaborate with universities andresearch institutes

Financial capital
Strong financial base that supports
sustainable growth“Creation” of one and only flavors

and fragrances in the world

Flavors used inbeverages, confectionery and otherprocessed foods

Fragrances used inperfumes, cosmetics and commodities

Governance

Shareholders
Investors

Improving corporate value
Sustainable growth

6

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

T.Hasegawa Corporate Code of Conduct

Our Group* embraces our corporate motto, “A Foundation inTechnology,” and reflects our Group’s desire to provide customers
with safe and reliable products. As a member of society, we also
aim to build and strengthen relationships with each of our stakeholders and contribute to the creation of an enriched society byusing flavor and fragrance technologies to solve the challenges
faced by society. To realize this vision, we have established theT.Hasegawa Corporate Code of Conduct as a set of rules thateach of us must observe and ensure that it is shared across theGroup.
All executives and employees of the Group will fulfill their social
responsibilities by understanding and adhering to this Code of
Conduct and acting sincerely and fairly with high ethical standards.

T.Hasegawa Corporate Code of Conduct
1 . Compliance with laws and regulations
We always pay attention to laws and regulations, work to understand them, and act based on social common sense.
2 . Initiatives for environmental issues
As a member of society, we proactively work on environmental
issues to protect the environment.
3 . Opposition to antisocial forces
We stand firm against antisocial forces and organizations of a similar nature and never engage in any relations with such parties.
4 . Respect for human rights
We respect the basic human rights of each individual and never engage in any unfair discrimination or harassment.
5 . Respect for the rights of third parties
We respect the rights of third parties in pursuing the Company’sbusiness and will not infringe on any such rights.
6 . Compliance with quality safety standards
We endeavor to provide safe products that comply with laws under a strict quality control system.
7 . Prohibition of insider trading
We conduct fair stock trading and never conduct insider tradingor any other suspicious stock trading.
8 . Prohibition of conflict of interest
We do not conduct any act as listed below that will or could resultin a conflict between our own and the Company’s self-interest.

( 1 ) Becoming an officer or employee of a competitor of the Company( 2 ) Promoting or supporting the sales activities of a competitorof the Company( 3 ) Performing an act that competes with the business of theCompany
9 . Handling of information inside the Company
We are fully aware of the value of the information possessed by
the Company and of the information provided by third parties. We
strictly manage such information by observing our company rules(“Confidential Information Management Rules” and “Rules Related toInformation Inside the Company and to Insider Trading”).
10. Actions towards customers
We do not engage in any act of entertainment or gift-giving that isregarded as bribery, nor any other act that deviates from sociallyaccepted business practices.
1 1. Relationships with suppliers( 1 ) We interact with suppliers with good sense and sincerity, andtreat them fairly and justly in business transactions.
( 2 ) We do not abuse the Company’s dominant bargaining position to impose any unjustified disadvantages on suppliers.
( 3 ) We never accept rebates or kickbacks from suppliers.

* Some of our overseas sites use a modified version based on this Code of Conduct in accordance with local conditions.

7

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Sustainability of the T.Hasegawa GroupWe promote sustainability by formulating a CSR Policy and developing a company-wide promotion system.

Basic approach and policy
Formulation of a CSR Policy
Based on the CSR activities that we have been conducting and our
support for the IFRA-IOFI Sustainability Charter and the UN Global
Compact, we considered our materiality from two aspects of solving social challenges (contributing through our business processes
and contributing through our products) and we have established six
CSR policies.

CSR Policy : Formulation process and regular review

1

Signed the IFRA-IOFI
Sustainability Charter

The IFRA and the IOFI* share a common belief that establishing sustainability activities in a
corporate business strategy is essential to achieving a prosperous and sustainable future. This
shared belief is defined in the Sustainability Charter, which the Company signed.
IFRA-IOFI Sustainability Charter
1 . Ensure responsible sourcing throughout the value chain;
2. Reduce our environmental footprint and address climate change;
3. Enhance the well-being of employees and ensure a rewarding labor environment;
4. Be at the leading edge of product safety;

We formulate a CSR Policy by considering materiality from the viewpoint of the Group and its stakeholders and then obtaining approval
from the Strategy Committee, which consists of the representative
director and senior vice presidents appointed by the representative
director. Any future change to the CSR Policy must also be approved by the Strategy Committee.

5. Be transparent and a reliable partner for society.

2

Identification/prioritization of issues

We extracted issues from our corporate motto, business vision, risks, opportunities, and existing
initiatives that should be examined. After that, we prioritized the extracted issues based on the
expectations and requests of stakeholders and from the perspective of our business strategy.
We also referred to international guidelines on the social responsibility of organizations, such as
the GRI Standards.

3

The Sustainability Committee checked the validity of the extracted issues by discussing themwith each division. They were confirmed as issues once they had been approved by the Strategy
Committee. We considered the issues to be the Company’s materiality issues and formulated six
CSR policies.

4

The Strategy Committee reviews the CSR policies once a year. They are reviewed as necessary
according to the progress of initiatives, changes in the social conditions, requests from stakeholders, etc.

Validation/CSR policy
development

Review* International Fragrance Association (IFRA);International Organization of the Flavor Industry (IOFI)

8

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Governance
Development of a sustainability promotion system

Overview of the Sustainability Committee

In order to contribute to creating an enriched society through flavors and fragrances, we strengthen sustainability initiatives andensure thorough risk management while capturing business opportunities through innovation.

Objective
The objective of the Sustainability Committee is to strategically promote sustainability initiatives, including matters stated in the CSR
Policy and ESG, across the entire Group.

The person in charge of sustainability in the Company is the President & CEO. Under this framework, we have established a Sustainability Committee to strategically promote sustainability initiatives,
including matters stated in the CSR Policy and ESG, across theentire Group. The Committee develops group-wide business strategies related to sustainability and deliberates and resolves important matters, including initiative details. Matters deliberated by the
Sustainability Committee are referred and reported to the Strategy
Committee and the Board of Directors as necessary. In addition, wedelegate authority to related divisions depending on the matter.

Committee members
The officer in charge of internal management control serves as theCommittee Chair. In contrast, people appointed by the Committee
Chair based on recommendations from the officers in charge ofeach relevant division serve as members.
Secretariat
The Committee Secretariat consists of the Corporate Planning Division and the CSR Division.
Activities in FY2023
The Committee met twice to discuss changes regarding the CSR
policy (including the addition of the SDGs mark to be contributed)
as well as the content and publication of the Sustainability Report.

Sustainability promotion system chart

Board of Directors
Minutes, report

Approved by

Strategy Committee
Minutes, report

Approved by

Sustainability Committee
ReportConfirm status of progress

Related Divisions (business execution)

9

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Strategies
Relationship between the CSR Policy, risks, opportunities, and business strategies
Category

CSR Policy (materiality)

Business strategy/approach
Expand business
opportunities

Procurement

We will promote responsible
procurement across the value
chain.

SDGs that we are targeting

Local procurement and production oversea
Ensuring the stock management of raw materials, anddiversification of the purchase channels

Reduce risk

Distribution of risks of local procurement and production
in other countries
Investigation and development of alternative raw materials
Sustainability survey and support for suppliers

Environment

Social issues we aim
to resolve throughbusiness processes

Human rights
and labor

Quality safety

We will learn the importanceof reducing the environmental
impact and actively engage inenvironmental protection andimprovement activities.

We will respect human rights anddiversity, work to improve thewelfare of employees, and realize asafe and comfortable workplace.

Expand business
opportunities

Response to social needs brought about by climate change

Reduce risk

Environmentally friendly product design, manufacturing
and environmental safety audits
Eﬀective use of waste products and installation of sufficientdeodorizing equipment

Expand business
opportunities

Improvement of production efficiency
Securing human resources

Reduce risk

Prevention and remedy for human rights violation
Prevention of labor accidents

Expand business
opportunities

Building a system to provide safe, secure and diverse
flavors and fragrances, etc., with high palatability
Development of an efficient production system, and stablesupply of products

We will become a leader in productsafety.
Reduce risk

GovernanceFair corporate
activities

Social issues we aim
to resolve through our
products

Innovation

We will ensure the soundness,fairness, and transparency ofmanagement and become a reliable
partner for society.

We will contribute to resolvingsocial issues through the flavor andfragrance business.

Reduce risk

Expand business
opportunities

A reliable, quality assurance system based on an enhanced
inspection system and strict standard-setting
Development of technicians who can produce quality
products

High transparent management

Sustaining R&D investments
Speedy development: accurately identify and rapidly
respond to customer requests and latent needs
Detailed response to customers
Response to increased demand for alternative raw
materials triggered by climate change

10CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :CSR Policy 2 :Procurement

Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Indicator and targets
We set out KPIs and to confirm their progress in an attempt to eﬀectively work eﬀectively on the CSR Policy (materiality).
CSR Policy (materiality)

Procurement

We will promote responsible
procurement across the value
chain.

KPI

Supplier assessment implementation rate:
FY2023: 70%
FY2024: 80%

FY2023 results

Supplier assessment implementation rate :70% completed (based on amount raised)Evaluation of the progress/Future policy
Scheduled to be implemented in FY2023 onwards as well according
to the plan
Supplier assessment implementation rate:
FY2024: 80%
FY2025: 90%
Continuation of the ISO 14001 certification

Environment

We will learn the importanceof reducing the environmental
impact and actively engage inenvironmental protection andimprovement activities.

Continuation of the IOS 14001 certification
Energy consumption per unit 1.6% reduction
compared to the previous year
GHG emissions (scopes 1 and 2)
30% reduction in FY2023 comparedto FY2013, 46% reduction by FY2030
compared to FY2013

Percentage of women in management
positions
More than 18% by FY2024

Human rights
and labor

We will respect human rights
and diversity, work to improve
the welfare of employees, andrealize a safe and comfortableworkplace.

Percentage of mid-career workers inmanagement positions
More than 18% by FY2024
Percentage of management positions filled
by foreign nationals
Maintain 30% or moreInterview implementation rate based on
the new human resources system: 100%

Quality safety

We will become a leader inproduct safety.

Continuation of the ISO 9001 and FSSC
22000 certifications
Evaluation of the eﬀectiveness of the Boardof Directors :Once a year

GovernanceFair corporate
activities

We will ensure the soundness,fairness, and transparency ofmanagement and become areliable partner for society.

Rate of taking the compliancecomprehension test : 100%Rate of taking the harassment prevention
training (for new managerial staﬀ) : 100%
Training on internal control (for new
employees and new managerial staﬀ):
At least once a year
Report on the progress of response toserious risks (follow-up):
At least twice a year

Innovation

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

Ratio of the R&D expense to sales:
Around 8% on a consolidated basis
Continuation of open innovation

See ESG Databook 2024 for ESG data other than the above.

Compared to FY2013
Rate of green power procurement
Head office: 100% from Dec. 2021
R&D Center: 10% from Mar. 2022
Fukaya Facility: Jan. 2023; Itakura Facility: 10% from Jun.
2023

Energy consumption per unit
1.3% reduction compared to the previous year (FY2024)
GHG emissions (set a target for each scope 1 and 2)
46% reduction by FY2030 compared to FY2013
30% reduction compared to FY2013 (2024 target)
Rate of green power procurement (non-fossil energy)
In FY2024, head office: 100%,
R&D Center, Fukaya Facility and Itakura Facility: 20% increase inprocurement rate

Percentage of women in management positions
15.1%

Percentage of women in management positions
More than 18% by FY2024

Percentage of mid-career workers in management positions
17.7%
Percentage of management positions filled by foreign nationals
33.3%
Interview implementation rate based on the new humanresources system : 100% (excluding employees who areabsent from work)

Percentage of mid-career workers in management positions
More than 18% by FY2024
Percentage of management positions filled by foreign nationals
Maintain the status of 30% or more (FY2024)

A regular audit for ISO 9001 and FSSC 22000 was
conducted. There were no serious remarks, so we wereapproved to keep the standards.
Evaluation of the eﬀectiveness of the Board of
Directors: Once a year
Rate of taking the compliance comprehension test: 100%Rate of taking the compliance training (includingharassment prevention; all employees, including executive
officers, assigned employees, and temporary employees):
100%
Training on internal control (for new employees and new
managerial staﬀ): Once a year each
Report on the progress of response to serious risks (followup): Twice
Ratio of the R&D expense: 8.0% (consolidation)
Number of joint research: 15

Implementation rate of interviews under the human resources
system, excluding employees who are absent from work
100%

Continue the management system certification and build a higher
quality food safety system.
We aim to continue achieving carious indexes by continuing ourcompliance and risk management initiatives to rein force thegovernance system and make it eﬀective.
Evaluation of the eﬀectiveness of the Board of Directors: Once a year
Rate of taking the compliance comprehension test: 100%Rate of taking the compliance training (including harassment
prevention; all employees, including executive officers, assigned
employees, and temporary employees): 100%
Training on internal control (for new employees and new managerialstaﬀ): Once a year each
Report on the progress of response to serious risks (follow-up): Twice
Maintain 8% in the ratio of the R&D expense
Search for new joint research and continue to strengthen the system
to resolve social issues.

11

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :CSR Policy 2 :Procurement

Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Stakeholder engagement
Our Group views all organizations and people involved in the Group’s value creation as stakeholders. We consider engaging in dialogue with stakeholders to be important and focus on gaining
their trust.

Stakeholder

Basic approach

Customers

Build a relationship of trust with customers through theprovision of safe and reliable products and aim to contribute tocustomer success.

Joint research
partners:
universities andresearch institutes

Endeavor to absorb cutting-edge research and improve
technologies by sharing knowledge, exchanging views, etc.

Employees

Respect the diversity of each individual employee, foster a
corporate culture that showcases the ability of individual
employees most, and work to develop a comfortable work
environment.

Shareholders/
Investors

Endeavor to improve sustainable growth and corporate value bybuilding a relationship of trust with shareholders and investors throughtimely and appropriate information disclosure and communication
opportunities under a reliable and transparent management system.

Suppliers

Build a long-term relationship of trust through fair, impartial,
and transparent transactions in accordance with theT.Hasegawa Group Procurement Policy.

Main dialog method/case
Sales activities
Understanding customer satisfaction
Replying to supplier surveys

WebsiteMainly related to CSR Policy
CSR Policy 4 : Quality safety
CSR Policy6 : Innovation

Conducting joint research, and dispatching employees to joint research partners
Regular guidance and lectures by university professors, etc.
Open innovation
Tier-specific training

Labor union

Whistleblowing system

Interview for performance evaluation by the Personnel Division (defining targets, and mid-term and final evaluation)
Stress check (once a year)

IR individual meeting

CSR Policy 3 : Human rights and labor

Self-assessment system (once a year)

General meeting of shareholders (once a year)

Purchase activities

CSR Policy6 : Innovation

Participation in conferences and research groups

Financial results briefing (twice a year)

Various disclosure materials

IR siteSupplier monitoring

Accompanying site inspections

Conducting questionnaire surveys

CSR Policy 5 : GovernanceFair corporate
activities
CSR Policy 1 : Procurement

Promoting GHG emission reduction measures
Promotion of energy conservation measures (conversion to non-fossil energy)
Naturalenvironment

Take into consideration global environment protection in all
business activities.

Holding Environmental Safety Committee meetings (facilities, R&D centers: every month;company-wide: 3-4 times per year)
Management of ISO 14001 (external and internal audits: once a year, excluding the head office)

CSR Policy 2 : Environment

Environmental safety audit (internal audit: once a year)
Various patrols (safety, energy conservation, static electricity, fire preventive object, etc.: once a year)
Resource conservation, and reduction and eﬀective use of waste products (including some composting)Local
communities

Achieve harmonious coexistence with the local communities
by contributing to resolving issues and developing the local
communities through business activities.

Contribution to the local communities through business activities

Governments/
NGOs

Collaborate with governments and NGOs to resolve
social issues through dialogues, participation in industry
organizational activities, etc.

Participation in industry organizational activities
Dialogues with governments/NGOs
Compliance with related laws

Consumers

Contribute to the realization of affluent and healthy living
through the final products in which our products are used.

Feedback through customers

Implementation of environmental (odor) patrol (around each facility and R&D center)
Implementation of community contribution activities

CSR Policy 2 : Environment
CSR Policy6 : Innovation
CSR Policy 5 : GovernanceFair corporate
activities
CSR Policy 4 : Quality safety
CSR Policy6 : Innovation

12

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Involved initiatives
Signing the IFRA-IOFI Sustainability Charter
We have already joined the Japan Flavor & Fragrance Materials Association (JFFMA), which is a member of the International Fragrance
Association (IFRA). We are also a member of the International Organization of the Flavor Industry (IOFI). We contribute to various
activities of these organizations with the aim of securing the safetyof flavors and fragrances directly and by participating in JFFMA’s
activities.
The IFRA and the IOFI share a common belief that establishing sustainability activities in a corporate business strategy is essential toachieving a prosperous and sustainable future. This shared belief isdefined in the Sustainability Charter. We emphasize sustainability
the most and have been conducting various activities. We signed
the Sustainability Charter on March 31, 2020, to express such activities as our commitment at a high level. To achieve a sustainable
society, we will work on the following five domains stipulated in the
Sustainability Charter.

Signing the UN Global Compact
T.Hasegawa signed the UN Global Compact, an initiative advocatedby the UN, and was registered as a participating company on August 24, 2020. On the same day, we also joined the Global Compact
Network Japan, a local network of UN Global Compact participantsin Japan.
The UN Global Compact is a global framework for realizing sustainable growth. It encourages participating companies and organizations to commit to responsible and creative leadership and to serveas positive members of society.
We support the ten principles of “Human Rights, Labour, Environment and Anti-Corruption” outlined in the UN Global Compact.
T.Hasegawa will continue to promote responsible management for
all stakeholders in order to create a sustainable world.

Main organizations and initiatives
We support and participate in a wide range of global sustainability
initiatives.

United Nations Global Compact (UNGC)
IFRA-IOFI Sustainability Charter
International Fragrance Association (IFRA)
International Organization of the Flavor Industry (IOFI)Roundtable on Sustainable Palm Oil (RSPO)
Japan Sustainable Palm Oil Network (Jaspon)
Task Force on Climate-Related Financial Disclosures (TCFD)
CDP
EcoVadis
Sedex
Japan Chemical Industry Association

IFRA-IOFI : Approaches to Sustainability

Japan Flavor & Fragrance Materials Association

1. Ensure responsible sourcing throughout the value chain;
2. Reduce our industries’ environmental footprint andaddress climate change;

3. Enhance the well-being of employees and ensure arewarding labor environment;
4. Be at the leading edge of product safety;
5. Be transparent and a reliable partner for society.

13

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 1: Procurement
Basic approach and policy
In order to provide customers with products that can be used withpeace of mind, it is essential to build a supply chain that enables
stable sourcing of good quality and price-competitive materials. By
gaining their long-term trust with suppliers through fair, impartial,
and transparent transactions, we will promote procurement activities that take into consideration resources, the environment, andhuman rights, so that the entire supply chain will be able to growsustainably.
For the purpose of promoting responsible procurement across theentire supply chain, we have established the “T.Hasegawa Group
Procurement Policy” and “T.Hasegawa Group Supplier Guidelines.”

T.Hasegawa Group Procurement Policy
1 ．Legal compliance and ethical transactions
We will observe laws and social norms in each country andregion and promote procurement activities with high ethicalstandards and social good sense together with suppliers.
２．Considerations for human rights
We will respect human rights in every situation and endeavor to ensure that no activities that may violate human rights
are conducted across the entire supply chain so that there
is no discrimination.

Governance and risk management
We will gain their long-term trust with suppliers through fair, impartial, and transparent transactions.

Related policies :CSR Policy
Environmental Safety Activity Policy
Basic Policy on Human Rights
Quality & Food Safety Policy
T.Hasegawa Group Policy on Bribery and Corruption
T.Hasegawa Group Tax Policy

Raw material procurement is mainly promoted by the Purchasing Division. The Risk Management Committee is a Group-wide organization that is chaired by the President & CEO and consists of directors
as members. It manages and verifies procurement-related risks. The
Purchasing Division collects risk information related to procurement
and reports it to the Risk Management Committee.
Note that the Group does business with chemical manufacturers,
flavor and fragrance manufacturers in the same industry, foodadditive manufacturers, food manufacturers, trading companies,
contract manufacturers, and packaging material manufacturers. In
FY2023, the total number of suppliers that the Company had business with was around 400, with a total number of 3,100 purchased
items. The main breakdowns are flavor and fragrance raw materials(natural and synthetic) and food (including food additives), whichhave the same percentage. The ratio of imports to domestic procurement is 35 : 65, and our suppliers are located in Japan, China,
the United States, the European Union, the United Kingdom, India,
Brazil, Argentina, and other countries around the world. A distinctive characteristic of our suppliers is that they engage in high-mix,
low-volume production and oﬀer raw materials with relatively highunit prices.

３．Considerations for the global environment
Together with all suppliers, we will conduct sustainableprocurement activities that take into consideration global
environmental protection with an awareness of reducing theenvironmental impact.
４．Mutual trust, co-existence, and prosperity with suppliers
We will respect the standpoint of counterparties based on
mutual trust according to the principles of fair and open
competition, and seek to co-exist and achieve prosperity together with all of our business partners, including suppliers.
5．Safety, security, and customer success
We will conduct procurement activities aimed at realizing
customer success, safety, and security by providing safeand quality products to customers and, in turn, consumers.

14

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Strategies
Implementation of supplier assessment
To promote responsible procurement, the Group conducts supplierassessments related to human rights, labor, the environment, faircorporate activities, quality and safety, information security, supply
chain, local communities, and corporate governance.

Overseas local procurement and local production

Measures
Implementation of global raw material procurement
Investigation and development of alternative raw materials
Sustainability survey and support for suppliers▲

FY2023 survey

Survey format:
Questionnaire using the CSR Procurement Self-Assessment Tool
Target:Top 169 suppliers in terms of the purchase amount, out of approximately 400 suppliers
Response rate:
93% (157 companies responded/169 companies surveyed)

Corporate governance

100%
Human rights

Based on the questionnaire results, we understand that there wereno suppliers with significant risks in terms of child labor or forcedlabor or that the suppliers in which the freedom of association or
the right of collective bargaining might be at risk.

Supply chain

Labor

0%

Information security

Environment

Fair corporate activities

Implementation of supplier monitoring

The Group has been conducting on-site audits of product safety
and quality at several of its suppliers on an ongoing basis, and theseaudits also include checks on the environment, human rights andoccupational safety.

▲

50%

Quality/Safety① Suppliers with a high scoring rate in corporate governance havebuilt a sufficient CSR promotion system and tend to score highpoints overall.
② Even if they have not developed a CSR promotion system, thecompanies generally scored high points in quality and safety,
which means they have eﬀectively implemented quality management.
③ Some suppliers that scored relatively high points had low scores inhuman rights and supply chain. Consequently, human rights andsupply chain management can be considered to be future issues,even for companies that have developed a CSR system to someextent.

▲Results of response from 157 companies (scoring percentage)

Local communities

Trends, etc., based on the response▲

Opportunities

Plan for the future

We will further advance the supplier assessment, extract issues
based on survey results, and cooperate with suppliers to solve theissues together, thereby solidifying the relations with suppliers andpromoting sustainable procurement.
We will continue to share the T.Hasegawa Group Supplier Guidelines
with more suppliers.
We will continue to request suppliers in the supply chain to promote sustainability.
We will continue to request responses from suppliers using the CSR
Procurement Self-Assessment Tool from the Global Compact Network Japan.
We will request overseas subsidiaries to conduct assessments oflocal suppliers and promote dialogue with domestic and overseas
suppliers.

15

CONTENTS

Company overview

Message fromthe President

Value creation
story

Procurement of certified raw materials
We purchase raw materials from certified farms through Japan
Good Agricultural Practices (JGAP), ASIAGAP, or Rainforest Alliance.
▲

Procurement of perilla oil

We promote the active use of distinctive flavor and fragrance raw materials in Japan as part of our challenge to develop uniquely Japanese
flavors. To procure perilla oil, which is an important flavor and fragrance
raw material, we collaborate with a producers’ association, as described
below, to support stable production in terms of quality and quantity as
well as for business continuation.

Provision of seeds:
We provide seeds to producers every year for stable quality andyield of perilla oil. With the cooperation of seed and seedling producers, we confirm the conditions of production sites.
Technical support:
To improve productivity, we dispatch researchers and engineers togive advice and support on production improvement and equipment modification.*

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation* Since it is difficult for the producers’ association to evaluate anddesign perilla oil extraction equipment by itself when modifying it
due to aging, we dispatched personnel who are responsible for theequipment and an equipment contractor to carry out the modification in 2021.

Indicator and targets
Indicator

Unit

Scope

Calculation period
Time of calculation

FY2021

FY2022

FY2023

Supplier assessment
implementation rate:(percentage based on
procurement amount)%

Nonconsolidated

Fiscal yearend

−

60

70

Mid- to long-termtarget80 (FY2024)
90 (FY2025)

See ESG Databook 2024 for ESG data other than the above.

Quality improvement support :We dispatch researchers to provide training and support for quality
inspection procedures that are difficult to learn only from a producers’ association.
Supply of packaging, etc.:
We provide containers for filling and packaging materials to a producers’ association.
Business continuity:
We promote planned procurement for years ahead that will not significantly increase or decrease the growing area so that producers’
revenue will be stable.

16

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 2: Environment
Basic approach and policy

Environmental Philosophy

In addition to environmental protection, we also view security anddisaster prevention as well as chemical safety as important corporate themes. As such, we incorporate these themes into our Environmental Safety Activity Policy and engage in relevant activities.

Security and Disaster Prevention
1 . Promotion of hazardous material safety measures
2. Promotion of disaster-prevention and safety measures
Chemical Safety
1 . Development of a chemical substance management system
2. Promotion of chemical safety measures① Promote resource and energy conservation and work toprotect the global environment.
② Promote the reduction and recycling of waste products.
③ Promote coexistence with local communities by strengthening environmental management at applicable sites andsurrounding areas and working to prevent pollution.
④ Comply with air, water, and other laws and agreements related to the environment.
⑤ Conduct internal audits, etc. to make continuous improvements to the EMS.
⑥ Provide environmental education to all employees to improve their environmental awareness.

Since FY2022, we have been providing e-learning classes on thebasic knowledge of SDGs to all employees in Japan, including employees assigned to overseas offices (excluding employees who areabsent for a long period of time). We conducted a comprehension
test after the session and achieved a response rate of 100%. We disclose the response results on the intracompany website in an eﬀort
to improve employees’ knowledge of sustainability.
Internal environmental seminars

The Environmental Safety Committee, Education Committee, etc.,
of each factory plan and hold seminars and study meetings on environmental issues. Upon request, we also held some study meetings
led by members of the CSR Division.
External environmental seminars

Employees involved in environmental safety work participate in professional seminars, lecture meetings, exhibitions, etc., in an eﬀort toupgrade their environmental knowledge.
▲

Environmental Protection
1 . Promotion of energy conservation
2. Promotion of resource conservation and eﬀective use ofwaste products
3. Odor countermeasures and environmental pollutant
emissions reduction
4. Strengthening of the environmental management system(EMS)
5. Promotion of green purchasing

As a comprehensive flavor and fragrance manufacturer involved in the production, research, and development of foodflavors, cosmetic fragrances, synthetic flavors and fragrances,
food additives, foods and cosmetic materials, the Fukaya Production Center and the R&D Center of T.Hasegawa CO., LTD.
recognize the importance of achieving harmony with the environment and aim to become companies that are trusted bysociety. To achieve this, we will conduct activities related to theenvironment in accordance with the following policies.

Training and information provision via the intracompany website

We post environment-related pages on our intracompany website and provide a Sustainability Report and other environmental
information.

▲

Environmental Safety Activity Policy

ISO 14001 Environmental Policy▲

T.Hasegawa CO., LTD. recognizes that the importantcommon issue facing all of humanity is to pass on thisirreplaceable planet to future generations. As a comprehensive flavor and fragrance manufacturer, we give due
consideration to environmental protection in all of ourbusiness activities.

▲

We have established the Environmental Philosophy to clarify ourstance towards environmental protection and have formulated theEnvironmental Safety Activity Policy and the Environmental Policy
based on ISO 14001 in order to embody the philosophy.

Internal education

New employees undertake adequate education and training when
they join the firm. We also provide sustainability training as part ofour courses for new hire employees.

Relation with stakeholders
Information disclosure to customers
We disclose information via platforms such as the CDP, EcoVadis, andSedex. We also respond to supplier surveys conducted by customers.

Environmental education for employees
We provide environmental education in a multifaceted approach aspart of our eﬀorts to improve environmental awareness among employees.

Environmental education under the environment management
system (ISO 14001)
The Fukaya Facility, the Itakura Facility, and the R&D Center conduct education and training in a planned manner as part of ourISO 14001 environmental management system (EMS). We havealso installed an ISO 14001 message board in each workplace andput environment-related information, including the Environmental
Policy and environmental promotion posters, in an effort to promote environmental protection.

Information disclosure to stakeholders
We post sustainability information (including this Report) on the
Company website.

17

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Governance and risk management
Promotion system
We have built and promoted an environmental safety management system in accordance with the Environmental Safety Management Rules. In addition, we have obtained the ISO 14001 certification, an international standard for environmental management
systems, at our Fukaya Facility, Itakura Facility, and R&D Center.
The Production Division and the R&D Division jointly check andmanage that the systems are functioning effectively.

Environmental safety management structure chart

Board of Directors( 2 ) Environmental Safety Committee of each site
① We have established an Environmental Safety Committee at ourhead office, R&D Center, Fukaya Facility, and Itakura Facility. It ischaired by the factory director, etc., and held at these sites, excluding the head office, every month.
② We promote activities related to environmental protection as well
as security and disaster prevention by establishing specific activity plans and targets in accordance with the activity policy determined by the company-wide Environmental Safety Committee.

Strategy Committee
Officer in charge of internalmanagement control
Responsible officers of the CSR
Division

Company-wide Environmental Safety Committee
Secretariat: CSR Division

Head officeEnvironmental
SafetyCommittee

R&D Center
Environmental
SafetyCommittee

Fukaya Facility
Environmental
SafetyCommittee( 1 ) Company-wide Environmental Safety Committee① The Committee is chaired by an officer in charge of the
CSR Division and consists of the Committee Chair and Vice
Committee Chair of the Environmental Safety Committeeof each site. It deliberates and decides on company-wide
policies and activity plans related to environmental protection and safety measures.
② The Committee receives reports on environmental safety activity
plans, activity results, etc., from each site, and coordinates activities from a company-wide perspective.
③ The Committee selects auditors of environmental safety audits(environmental protection in addition to security and disasterprevention) and conducts annual audits at each site.

Itakura Facility
Environmental
SafetyCommittee( 3 ) CSR Division①The Division develops and promotes basic policies on CSR
and the SDGs.
② This Division is responsible for the overall management of environmental safety activities.
③ The Division operates the company-wide Environmental Safety Committee as a secretariat and formulates and manages the progress of thenon-fossil energy conversion plan.
④ The Division manages environmental safety audits as a secretariat, compiles the results of environmental safety audits, andreports the results to the Strategy Committee.
⑤ The Division discloses related information in our Sustainability
Report and on our website.
Environmental management system based on ISO 14001
In 2001, the Fukaya Facility and the Itakura Facility obtained an ISO
14001 environmental management system (EMS) certification fromthe Japanese Standards Association and have since conducted relevant activities. Note that the current certifying body is DNV Business
Assurance Japan Co., Ltd. The Production Division (Fukaya Facility
and Itakura Facility) has a particularly large environmental impact

compared to other divisions of the Company. Furthermore, the Division works on continuous improvement by implementing the PDCA
cycle, which is a core concept of the ISO 14001 system. In June
2012, we added the R&D Center to the scope of certification in an
attempt to strengthen the eﬀorts of reducing environmental impact
from the product design phase.
The Suzhou Facility in China has been certified since 2015. ISO 14001
certification has been acquired by four of the Group’s ten production
and R&D sites (the ratio of ISO 14001-certified sites is 40%).

Internal audit (ISO 14001)
An internal audit is conducted in accordance with the internal program as prescribed in the Environmental Manual.
When issues are identified, we take corrective actions promptly anddisseminate them to the related divisions to ensure continuous improvement.

Environmental safety audits by the company-wide Environmental
Safety Committee
Since 1997, the Environmental Safety Committee has been conducting audits related to environmental protection and safety measures.
From 2008 onwards, we reorganized our auditing framework into
three categories to conduct more detailed checks: Environmental
Protection Audits, Security and Disaster Prevention Audits, andOccupational Safety and Health Audits. We select expert auditors
for each audit category. They check for compliance with environmental laws, the status of activities, and the management status atrelevant facilities while issuing an improvement recommendations
report for matters that need to be enhanced. In response, the site
to be audited creates an improvement plan for the issues that werepointed out and implements the improvements after reporting to
the company-wide Environmental Safety Committee. In FY2023, anaudit was conducted at each site in August. The results are to bedeliberated by the Environmental Safety Committee, reported to theStrategy Committee, and then referred and reported to the Board of
Directors as necessary.
From FY2024, Occupational Safety and Health Audits will be conducted mainly by each site’s Occupational Safety and Health Committee.

18

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Strategies
Opportunities
Response to social needs brought about by climate change

Measures
We will thoroughly comply with laws and respond to risks.
We will solve environmental issues in accordance with the
CSR Policy and incorporate them into our sustainablegrowth strategy.

Related measures
The Strategy Committee considers and decides on environmental
targets from a long-term perspective.
The company-wide Environmental Safety Committee manages
the progress of policies and promotes awareness among the entire Group.
We ensure that measures against global warming are taken (reduction of energy consumption and GHG emissions through theactivities of the Environmental Safety Committee, eﬀective use ofresources and waste products through resource conservation,and composition of waste products).
We continue to join the Global Compact Network Japan, CDP,
EcoVadis, and Sedex and maintain transparency through information disclosure on the platforms.
We expand transactions with customers by ensuring traceability.
We accelerate innovation and develop, propose, and sell new
products to achieve the SDGs.
We contribute to resource conservation for container materials
through thinner and lighter weight PET bottles by utilizing Carbonation Enhancer®, a natural light degradation inhibitor, etc.

TCFD initiatives and CDP evaluation
The T.Hasegawa Group declared its support for the TCFD recommendations in 2022 and disclosed our analysis of climate changerisks.
As part of this process, we are conducting a scenario analysis inlight of the requirements of the TCFD.

Note that, under the CDP climate change category in FY2023, weachieved the B ranking at the management level in the CDP evaluation, indicating that actions are being taken for environmental risks
and that such risks and their impacts are tracked, mitigated andeliminated.
In the area of water security, we received the B- ranking at the management level, which indicates that we have developed and implemented activities, policies, and strategies related to water issues.

Environmental accounting
To ensure efficient and eﬀective environmental protection activities,
we referenced the Environmental Accounting Guidelines publishedby the Ministry of the Environment for conducting environmental
accounting.

Initiatives for mitigating environmental impact
Energy use
We take energy conservation as an important issue and are proactively
working on it. In addition to conducting company-wide energy conservation activities, we promote energy conservation by updating all boilers
used in the Production Division to models with less GHG emissions andbetter combustion and fuel efficiency and by installing special high-voltage
power receiving and transforming equipment and energy monitoring systems. The Fukaya Facility and the Itakura Facility, which are Type 1 Designated Energy Management Factories as defined by the Act on Rationalizing
Energy Use and Shifting to Non-fossil Energy (Energy Conservation Act),
have established energy usage optimization standards and are working onenergy conservation based on those standards. The facilities also plan toconvert non-fossil energy, including their domestic groups.
In FY2023, we improved manufacturing processes, streamlined the formula, reviewed the use of steam to reduce loss, increased the efficiency of
boiler operations, optimized air conditioning and lighting operating hours,
and so on. As a result, the energy consumption was reduced by 13,865 GJ
compared to the previous year and the energy consumption rate per unit
was improved by 0.9%, falling short of the target year-on-year reduction of
1.0%.

For details, refer to the “Climate change risk analysis of the T.Hasegawa Group.”
Home ＞ Sustainability ＞ Disclosures Based on TCFD Recommendations ＞ Climate change risk analysis of the T.Hasegawa Grouphttps://www.t-hasegawa.co.jp/files/hasegawa_group_tcfd.pdf

GHG emissions
In FY2023, we reduced CO2 emissions in scopes 1 and 2 by 7.7% comparedto the previous year. For our target of 46% reduction by FY2030 from the
FY2013 level, we have managed to reduce the emissions by 28%.

We aim for green power procurement rate of 100% by FY2030 aspart of the reduction plan. At the head office building, 100% of theelectricity used has been procured from green power sources since
December 2021, while at the R&D Center, 10% of the electricity used
has been procured from green power sources since March 2022.
In the Production Division, which uses more electricity, the Fukaya
Facility and the Itakura Facility started to procure 10% of the electricity used from green power sources in January 2023 and June 2023,
respectively. We have submitted a letter of commitment to SBTi withthe aim of obtaining SBT certification within two years, and will continue our eﬀorts to reduce GHG emissions over the medium to long term,
including Scope 3 and overseas groups.
Having received a third-party validation of GHG emissions (scopes 1 to 3)
for the Company alone for FY2021, we have been receiving the validation
for the consolidation of Group companies in Japan since FY2022.
We will continue third-party validation of GHG emissions to maintainthe accuracy of our calculation methods and the reliability of our data.
See ESG Databook 2024 for details.

Water use
We use water in our manufacturing processes, as well as for coolingand cleaning. So far, we have been striving to reduce water usage
by reducing the use of cooling water through the implementationof better manufacturing methods and by reducing the use of water through the optimization of cleaning methods and additionsof cooling water recycling equipment. In FY2023, we reduced theamount of water usage by 43,431 m3 compared to the previous year
and improved the energy consumption per production unit by 6.4%,
achieving the target value of 0.5% reduction.
In light of rising global interest and the importance of water resources in addition to climate change, the company-wide Environmental
Safety Committee developed a strategy for water risks and built amechanism to supervise initiatives for them.
This Committee sets numerical targets using data on the amountof water used in the past. The Production Division, in which water
usage is particularly high, reports the reasons for the increased or
decreased usage and the reduction measures implemented every
month.

19

CONTENTS

Company overview

Message fromthe President

Value creation
story

At the moment, we understand that the water risk in the Company’s
production area in Japan is not high. However, since we recognizethat water is a precious resource globally and that it is important tostrengthen its management, we will continue to manage water risks
properly. In the future, we will set a water use reduction target andwork to reduce the amount of water used while checking the progress of measures.

Wastewater treatment
Since we installed a wastewater treatment system at the Fukaya
Facility in 1969, we have been installing and upgrading wastewater
treatment facilities using various water purification technologies,
such as the activated sludge method, dissolved air floatation method, anaerobic method, coagulation and sedimentation method, andthe membrane filtration method.
Wastewater from production facilities is treated through a tertiary
treatment process. Wastewater from the R&D Center is treatedthrough to the secondary treatment process before being discharged to the sewer system. We comply with wastewater standards in terms of regulation values, etc., as prescribed in the Water
Pollution Control Law, prefectural ordinances, and agreements with
communities.

Wastewater treatment equipment (Itakura Facility)

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Selection of waste service companies
When choosing waste service companies that are responsible forwaste generators, we visit the treatment site to check if they treat waste
properly and we also conduct periodic audits. Internally, we check the
Fukaya Facility, the Itakura Facility, the R&D Center, and our head officeregarding the conditions of waste treatment as part of our environmental safety audit once a year. If there is any remark, corrective actions aretaken immediately. During an environmental safety audit in FY2023, it
was confirmed that waste management was properly conducted.
Eﬀective use of waste products
We manufacture a diverse range of flavor and fragrance products,
which generate various waste. We work to eﬀectively use such
waste and proactively promote resource recycling of waste cans,paper, waste glass, oil, and so on. We also work to limit the generation of landfill waste. The eﬀective utilization rate of waste products
was 95.7% (domestic consolidated : 96.0%) in FY2023.
Vegetable field (Koumi-machi, Nagano)We ask a business operator that manufactures recycled cans totreat cans that are less likely to transfer the odor and another business operator with recycling technology to treat some waste liquid.
As seen in the enforcement of the Act on Promotion of Resource
Circulation for Plastics (Plastic Resource Circulation Act) in Japan in
2022 and the intergovernmental negotiations to formulate a legallybinding international document (treaty) concerning plastic pollution, we recognize the reduction and waste treatment of plastics as
issues that require a more serious response. Although it is difficult to
reduce plastic containers due to the characteristics of our products,
we separate plastics used within the Company that can be recycled
and then make an eﬀort to use them eﬀectively. At Koumi Compose
Co., Ltd. in Koumi-machi, Minamisaku-gun, Nagano (45% investmentby the Company), the large amount of residue generated after
extracting natural products (botanical residue) from our Company
goes through fermentation composting for use by highland vegetable farmers, as part of its eﬀorts to eﬀectively use waste products. In
addition, from the viewpoint of stable procurement of domestic raw
materials for flavors and fragrances and the realization of a circular
economy, the Company is conducting experimental cultivation oflemongrass using this compost in Koumi-machi.

Laying compost (Koumi-machi, Nagano)

20

CONTENTS

Company overview

Message fromthe President

Value creation
story

Odor measures
As a company that manufactures flavors and fragrances, we pay
extra attention to odor measures (Oﬀensive Odor Control Act). We
work to prevent the emission of odors by adopting deodorizing
equipment using various deodorizing technologies.
As part of our odor measures, we regularly conduct environmental(odor) patrols of the premises and surrounding areas.

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Biodiversity protection
In preparation for disclosure in line with the Taskforce on Nature-related Financial Disclosures (TNFD), we commenced the identification and assessment of nature-related risks and opportunities in
FY2023 based on the LEAP approach recommended by the TNFD.
We are organizing the value chain for natural raw materials of major
flavors and fragrances, collecting information on our Company’s
and major suppliers’ sites, and identifying priority areas that fallunder the assessment criteria set forth in the TNFD. In addition, weare assessing the importance of biodiversity by identifying the dependency and impact of our business, identifying and assessing thenature-related risks and opportunities that may arise in the future
and considering how to respond to these risks and opportunities.
We will continue to analyze biodiversity-related risks, opportunities,
and their impacts and disclose information in a manner that integrates the TNFD and TCFD.

Deodorizing equipment (Itakura Facility)

Dust collection measures
Dust collectors are installed in some manufacturing divisions as part ofour eﬀorts to improve the work environment during manufacturing.
Chemical substance management
We manage chemical substance emissions by specifying flavors
and fragrances applicable to the Pollutant Release and Transfer Register (PRTR) and substances to be voluntarily controlled.

A biotope consisting of a pond anda stream has been established on
the premises of the R&D Center.
Birds, amphibians, aquatic
insects, and other animals in
the area use the biotope.

A variety of plants, mainly native
species, are planted in the biotope.

21

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :CSR Policy 2 :CSR Policy 3 :Procurement

Environment

Human rights and labor

FY2021

FY2022

FY2023

CSR Policy 4 :CSR Policy 5 :Governance

Quality safety

CSR Policy 6 :Innovation

Indicator and targets
Indicator

Unit

Scope

Calculation period
Time of calculation

Energy

6,873

6,477

7,463

7,792

7,052

GHG emissions (scope 3)

115,143

135,029

144,131

Energy consumption

299,602298,230

284,366

136,437

125,078

117,647

163,165

173,153

166,719

5,993.5

5,310.9

4,483.1

97.6

96.4

95.7

0.5

3.1

4.3

441,691

436,169

393,028

FY2023 target (water use per production unit)
Reduce by 0.5% compared to the previous fiscal year

156,748

155,629

148,540−

125,918

129,433

119,503−

159,025

151,107

124,985−

Total wastewater volume348,838

345,019

307,318

Of which surface water

335,207328,257

291,178

Of which third parties

13,631

16,762

16,140GHG emissions (scope 2)

Of which fuelt-CO2e

GJ

Nonconsolidated

Nonconsolidated

Fiscal year

Fiscal year

Of which electricity
Amount of waste
generated
Waste
products

Eﬀective utilization rate

Ton

Nonconsolidated

Fiscal year

Amount of hazardous
waste
Total water used
Of which tap water

Water
resources

Scope 1.2 GHG emissions were targeted to be reducedby 46% by 2030 compared to FY2013. However, theScope 2 GHG emissions will be set at 2030 “0” due tothe change of the electricity procurement rate by nonfossil certificates to 100% until 2030. We will continue totarget a 46% reduction in Scope 1 by 2030 compared to
FY2013, but will revise the target to be more ambitious,
including Scope 3, in order to obtain SBT certification.

7,442

GHG emissions (scope 1)
GHG
emissionsMid- to long-term target

Of which commercialuse water
Of which groundwater㎥

Nonconsolidated

Fiscal year

Reduce energy consumption per unit of production
by 1.6% in FY2023 compared to the previous year.

Zero landfill waste

See ESG Databook 2024 for ESG data other than the above.

22

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 3 : Human rights and labor ~Human capital~
Basic approach and policy
Measures< Human resources system reform >The Company introduced a new personnel system in FY2023 after
a total review of its job class system, evaluation system, compensation system and human resources development.
We have clarified the roles required by the Company (job class system) and introduced a corresponding evaluation system.

In order to further promote the creation of a safe and rewarding
workplace, we will undertake the following initiatives.

▲

Governance and risk management
Promotion system

Strategies
Opportunities
Increased employee motivation
Increased production efficiency as a result of improving the work
environment

Evaluation system
Our approach to the evaluation system

The evaluation system is not only a system for evaluating employees’ performance but also facilitates a tool to promote the achievement of company-wide and organizational targets and the growthof individuals. Therefore, the actions expected of employees areclarified and the degree of fulfillment of required actions, roles, andspecialties and the level of actual achievements are evaluated.
Since the results of evaluating employees’ performance encourage
individuals to grow, we utilize the evaluation system as the foundation for developing human resources.
▲

Based on the management policy of creating a safe and comfortable work environment for our employees, the Human Resources
Division plans to address various human resource policies andformulate them as activity policies for each fiscal year. Each plan isapproved and executed in accordance with the rules of administrative authority. The actual results that are deemed to be significant
are reported to the Board of Directors on a quarterly basis.

In addition, compensation is set in line with grade levels, providing
compensation commensurate with performance regardless oflength of service, gender, or other factors.

Important points of the evaluation system

Our approach to the compensation system

In order to encourage employees to achieve the actions and results
expected from them, we will focus on treating the desired actions
and results so that we can appropriately guide employees in developing an interest and making eﬀorts.
▲

In accordance with the management policy of creating a safe andcomfortable work environment for our employees as well as linking
the management and human resource strategies, we seek to create
an energetic corporate culture in which human resources can growand maintain their motivation. We are committed to providing employees with opportunities to advance their careers fairly and without regard to race, nationality, gender, religion, disability, or otherattributes.

Compensation system▲

The Company views human resources as capital and promotes
human capital management, which aims to maximize the value ofhuman resources and increase corporate value over the medium tolong term by continuously considering and implementing improvement measures.

Important points of the compensation system

Seniority-based wages, which were in the previous system, havebeen eliminated in order to alleviate the seniority criteria. Job performance wages are set according to grade level to match job
performance and compensation. In addition, a managerial position
allowance is established to reward the relevant role. Bonus payments
to employees are balanced by distributing payments according
to the performance evaluation of each individual, and high performance will be rewarded accordingly. In order to hire excellent humanresources as mid-career hires, we have revised the compensationlevels, so that the mid-career employees are treated well.

Having a proper interview for the performance evaluationand development of employees
We have introduced a cloud-based human resources evaluation system service in line with our new human resources system reform. The
system allows the Human Resources Division to easily check the target
setting and records of each interview held as part of the evaluation andto check the interview status of the people to be evaluated.

Evaluation of achievements
Employees should work on challenging goals that are closely
linked to the policy of the Company or their organizations, andthey are expected to obtain measurable achievements that arelinked to the company-wide target. In addition to results, the relevant process is evaluated, and the results are reflected mainly intheir bonuses.
Evaluation of actions
The evaluation should be a system that leads to human resource
development based on elements required by the Company.
The Company also evaluates whether expected actions corresponding to the job class and course were taken. The results arereflected in the job class (promotion) and salary of the relevant
employee. In any evaluation, an interview with the superior of theemployee is required, and human resources are developed byproviding appropriate feedback.

23

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

Key Points of New Human Resources System

CSR Policy 1 :CSR Policy 2 :Procurement

CSR Policy 3 :Environment

Human rights and labor

CSR Policy 4 :CSR Policy 5 :CSR Policy 6 :Governance

Quality safety

Innovation

Achievement of management targets

Employee training and career realization

New Human Resources
SystemJob class system

・Establishment of classes according to duties, skills, and preferences
・Reduction of seniority criteria and clarification of company requirements
Evaluation system

Compensation system

・System for working on challenging goals closely linked to company and organizational policies
・System connected to human resources development based on company requirements

・Reduction of seniority criteria and setting of compensation according to role/performance

・Increase in compensation levels for younger and mid-career employees and setting of compensation high enough to ensure hiring competitiveness＜ Human resources development ＞
Human capital improvement initiatives
Education system

Autonomous action

Mid-career employee training

Internal seminars
Third year training

E-learning for self-development

Learning about the Company

THBC Basic

Support for acquiring qualifications

Engaging others to improve results

THBC Advance

Skill improvement
Language training

Fostering awareness of participation in
management

Organizational capability training

Sales instruction manual

Office work
level

Analysis and implementation of management
strategies

Training for new managerial staﬀ

Sales

Human resource development program for mid-

Key position
level

Promoting autonomy and growth of subordinates

Manufacturing

career employees

Understanding managerial roles

Managerlevel

Senior management training

By job category
Research

Training programs at other divisions*

Basic management skills

Company-widetraining
Compliance training, harassment training, etc.

Seniormanagement
level

Tier-specific training

On-the-job trainer training

Shared values

New employee orientation* Program to improve the knowledge and skills of employees who have been with their divisions for around three years by providing training at a diﬀerent R&D center.

24

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

▲

Support employees’ self-learning and growthE-learning for self-development
In order to acquire a wide range of knowledge, we have introduced an e-learning system that allows our employees to takecourses at their own pace, regardless of time or location. There isno limit to the number of courses available, and there is no costburden.

Re-employment support for those who are resigning from theCompany upon reaching retirement age
We oﬀer a Re-employment Support Program, which provides
re-employment know-how to those seeking re-employment, and a
Second Life Program, which is for those seeking to start their own
businesses or relocate overseas, etc., to help those who wish to
set out on a new path after reaching retirement age.

Support the development of global human resources

Language training
The Company covers the full costs of language lessons by native
speakers for employees who need English or Chinese language skills.
Training before overseas assignment
The Company invites outside lecturers to lecture employees assigned to overseas subsidiaries on the cultures, laws and businesspractices of the countries where they have been assigned.

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

human resources system reform and perform proper evaluation anddevelopment.

＜ Respecting diversity and creating a comfortable workplace ＞
Ensuring diversity in the appointment, etc., of core human resources
Our approach to ensuring diversity

The Company respects the diversity of individual employees andhas actively appointed excellent human resources to management
positions regardless of gender, nationality, or whether or not they
are mid-career workers. After appointing such employees to management positions, we continue to provide education, includingorganizational capability training, to improve their skills. The Company seeks to continue increasing the percentage of women in management positions. As a result, it will appoint women and mid-career workers to move on to management positions in an attempt toaddress the ever-changing management environment. We will also
continue to appoint talented foreign nationals to expand our overseas business based on the growth strategy.

Fair treatment and evaluation of non-full-time employees
Payment of the same family allowances, housing allowances, andcongratulatory or condolence money as those for full-time employees

Support management that encourages growth and autonomy

Organizational capability training (formerly management training)This program is designed to enable newly appointed managers
to understand and practice management that promotes thegrowth and autonomy of their subordinates as part of their training program. To ensure that all of those managers have the same
perspective and mindset, this program is implemented in the year
after they are promoted to management positions.
▲Life planning seminars
We regularly oﬀer external seminars to employees and their spouses
who wish to participate in a fulfilling second life after retirement.

Foster management awareness among younger employees

THBC B a s i c : The course aims at mastering the basics of business
management through lectures and exercises in areas
such as critical thinking, finance and accounting, basic
management strategy, and marketing basics.
THBC Advance : The program provides practical training in management skills, management decision-making techniques,
and analysis of business plans and strategies.

▲

Support system for acquiring qualifications
When acquiring qualifications approved by the Company, suchas those for certified public tax accountants and labor and social
security attorneys, the Company pays up to half of the course
fees. In addition, employees who have met certain requirements,
such as those who have acquired a TOEIC score designated by
the Company, are provided with an incentive.

CSR Policy 3 :Human rights and labor

TH Business College (THBC)The THBC provides people who are willing to learn on their own with
opportunities to develop their skills, with the aim of acquiring business management skills and enhancing their sense of participation in
management.

▲Internal seminars
Employees from each division of the Company serve as lecturers on theoperations of their respective divisions and other current information.
This allows participants to gain not only an understanding of T.Hasegawa
as a whole but also the connection and relationship between their own
divisions and the division of the lecturer, which can help their own business. By teaching others, the lecturers themselves can also deepen theirunderstanding of the operations of their own divisions.

CSR Policy 2 :Environment▲

Tier-specific training
We conduct training for new employees, mid-career employees
and new managerial staﬀ. The purpose of the training is for employees to understand the roles at each tier and acquire skills. We
implement a PDCA cycle and work to make improvements in theplanning and management of training.

▲

Promotion of career development

CSR Policy 1 :Procurement

Train senior management

Senior management training
Three members of senior management took a businessschool course in FY2023.

Enhancement of long-term absence and leave systems
Introduction of an evaluation system to have follow-up interviews
Reflection of evaluation results in salary and bonuses to increase
employee motivation
Note that the Company pays at least the minimum wage in any
employment category required by the prefecture where each of oursites is located.

Providing training to those who evaluate employees’ performance in line with the human resources system reform
We will continue to provide training to those who evaluate employees’ performance so that they understand the intent of the new25

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

Obtaining the “Kurumin” certification logo

CSR Policy 1 :CSR Policy 2 :Procurement

CSR Policy 3 :Environment

Human rights and labor

CSR Policy 5 :CSR Policy 6 :Governance

Innovation

Understanding employees’ requests through labor union
meetings

Conducting one-on-one interviews
We provide support in helping individual mid-career hires to address any anxiety that they may feel about the new environment
so that they can exercise their abilities as soon as possible.

In 2022, the Company was certified for the third time
for conforming to standards based on the Act on Advancement of Measures to Support Raising Next Generation.

CSR Policy 4 :Quality safety

In order to understand employees’ requests properly, a meetingwith the labor union is held every month.

Initiatives for developing a comfortable work environment

Support for new and mid-career hire employees
Mentor System
To help relieve new employees who feel confused about working life
and organizational activities and are anxious about performing theirduties, young employees close to their age regularly meet with themto provide support for their mental and career development.

Staggered work hours
Short work shift for child and nursing care
Adoption of hourly paid leave for employees in FY2023

Encouragement to take paid leave
To promote the use of paid leave, we regularly notify division
members of their use status and encourage division heads tocreate an environment that facilitates the use of leave.

Indicator and targets
Unit

Scope

Calculation period
Time of calculation

Percentage of women in management
positions%

Nonconsolidated

Fiscal year-end

16.8

17.1

15.1

18% or more

Percentage of mid-career workers
in management positions%

Nonconsolidated

Fiscal year-end

16.3

18.2

17.7

18% or more

Percentage of management positions filled
by foreign nationals%

Nonconsolidated

Fiscal year-end

30.0

33.3

33.3

Maintain 30% or more

Status of employees

Unit

Scope

Calculation period
Time of calculation

Full-time employee

PersonDomestic
consolidated

Full-time contract employee

PersonShort-term employee

PersonIndicator

FY2021

FY2022

FY2023

FY2021

FY2024 target

FY2022

FY2023

Total

Male

Female

Total

Male

Female

Total

Male

FemaleFiscal year-end

1,087

719

368

1,097

718

379

1,086

704

382

Domestic
consolidated

Fiscal year-end

68

52

16

69

50

19

75

53

22

Domestic
consolidated

Fiscal year-end

75

34

41

69

19

50

63

17

46

See ESG Databook 2024 for ESG data other than the above.

26

CONTENTS

Company overview

Message fromthe President

Value creation
story

CSR Policy 1 :T.Hasegawa Group’s
Sustainability

Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 3 : Human rights and labor ~Human rights~
Basic approach and policy
We will respect human rights and diversity, work to improve the welfare of employees, and realize a safe and comfortable workplace. In
addition, we will promote respect for human rights in our businessactivities in accordance with our Basic Policy on Human Rights.
The Group has established the Compliance Regulations and theT.Hasegawa Corporate Code of Conduct to be followed by all employees as they engage in business activities, including those related to respect for human rights. We strive to make sure that all of ouremployees are aware of the Code of Conduct to spread awarenessof respect for human rights and prevent issues related to theserights.

Governance and risk management
Promotion system
We will check the status of compliance with items 1-6 of theabove policy and work to build a system for identifying, preventing and mitigating any negative impact on human rights
related to the Company’s business activities. In the event that it
becomes clear that the Company has caused or contributed toa negative impact on human rights, we will work to remedy or
correct the situation through proper procedures.

Human rights are the foundation of compliance and essential elements for improved corporate value. As such, the Compliance
Committee (which is chaired by the President & CEO and consistsof directors in charge of internal management control, officers incharge of the respective divisions, and others) collaborates acrossdivisions to ascertain issues related to human rights and the labor
environment and conduct improvements. The Committee also reports to the Board of Directors as necessary.

Major human rights risks

Identified human rights
risks (the Group)
Harassment

Basic Policy on Human Rights
The Company will support international human rights standards, such as the Universal Declaration of Human Rights, theILO Declaration on Fundamental Principles and Rights at Work,and the United Nations Global Compact. It will act in accordance with the policy below, which is based on the United Nations Guiding Principles on Business and Human Rights.
1 . We never engage in child labor or forced labor.

4. We do not allow any harassment that harms workers or thework environment.

Compliance training, including harassment prevention, was conducted.
Posters were intermittently displayed to raise awareness.
For new employee training, the Information Systems Division
issued a reminder regarding information leaks.

Manage properly in accordance with the law.

Improper use ofsocial media

Increase employee awareness of the impact ofsocial media.

Warnings regarding the use of social media were sent throughinternal notification once a year.

Blocking of labormanagement
consultation

Establish a basic policy of appropriate and goodfaith consultation with worker representatives.

As a rule, a consultation was held every month, with a total of
49 labor-management consultation sessions by theheadquarters and branches.

Adhere to legally mandated working hours and make it apolicy to provide a good working environment for employees.

An agreement was entered into regarding the upper limit ofovertime work to avoid any adverse impact on health.

At present, no excessive working hours have occurred, butwhen such incidents do occur, we will analyze the causes
and work to reduce them through countermeasures.

A system that generates an alert when the upper limit of overtime
working hours is approached as a warning was installed.

Discrimination

Distribute the “T.Hasegawa Corporate Code of
Conduct,” which states that discrimination of any
kind is not tolerated, to all employees to increase
their understanding of the Code.

The T.Hasegawa Corporate Code of Conduct, which requires
compliance with respect for human rights, was distributed andmade known to all employees who entered the Company inthis fiscal year.

Carry out continuous initiatives such as developing
a safe work environment that will not cause alabor accident, creating work procedures, anddisseminating them to all workers.

Reinforced safety measures for various facilities.

Occupational healthand safety

Overwork

5. We endeavor to prevent accidents and disasters by prioritizing the health and safety of the workplace and workers.
6. We have proper and faithful discussions with labor representatives.

Encourage employees to correctly understand harassment
and create a comfortable workplace with no harassment.

Response results for FY2023

Personal data
breach

2. We comply with regulations on working hours, holidays andminimum wages stipulated by the law.
3. We do not discriminate against people in terms of hiring,promotions and career advancements.

Response policy

Alerted employees about the risk of personal information
leakage through the use of generative AI.

Identification of risks for each operation, implementation of
behavioral risk assessment, and revision of work procedures
Investigation of manufacturing risks and safety training

27

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Strategies
Risks
Identification of human rights risks

Response to human rights risks

The risk survey of divisions conducted jointly every year by the Risk
Management Committee and the Compliance Committee incorporates the viewpoint of human rights risks. Human rights risks extracted by the survey are categorized, and businesses and divisions
that are at risk are identified.

Evaluation of human rights risks
Currently, the Group organizes and responds to the following main
human rights risks.

Implementation of supplier assessment
To promote responsible procurement, the Group conducts supplierassessments, including human rights and labor, through questionnaires. For details, refer to P.15.

The Group identifies human rights risks that should be addressedto prevent or mitigate the negative impact of business activities onhuman rights. We take measures for identified risks and regularly
monitor and disclose information to improve our eﬀorts.

Measures and monitoring of human rights risks
Having developed internal rules, we analyze, manage and consider
measures for risks, mainly for relevant divisions. In addition, the relevant divisions and the Risk Management Committee analyze, manage, and consider measures for risks that require a response fromthe Company or the Group based on the risk management rules.

Establishment of a whistleblowing service
As part of our complaint handling mechanism, we have establishedthe person responsible for general aﬀairs, the person responsible
for human resources, an outside lawyer and a Full-Time Auditor foreach site as the whistleblowing/hotline service contact. The service
can be accessed from multiple locations both inside and outside

the Company from the dedicated banners on the intranet and directe-mail address.
Personal information regarding the consultant and the content of
opinions and consultations are strictly controlled and will not be divulged outside the Company without the consent of the consultant.

Providing harassment prevention training
Harassment in the workplace not only damages the personality anddignity of the person who is harassed, but it also results in a loss ofdesire to work or self-confidence or may even cause mental healthto deteriorate. Based on the Company’s conviction that harassment
shall not be allowed, we provide a wide range of training intended toenlighten employees and prevent harassment. In FY2023, we conducted compliance training, including our harassment prevention
program, for all employees using e-learning. This expanded training
from previous years, which had targeted only newly appointed managers.

Process for responding to human rights risks

Commitment
Make commitments
based on the Basic Policyon Human Rights
Spread the Basic Policyon Human Rights
Spread the Basic Policyon Human Rights among
Group employees.
Explain and promote
understanding of the
Basic Policy on Human
Rights in the supply
chain (value chain).

Identification/assessment of human rights risks

Measures & monitoring

Report & information disclosure

Complaint handling mechanism[Group (internal)]

Consider, develop, andmonitor measures

Disclose details andprogress of initiatives

Analyze, manage, andconsider measures for risks,
mainly for relevant divisions,based on internal rules.

Report the progress of
initiatives annually on the
Sustainability Report.

Establish and manage
diverse whistleblowing
channels

Identify businesses
and divisions withpotential risks
Conduct a companywide risk investigation to
identify possible risks ineach division.
Categorize, analyze, andassess identified risks
and identify risks related
to human rights.

[Suppliers (external)]
Conduct supplierassessment
Check the status of
response to humanrights and supply chain
management throughquestionnaires using the
CSR Procurement SelfAssessment Tool.
* Identification andassessment of human rights
risks in the supply chain will
be performed later.

The relevant divisions and the
Risk Management Committee
should analyze, manage, andconsider measures for risks
that require a response fromthe Company or the Group
based on the risk
management rules.

Ensure ability to contact theperson responsible for generalaﬀairs, the person responsible forhuman resources, an outside
lawyer, and a Full-Time Auditor foreach site. Provide multiple means
within and outside the Company,
including dedicated banners on
the intranet, direct e-mail address,
and whistleblowing/hotline
service contact.

28

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :CSR Policy 2 :Procurement

Environment

CSR Policy 3 :CSR Policy 4 :Human rights and labor

Quality safety

FY2023Mid- tolong-term
targetCSR Policy 5 :Governance

CSR Policy 6 :Innovation

Indicator and targets

Indicator

Unit

Scope

Calculation period
Time of calculation

Internal control training for new
employees(human rights included in the content)%

Nonconsolidated

Fiscal year-end

FY2021100

FY2022

100

100

100

Remarks
At time of hiring and assignment(including temporary
employees)
For leadership level in FY2021

Compliance training(including harassment prevention training)%

Nonconsolidated

For managers in FY2022
Fiscal year-end

100

100

100

100

At time of promotion to
management in FY2022
For all employees in FY2023

See ESG Databook 2024 for ESG data other than the above.

29

CONTENTS

Message fromthe President

Company overview

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 3 : Human rights and labor ~Occupational health and safety~
Basic approach and policy

Strategies

The Company is committed to occupational health and safety as animportant theme.

Governance and risk management
Promotion system

We have established Occupational Safety and Health Committees
at each site and are implementing measures to prevent personalhazards and health problems among our employees. Incident reports are regularly held twice a year at the Board of Directors’ meetings. Serious incidents are reported and discussed for responses ona case-by-case basis.

Health and safety management system chart

Board of Directors
Strategy Committee

Administrative
Division
officers in charge

R&D Division
officers in charge

Production Division
officers in charge

Fukaya Production Center responsible officers
General Aﬀairs
Division
responsible officers

Research
Management
Division
responsible officers

Fukaya Facility
factory director

Itakura Facility
factory director

Fukaya Production
Center Safety
Management Office
Head office
Occupational
Safety and HealthCommittee

Head office

R&D Center
Occupational
Safety and HealthCommittee

R&D Center

Fukaya Facility
Occupational
Safety and HealthCommittee

Itakura Facility
Occupational
Safety and HealthCommittee

Fukaya Facility
Education
Committee

Itakura Facility
Education
Committee

Fukaya Production Center

Opportunities
Increased job application rate and employee retention rate
Increased production efficiency as a result of improving thework environment
We work to improve workplace sanitation by placing top priority on
ensuring occupational safety and disaster prevention. At each site, theOccupational Safety and Health Committee develops activity policies
and plans, and it works on workplace environment safety and security
and disaster prevention activities in compliance with the Fire Service
Act and other laws and regulations related to safety and disaster.

System for hazard identification,risk assessment and incident investigation
With the goal of reducing the number of occupational accidents,
each site holds a monthly Occupational Safety and Health Committee meeting. The Committee deliberates and shares information
on safety and health activities based on the analysis of factors andcountermeasures for accidents and occupational injuries, as well as
the situation of employees on sick leave. Furthermore, the division
head of each workplace identifies workplace hazards, assesses risks,
and implements appropriate countermeasures while listening to
input from employees. In particular, they communicate the dangers
of handling chemical substances and their toxicity to all employees
while regularly measuring the organic solvent concentration in thework environment to assess its eﬀect on the health of employees.
In the event of a serious accident or occupational accident, a company-wide Accident Investigation Committee is established. We
have established a framework for quickly reporting accidents to theCommittee, investigating causes, developing recurrence prevention
measures, and implementing the measures.
The Fukaya Production Center, which is our production factory,
established a Safety Management Office in April 2023. It has beenworking to improve the workplace environment to prevent occupational accidents, which is its most important issue. We ensure that
all employees check and follow the rules.

And Safety Management System for the Fukaya Production Center,
which was established internally.
To prevent the industrial accident at the Itakura Facility that occurred on September 15, 2022, from being forgotten, we havedesignated September 15 as Safety Day. With the aim of raisingawareness of occupational safety, we promoted the development ofa safe work environment and occupational safety education for all
employees.

System to improve a series of processes
Until FY2023, the company-wide Environment and Safety Committee audited environmental and occupational safety issues at plants
for prompt improvement and compiled them in Corrective Action
Reports and other documents. However, starting from FY2024, theOccupational Safety and Health Committee at each site will take thelead in conducting audits on occupational safety.

System for employees to report on danger
At the Fukaya Production Center, employees provide information onnear misses and improvement requests during morning meetingsand safety roundtables at each workplace so that all members canunderstand the potential danger there. The Occupational Safety and
Health Committee also deliberates and takes risk reduction measures, which are deployed to other workplaces. In addition, hazard
prediction activities (KY activities) engaged in work that may cause
accidents and occupational injuries are conducted at each workplace to enable employees to foresee hazards in their own work andtake preventive measures.

Providing training on safety and health to employees
The Fukaya Facility holds safety and health-related skills training for
all employees (training upon hiring, training upon reassignment,
forklift skills training, etc.) in an eﬀort to raise employee awarenessof safe work practices. Our employees also actively participate inoutside lectures to obtain the qualifications necessary for work.

In accordance with the Occupational Health and Safety Management System Guidelines of the Ministry of Health, Labour andWelfare, we are operating and promoting an Occupational Health30

CONTENTS

Company overview

Message fromthe President

Value creation
story

Employee health care
Prevention of overwork and interviews with industrial physicians
We properly monitor the working hours of all employees, including
managers, and confirm whether they wish to be interviewed by an
occupational physician if they work long hours. We also encourage them to be aware of their physical health.
Health checkups
Employees who are 35 years of age and older can receive a fullmedical examination at the Company’s expense, and we encourage them to undergo health checkups actively.

CSR Policy 1 :T.Hasegawa Group’s
Sustainability

CSR Policy 2 :Procurement

Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Stress checks
Stress checks are conducted once a year to promote employee
awareness of stress and improve the work environment. We recommend that employees who were determined to have elevatedstress levels to talk with an industrial physician. In addition, eachdivision reports the results of the group analysis and then formulates and implements improvement measures.
Provision of health-related information
We distribute a monthly insurance newsletter published by thehealth insurance association. We have an industrial physician goover the health checkup results and also encourage applicable
employees to undergo an examination. Information on healthissues and work environment from industrial physicians is postedon the Company’s bulletin boards.

Indicator and targets
Indicator

Unit

Scope

Calculation period
Time of calculation

FY2021

FY2022

FY2023Mid- to long-termtargetNumber of workplace
deaths

PersonNonconsolidated

Fiscal year-end

0

1

0

0

Number of accidents
requiring leave

Case

Nonconsolidated

Fiscal year-end

1

5

4

0

Excluding commuting
accidents

Number of accidents not
requiring leave

Case

Nonconsolidated

Fiscal year-end

7

6

6

0

Excluding commuting
accidents

Ratio of worktime loss from
accidents resulting in leave−

Nonconsolidated

Fiscal year-end

0.53

3.17

2.13

0

Excluding commuting
accidents
Excluding accidents not
requiring leave

Ratio of worktime loss fromoccupational accidents
resulting in leave−

Nonconsolidated

Fiscal year-end

0.00483.98430.01880Excluding commuting
accidents

Ratio of worktime loss fromoccupational illnesses
resulting in leave−

Nonconsolidated

Fiscal year-end

0

0

0

0

Remarks

See ESG Databook 2024 for ESG data other than the above.

31

CONTENTS

Company overview

Message fromthe President

Value creation
story

CSR Policy 1 :T.Hasegawa Group’s
Sustainability

Procurement

CSR Policy 2 :Environment

CSR Policy 4 :CSR Policy 3 :Human rights and labor

CSR Policy 5 :Governance

Quality safety

CSR Policy 6 :Innovation

CSR Policy 4 : Quality safety
Basic approach and policy

Governance and risk management

In order to meet customer requirements that want products to besafe and reliable to use, the Group has established a quality assurance system and prioritizes the supply of safe and reliable products.

To ensure customers and consumers of the quality and safety of
our flavor and fragrance products, we have built a quality assurance
system led by the Quality Assurance Division, which communicatesdirectly with the President & CEO. We value communication withcustomers, and we promote quality and safety activities. All raw
materials that we use are registered under the system. Only raw materials whose quality and safety have been verified are used to makesample pieces and products. We focus on providing high-quality
products while also performing final inspections for all customers’
products.

Quality & Food Safety Policy
We will implement the following policies to provide customers
with reliable products.
1. We value communication with our customers and we work
to provide satisfying products that embody their needs.
2. In all processes, from R&D to raw material procurement,
manufacturing, distribution, sales and administration, we
steadily fulfill our roles and duties and provide quality products and services that our customers rely on.

Quality assurance system chart

President

R&D Center

3. We observe related laws and regulations, establish a quality
assurance system that allows us to provide safe, high-quality
products, and work continuously to make improvements.

Quality Assurance
Division

Quality Control Center
The Quality Control Centers of the Fukaya Facility and the Itakura Facility manage the plant quality system and conduct quality
inspections of products manufactured at the facilities and purchased raw materials.
In quality inspections, we have established a system that allows us
to carry out all inspections internally. Inspection results are automatically transferred from the inspection equipment to a computer
system by an automatic transfer system. Measurement, pass/faildetermination, and inspection card issuance are fully automated (digitalized), which helps to prevent transcription errors. As a company that handles fragrances, we are also working on training sensory
inspectors. Only those who have been trained to distinguish fragrances and have passed our internal certification test are involved
in sensory tests.

Quality Control
CenterFacility

Supplier

Purchasing
Division

Sales
Division

CustomerCommunication with customers
CustomerRequired quality

Relation with stakeholders
We are committed to providing products that customers can use
with a sense of security and that are valuable for customer success.

Assessment

Our quality assurance system
Quality Assurance Division
We confirm legal compliance at the raw material purchase stage toprovide customers with products that they can use with peace ofmind. In addition to complying with laws and regulations in Japan,
we check laws and regulations of destination countries of export
products for our overseas customers and provide products thatcomply with the laws and regulations of the respective countries
and regions.
We also promote automatic creation (digitalization) of product specifications so that we can quickly provide customers with accurate information.

Product
specification
SDS
Test reports

Complaints
Inquiries
Requests

Product
Sample presentation

Feedback
Planning
Marketing

Development&improvement

Production

Sales

Quality Assurance
T.Hasegawa

32

CONTENTS

Company overview

Message fromthe President

Value creation
story

Quality control from raw materials to products

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

Laws related to chemical substances and our compliance

We use a traceability system based on barcodes for processes fromraw material acceptance to product shipment to ensure productquality so that our customers can use our products with a sense of
security. All information is traceable under the system, from productlots to manufacturing records, product inspection results, lot numbers of raw materials used in the products, and raw material acceptance inspection results.

From the viewpoint that the components of flavors and fragrances
we handle are chemical substances, we actively and appropriately
comply with related laws to protect the workers who are handlingchemical substances during manufacturing and transport, ensure
the safety of users, and conserve the environment.

We check the quality and safety information for the raw materials
that we use, including standards, allergies and residual agrochemicals. We also confirm the compliance of compounds used in flavors
and fragrances with related laws, including the Food Sanitation Act,
the Fire Service Act, the Industrial Safety and Health Act, and the
Act on the Regulation of Manufacture and Evaluation of Chemical
Substances. By consistently using raw materials with guaranteed
quality and creating quality products, we provide safe and reliable
products and manufacture products while considering the environmental impact.

We perform the following in compliance with the Act on the Regulation of Manufacture and Evaluation of Chemical Substances:

In addition, a traceability system allows information to be provided
promptly in response to customer inquiries.

Application and registration of “New Chemical Substances”
Application for “Small Production Volume of New Chemical Substances”

Raw material

CSR Policy 3 :Human rights and labor① Application for registering new chemical compounds in

CSR Policy 6 :Innovation

Globally Harmonized System of Classification and Labelling of Chemicals (GHS)

We issue SDSs and disclose information on substances subject tothe law contained in flavor and fragrance products for all of our
products so that customers will be able to use them safely. Applicable related laws are as follows:
Industrial Safety and Health Act
Act on the Assessment of Releases of Specified Chemical Substances in the Environment and the Promotion of Management
Improvement (Chemical Substances Management Law)

Notification concerning “ Low Production Volume of New Chemical Substances”
Request pertaining to “ Small Production Volume of New Chemical
Substances”

Development

CSR Policy 5 :Governance② Publication of Safety Data Sheets (SDSs) supporting theaccordance with Japanese laws

We perform the following in compliance with the Industrial Safety
and Health Act:CSR Policy 4 :Quality safety

Fire Service Act
Ship Safety Act
Act on Prevention of Marine Pollution and Maritime Disaster (Marine
Pollution Prevention Law)
Poisonous and Deleterious Substances Control Law
For products to be exported, we also issue SDSs corresponding to
the GHS system of the export destination country.

Manufacturing

Product

Raw material
registration

Prototype production

Sample provision

Raw material
acceptance

Manufacturing

Quality inspection

Follow-up

All raw materials arechecked for legal
compliance andsafety. Only thosethat are approved canbe registered as raw
materials for use.

Flavor and fragrance
products aredeveloped according
to customer
requirements using
registered raw
materials.

We check the label
and safety information
based on laws andregulations and create
safe and reliablesamples.

All raw materials
arriving at theplant undergo an
acceptance inspection
to confirm that theymeet our standards.

We engage in highquality productmanufacturing throughmanufacturingcontrol utilizing FSSC
22000-certified
operations and abarcode system.

All products undergo a
final inspection by the
manufacturing batch toconfirm that they meetthe standards that havebeen established foreach product.

After selling the
products to ourcustomers, we handle
any complaints orinquiries that may arise.

33

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

lation trends in countries and law amendment in Japan

We obtain information on chemical-related regulation trends ofcountries and items listed in the registered chemical substance list
(inventory) through law search databases in and outside Japan, as
well as through industry organizations. We manage the chemical
substances by registering information on how they are obtainedin our internal system, and we use this data to respond to inquiries
from customers.
As for the amendment of laws in Japan, we work to obtain notifications from relevant government offices as well as industry organizations. We collaborate with relevant divisions by responding toamendments to the Industrial Safety and Health Act and the Chemical Substances Management Law, which have frequently been
amended, especially in recent years, when collecting raw material
information and improving internal systems. We do so while considering the fact that the frequency of counting the emissions of flavors and fragrances applicable to the Pollutant Release and Transfer
Register (PRTR), updating SDSs, and changing label indication, as
well as the number of materials subject to risk assessment, will further increase in the future.

▲

China

( 1 ) Main chemical management regulations applicable to our
subsidiaries in China (Shanghai Facility and Suzhou Facility)
Safety production regulations: Work Safety Law of the People’s Republic of China; Fire Control Law of the People’s Republic of China;
Regulations on the Control over Safety of Hazardous Chemicals;
Measures for Administration of Hazardous Chemicals Registration;
Catalog of Hazardous Chemicals; and Safety Production License
Ordinance
Occupational health and protection regulations: Law of the People’s Republic of China on Prevention and Control of Occupational
Diseases; Regulations on the Management of Occupational Healthat Workplaces; and Warning Signs for Occupational Hazards in the
Workplace(2) Application for registration and notification of new chemical
substances
T.Hasegawa FLAVOURS AND FRAGRANCES (SHANGHAI) CO., LTD.
has so far applied for a simplified single item registration in accordance with the “Measures for Environmental Management of New
Chemical Substances” (Order No. 7 of the Ministry of Environmental
Protection) and for notification of a second item in accordance withthe “Measures for the Environmental Management Registration of
New Chemical Substances” (Order No. 12 of the Ministry of Ecology
and Environment; enforced in 2021).
(3) Submission of SDSs
We issue SDSs for all products that comply with GB 30000: Rules
for Classification and Labeling of Chemicals, GB 12268: List of Dangerous Goods, and GB 2944: Classification and Code of Dangerous
Goods.
Malaysia( 1 ) Main chemical management regulations in our subsidiaries in
Malaysia:
Industrial Safety and Health Act 1994 (OSHA 1994)
Subordinate legislation of OSHA 1994: Occupational Safety and
Health (Use and Standard of Exposure Chemical Hazardous to
Health) Regulations 2000 (USECHH Regulations)
The Malaysia Facility only manufactures food flavors, so it does
not have to register chemical substances. However, we internallymanage records of substance names listed in the inventory ofhazardous harmful chemical substances of CLASS Regulations
2013 (2013 Regulations on Classification, Labelling and Safety
Data Sheets of Hazardous Chemicals).
(2) Submission of SDSs
We issue SDSs that comply with the CLASS Regulations 2013. We
obtain SDSs of chemical substances used as raw materials of foodflavors from suppliers and issue SDSs for samples and products
according to customer requests.

CSR Policy 3 :Human rights and labor

Environmental protection regulations:
Environmental Protection Law of the People’s Republic of China;
National Inventory of Hazardous Wastes; and Measures on the Management of Transfer of Hazardous Waste▲④ Response of overseas subsidiaries
Our overseas subsidiaries are also responsible for complying withchemical-related laws applicable to each site.

CSR Policy 2 :Environment▲③ Information management and response to chemical regu-

CSR Policy 1 :Procurement

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

United States( 1 ) Main chemical management regulations applicable to our
subsidiaries in the United States (3 sites in California):
Our subsidiaries in the United States only manufacture food flavors
and not new chemical substances, so they are exempted from thelaw on the application for registration of new chemical substances.
However, Provision 65 (California state law) applies as a chemical
substance management law. We provide a statement related toProvision 65 before the customer places the first order of a productand/or upon customer requests.
(2) Submission of SDSs
We issue SDSs in compliance with the GHS for samples and products according to customer requests.

Product risk assessment(risk assessment of chemical substances)
Factory employees regularly receive education on the danger, harmand appropriate handling of chemical substances and chemical
regulations in and outside Japan in order to appropriately manage
the chemical substances handled by the Company as raw materials.
In addition, we conduct risk assessments of chemical substances
based on the SDSs of raw materials and intermediate products,
consider risk reduction measures, and reflect the results in work
procedures. We warn all workers who handle chemical substancesof the toxicity of chemicals, provide precautions for handling chemicals, and provide exposure prevention measures (by installing local
exhaust ventilation and wearing protective equipment).
The R&D Center conducts risk assessments of all chemical substances used in the factories according to the Industrial Safety and
Health Act, prepares a measure sheet according to the risk level,and puts it on the intracompany website so that it will be available
to employees at all times.
We will also respond to an increase in substances subject to risk assessments in the future due to amendments to the Industrial Safety
and Health Act.
At our overseas subsidiaries, we also take action according to theactual situation there.

34

CONTENTS

Company overview

Message fromthe President

Value creation
story

▲

China

The Shanghai Facility and the Suzhou Facility independently manage
chemicals according to the respective local requirements. They formulate and manage the following management measures from the perspectives of safety production, occupational health and safety, environmental protection, and production risk management.
① Obtain SDSs from raw material suppliers and register the information
so that it can be searched on internal systems.
② Evaluate workshops in accordance with legal requirements to
identify occupational hazards. Regularly inspect workshops
every year, publicly announce the results, and put occupational health warning marks at workshops.
③ Store flammable, dangerous chemicals in specified warehouses.
④ Conduct a safety production risk assessment once a year to identify
risks (such as the use, storage and transport of dangerous chemicals) and establish control measures and emergency countermeasures to prevent production accidents from occurring.
▲

Malaysia

In order to confirm that a risk assessment has been conducted for all
chemical substances and to ascertain the impact of such substanceson employees, our subsidiaries in Malaysia receive chemical substance
health risk assessments by external authorized reviewers registered with
the Department of Occupational Safety and Health (DOSH) of Malaysia
in accordance with USECHH Regulations. Based on the risk assessment
results and in accordance with relevant regulations, we installed local
exhaust ventilation devices (fume hoods) at research labs and employed management measures to confirm the permissible exposure
limit of employees. In addition, we provide protective equipment to employees approved by the Standard and Industrial Research Institute of
Malaysia-Department of Occupational Safety and Health (SIRIM-DOSH).
▲

United States

At our subsidiaries in the United States, risk assessments of raw materials are conducted based on the hazard risk information for respiratoryorgans of the Flavor and Extract Manufacturers Association of theUnited States (FEMA) or other information provided by suppliers. All
employees receive hazard communication training. The facilities comply with the requirements of government agencies and the Division of
Occupational Safety and Health (Cal/OSHA). Regarding exposure to
employees’ respiratory organs during flavor manufacturing, we observe
the priority chemical substance list for health and safety provided by
FEMA. Precautions on safety are all reflected in manufacturing process
sheets so that employees can observe them.

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 4 :CSR Policy 3 :Human rights and labor

International standard certification
ISO 9001
In 1998, we acquired an ISO 9002 certification for the quality management system at our facilities. In 2003, we changed the registration to an
ISO 9001 certification. In 2007, we expanded the scope and acquireda certification covering the entire Company. With the strong leadership
exemplified by the President & CEO as top management, all employees
involved in business activities cooperate in quality activities.
In 2012, we obtained a FSSC 22000 certification for our food safety
management system and then began rolling out an integrated management system of ISO 9001 and FSSC 22000. However, in order to narrow down the activities at each division and focus on the most suitable
standards, we have changed the scope of ISO 9001 to cover the head
office, branches, sales offices, R&D Center, and fragrance facilities withthe certification and to cover flavor facilities with only the FSSC 22000
certification since 2019.
In China, we acquired an ISO 9001 certification in Shanghai and Suzhou
in 2004 and 2010, respectively. These certifications guide our quality
activities.

FSSC 22000

Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Overseas subsidiaries- Status of international food safety standards certification

Location

Certification type (year acquired)

China

FSSC 22000 (2012)(Only in Suzhou, where food flavoringessences are manufactured)(In China, ISO 9001 certification is
ongoing in both Shanghai and Suzhou
facilities)

Malaysia

HACCP (2011), ISO 22000 (2013), FSSC
22000 (2014)

United States(3 locations in California)

British Retail Consortium (BRC) Global
Standard for Food Safety certification( 1 location in 2012 and 2 locations in
2022)(BRC is a GFSI-recognized certification
standard)

Audit
Internal audit

In 2012, all divisions associated with flavors obtained an FSSC
22000 certification for their food safety management systems. We
acquired an international standard certification approved by the
Global Food Safety Initiative (GFSI), which allowed us to reduce risks
related to food safety and provide safe and reliable products thatare recognized by our customers overseas and in Japan.

We conduct the annual internal quality and food safety audit at
all divisions. We provide specialized training to some employees
as well as those approved as internal auditors conduct audits. By
having employees audit one another, we can make detailed improvements to areas that we do not usually notice and eliminate
operational inefficiencies. Findings are shared with other divisions
to make ongoing improvements in every division.

Since the FSSC 22000 standard specializes in food safety, wechanged the scope of the certification and have been obtaining it
only at our flavor facilities since 2019.

5S audit

We have also acquired certifications under international standards
related to food safety at our overseas subsidiaries.

Members from the Quality Control Center of the Fukaya Facility andthe Itakura Facility enter the manufacturing area to conduct hygiene
audits based on the 5S, which stands for Seiri (Sort), Seiton (Systemize), Seiso (Shine), Seiketsu (Standardize) and Shitsuke (Sustain), by
using a method equivalent to that used in external audits according
to ISO 9001 or FSSC 22000. The hygiene control of a factory forms
the basis of food safety and helps prevent contamination by foreign
matter or microorganisms.
In China (Shanghai and Suzhou), regular patrols and audits are conducted by the 5S Management Committee.

35

CONTENTS

Company overview

Message fromthe President

Value creation
story

Management review
To provide information to management, we provide reports to review
activities related to quality and food safety performed during the year.
We conduct ongoing improvement activities by reflecting on the year’s
activities and receiving approval and assignments from management.

Compliance initiatives
We believe employee awareness is important to provide customers
with high-quality products, and we are engaged in activities to raisecompliance awareness. We repeatedly provide quality management
training on various occasions, including when employees join the
Company and when they are promoted. In particular, legal information changes on a daily basis, so we constantly collect informationfrom industry organizations and various media and work to promptly communicate legal information to employees through intracompany websites, regular workshops and various study sessions. Suchinformation is posted on intracompany websites so employees cancheck these details at any time. Regular study sessions on foodsafety are held at the Fukaya Facility and the Itakura Facility to raisecompliance awareness among employees.

Internal Halal Committee
In order to respond to requests from Islamic customers, our export products to Southeast Asian countries are Halal certified
to supply safe and reliable products. We established an Internal
Halal Committee by selecting members from related divisions,
including Sales, R&D and Production. The Committee shares Halal-related information with our locations in China and Southeast
Asian countries and maintains the Halal certification. We have also
entered into an agreement with the Nippon Asia Halal Association
as an advisor, and we are working to solve various problems.

Response to complaints and the Quality Control Committee
When a complaint arises, quality-related divisions coordinate witheach other to clarify the cause and countermeasures and quickly
respond to the customer. Serious complaints are promptly reported
to management, and proper measures are taken from the customer’s perspective. Complaint information is shared at Quality Control
Committee meetings and with related divisions to help prevent
recurrence. When a manufacturing problem occurs, the cause andT.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and laborcountermeasures are clarified in the same way as when dealing withcomplaints, and information is shared at Quality Control Committee
meetings to help prevent recurrence.

Strategies
Opportunities
Increased trust owing to improved product quality

Measures
Investing in aging equipment
Improving the skill level of inspectors
Reviewing manufacturing methods and conditions
Improving the manufacturing skill level through education andtraining
Enhancing the production system (supply system)
Reducing the lead time by promoting fully automated issuance ofinspection cards (digital transformation)
Developing the sensory skill of manufacturing personnel to diﬀerentiate taste and scent through sensory test division training
Customers will always require safety and security. We will work toenhance our quality assurance system and aim to achieve a level ofquality that customers will continue to rely on. The Quality Assurance
Division, which communicates directly with the President & CEO, willlead our eﬀorts to ensure close collaboration with the Quality Control
Center of the Production Division and the Quality Assurance Divisionsof our overseas locations to provide quality products that satisfy all
customers both in Japan and abroad. At our factories, we will review
the manufacturing methods and work to improve operations in orderto reduce the number of complaints and further reduce the rejectionof goods. We will also expand the introduction of the entrance and exit
monitoring system for food factories. We will continue to obtain the
ISO 9001 and FSSC 22000 certifications to improve quality and maintain food safety.
Furthermore, the Production Division will proactively provide training
for skill improvement at the R&D Center to develop highly skilled workers who can take on the responsibility of flavor and fragrance production. At the Quality Control Center, we will work to improve the skillsof inspectors and enhance the inspection system with the aim of

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

providing customers with high-quality products.
In our overseas locations, we will also continue to train employees
involved in production, introduce an operational improvement
suggestion program, and engage in process control in the Production
Divisions in the same manner as the Company.
We also realize that properly managing chemical substances tomaintain health and the environment is an important issue in building a sustainable society. Going forward, we will continue to monitor
trends in regulating related chemicals, including amendments to
the Industrial Safety and Health Act, conduct risk assessments ofapplicable chemical substances, and reflect changes to SDSs.

Continued enhancement of the promotion system
Strengthening the development of the flavor and fragrance
industry and responding to the environment surrounding
the industry
We actively dispatch employees to serve as members of industry organizations in other countries in an attempt to respond to constantly changing legal information and develop the flavor and fragrance
industry as a whole. We also joined organizations in Japan, including
the Japan Flavor & Fragrance Materials Association (JFFMA) and theJapan Food Additives Association, as well as international industry
organizations, such as the International Fragrance Association (IFRA)
and the International Organization of the Flavor Industry (IOFI),
as a special member of the JFFMA. We take quick and appropriate
action for the entire industry regarding various regulations related
to the industry, and conduct activities that will help develop theentire flavor and fragrance industry.
In addition, we have joined the China Association of Fragrance
Flavor and Cosmetic Industries (CAFFCI) in China and FEMA in the
United States, and we dispatch employees as committee members
to participate in the activities of industry organizations.

Enhancement of response to quality requirements in R&D
Various legal regulations are constantly changing, not only in Japan but
also overseas. In order to promptly respond to such changes, reflect
them in products, and communicate the information to customers, it isnecessary to participate actively in activities of industry organizations
to collect information. The collected information is registered in an

36

CONTENTS

Company overview

Message fromthe President

T.Hasegawa Group’s
Sustainability

Value creation
story

CSR Policy 1 :Procurement

CSR Policy 2 :CSR Policy 3 :Environment

Human rights and laborinternal database and quickly reflected in product information. Updated information can always be referenced by researchers, which allows
them to develop products based on the latest information and is also
used to provide information to customers.

in combination with barcode management to help manage manufacturing and ensure traceability. By installing IT technologies in
our facilities, we are striving to ensure that we consistently provide
products with the specified quality.

Enhancement of response to quality requirements in manufacturing processes

Regular audits for ISO 9001 and FSSC 22000 were conducted, andwe received approval for maintaining the certifications with no serious findings. An audit was also conducted for the Halal certificationand its renewal was approved.

In the manufacturing process, we are always required to produce
products with consistent quality. We assign codes to every raw material and product. By managing them using barcodes, we prevent
incorrect raw materials from being input and products from getting
mixed up. In our compound flavor and fragrance facilities and powder facilities, the system records measurement data from scales
used to measure raw materials and fill products. The data is used

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

worked to improve our services by promoting the direct deliveryof samples from factories to customers with whom we have closebusiness relationships, thereby increasing our response speed.
Employees engaged in the manufacturing of flavors for foods takecourses on HACCP and work to gain knowledge on and raise awareness of food safety. (Number of employees who took HACCP courses at the Fukaya Production Center in FY2023: 12)
We also work to increase awareness of quality and food safety system requirements and improve the operations of standards by theemployees of each division by providing courses on ISO 9001 and
FSSC 22000. (FSSC 22000 course: held three times for 58 participants; ISO 9001 internal auditor seminar: held two times for 77 participants)

As an initiative for food safety, we pruned trees within the factories’
premises and strengthened rat-proof measures by installing ratproof devices. The raw materials that we use are delivered fromaround the world. As such, we strengthened the acceptance andinspection work in cooperation with the Purchasing Division. We

Indicator and targets
Unit

Scope

Calculation period
Time of calculation

Serious quality incident with market recall(number of recalls)

Case

Nonconsolidated

Fiscal year

0

0

0

0

Product complaints from customers

Case

Nonconsolidated

Fiscal year

5

3

0

0

Number of FSSC 2200 courses held

Time

Nonconsolidated

Fiscal year

2

1

3

1

Number of FSSC 2200 course participants

PersonNonconsolidated

Fiscal year

92

37

58

10

Number of ISO 9001 internal auditor seminars held

Time

Nonconsolidated

Fiscal year

1

1

2

2

Number of ISO 9001 internal auditor seminar participants

PersonNonconsolidated

Fiscal year

32

20

77

70

Indicator

FY2021

FY2022Mid- to long-termtarget (per year)

FY2023

See ESG Databook 2024 for ESG data other than the above.

37

CONTENTS

Company overview

Message fromthe President

Value creation
story

CSR Policy 1 :T.Hasegawa Group’s
Sustainability

CSR Policy 2 :Procurement

CSR Policy 4 :CSR Policy 3 :Environment

Human rights and labor

CSR Policy 5 :Governance

Quality safety

CSR Policy 6 :Innovation

CSR Policy 5 : Governance -- Fair corporate activities ~Corporate governance~
Basic approach and policy
The Basic Principles on Corporate Governance
As a listed company, we respect the following five basic principles of corporate governance. We will achieve sustainablegrowth and maximize corporate value through accurate andprompt management decisions as well as timely and appropriate execution of duties while enhancing the management
check function and ensuring compliance (legal observance).
( 1 ) Protect shareholder rights and ensure equality

SystemThe Company adopted the Audit and Supervisory Board as its corporate governance system under the Companies Act of Japan. The
Board of Directors makes important management decisions andsupervises business execution, while auditors and the Audit andSupervisory Board, which are independent of the Board of Directors,
audit the status of such business execution. We have also adopted
the executive officer system and the group executive officer system
to promote the appropriate division of roles between management
and business execution, accelerate management decision-making
and strengthen business execution functions.

Furthermore, we have established three voluntary organs: the Strategy Committee, Appointment Committee, and Compensation Committee. The Strategy Committee was established for the purpose of
dynamically deliberating on the development of business strategies
and the execution of businesses, including important matters related to the management of the Group. The Appointment Committee
and the Compensation Committee were established to ensuretransparency and objectivity in relation to the nomination of director
candidates and decisions on directors’ compensation.
The outline of our corporate governance structure is shown in thefollowing chart.

(2) Build smooth relationships with stakeholders(3) Create a comfortable work environment for employees(4) Ensure timely and appropriate information disclosure andtransparency(5) Enhance management supervision and ensure accountability to shareholders of the Board of Directors and the Audit
and Supervisory Board

It has established the Basic Policy on Corporate Governance, whichis posted on the Company’s website.
https://www.t-hasegawa.co.jp/en/ir/governance
As a member of society, our Group aims to build and strengthen our
relationship with each stakeholder and contribute to the creationof an enriched society using flavor and fragrance technologies tosolve the challenges faced by society. To fulfill its social responsibilities, grow sustainably, and improve long-term corporate value, ourGroup needs to make decisions rapidly and execute business flexibly while responding to the changing management environment
under a highly reliable and transparent management system. Our
Group regards corporate governance, which serves as the foundation of a highly reliable and transparent management system, as animportant challenge and will continue to work on strengthening ourgovernance system so that it remains eﬀective.

Corporate governance structure
General Meeting of Shareholders
Nominate/
Dismiss

Nominate/Dismiss

Appointment Committee
Compensation
Committee

AdviseReportParticipate

Board of Directors(Directors)

Nominate/
Dismiss

Audit & Supervisory Board(Corporate Auditors)

Audit/Monitor

Nominate/Dismiss

President & CEO

Exchange
information/
opinions

ReportNominate/Dismiss
Participate

Participate

Strategy Committee
InstructParticipate

Full-Time Auditors

Audit/Monitor

Participate

Senior vice presidents (officers in charge/responsible officers)
and senior vice presidents of Group companies

ReportInstruct

Business execution

People in charge of operations

Accounting Auditor

Exchange
information/
opinions

ReportAuditing DivisionInternal audits

Exchange information/
opinions

Audit

38

CONTENTS

Company overview

Message fromthe President

Value creation
story

Diversity of directors and auditors

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :CSR Policy 3 :Environment

Human rights and labor

Succession plan

To achieve corporate governance that will serve as the foundationof a highly reliable and transparent management system, the Group
ensures diversity in the nomination of directors and auditors. We
consider various factors in nominating both internal and external
candidates, including personality, insight, knowledge in various
fields, experience, career, gender and age. As stipulated in the Articles of Incorporation, we appoint the appropriate number of directors (up to 10) to enable active deliberation, consideration and rapid
decision-making.

The Group realizes that the planned development of successors to
the President & CEO is important as a business strategy for continuing to improve our corporate value in the future. In accordancewith the Basic Policy on Corporate Governance, we are working todevelop successors in a planned manner so that candidates cangain experience while participating in management through business execution and attending important meetings, including Boardof Directors meetings and the Strategy Committee. As a result, weare able to cultivate the abilities, experience, knowledge, skills, andother factors that are necessary to serve as a President & CEO.

CSR Policy 4 :CSR Policy 5 :CSR Policy 6 :Governance

Quality safety

Innovation

In order to ensure transparency and objectivity in the nomination of
President & CEO candidates, relevant details are deliberated in the
Appointment Committee (which is a voluntary committee comprisedof the representative director and a majority of independent outside
directors) and chaired by an independent outside director before they
are reported to the Board of Directors. Based on reports and advice
from the Appointment Committee, the Board of Directors continues tosupervise the overall eﬀorts for developing successors.

Skill matrix of directors and auditors
Particularly important skills among required expertiseName

Title/post

Corporate
management
Business strategy

ESG
Sustainability

Quality

Sales
MarketingTakao Umino

President & CEO

●

●

●

●

Yoshiaki Chino

Representative Director & Deputy President

●

●

●

●

Minoru Nakamura

Director & Senior Executive Vice President●●

Tetsuya Nakamura

Director & Executive Vice President●●

Koichiro Kato

Director & Executive Vice President●

Kenji Hasegawa

Director & Executive Vice President●

Shingo Ohkado

Outside Director●

Takao Yuhara

Outside Director●

Akiko Izumi

Outside Director●

Paul Dupuis

Outside Director●

Takehiro Matsumoto

Full-Time Auditor●

Tomoyoshi Arita

Outside Auditor

Kazuhito Yamamura

Outside Auditor

Maki Suzuki

Outside Auditor●

Production●

Overseas strategy
International

Accounting
Finance

●

●

●

●

●

●

●
●

●

●
●

●

●

●
●

●
●

●

●

●
●

●

●
●

●
●

Human resources
Legal aﬀairs
Human resource
Compliancedevelopment
Risk management

●

●

●
●

R&D

●
●

●

●

●

●

●

●

●

●

●

●

●

●
●

39

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Officer remuneration
The Company determined the policy on decisions regarding the remuneration, etc., of individual directors during a Board of Directors
meeting held on April 16, 2021.

the calculation method for the amount or number thereof(including the policy on deciding the time or conditions for
granting remuneration)

As the basic policy for the remuneration, etc., of the Company’s directors, the remuneration system shall also be linked to shareholder returns
so that it will adequately function as an incentive to increase motivationand morale for improving shareholder value and to continue to improve
corporate value. Furthermore, the remuneration, etc., of individual directors shall be set at the appropriate level in light of their duties.

The upper limit for the total amount of bonus payment, whichis performance-linked remuneration, shall be determined within
the remuneration limit approved by the resolution of the General
Meeting of Shareholders. With consolidated ordinary profit as
the indicator for performance-linked remuneration, the payment
amount shall be calculated by multiplying the payment unit
(which is obtained by multiplying the incentive corresponding to
the rate of achievement of the consolidated ordinary profit plan)with the factor corresponding to the position of the director,
while taking into account the performance evaluation of the director. This payment shall be made at a certain time every year.

Specifically, the remuneration, etc., of internal directors shall include basic remuneration as fixed remuneration, bonus as performance-linked
remuneration, and stock-based compensation stock option as
non-monetary remuneration. The remuneration, etc., of outside directors shall be paid only as basic remuneration in light of their duties.

Note that consolidated ordinary profit represents profit fromoverall management activities and is considered appropriate as
an indicator to evaluate the performance of duties of directors.
Therefore, consolidated ordinary profit shall be used as the indicator pertaining to performance-linked remuneration.

ｂ．Policy on decisions regarding the basic remuneration (monetary remuneration), etc., of individuals (including the policy
on deciding the time or conditions for granting remuneration)

d ．Policy on decisions regarding the details of non-monetary
remuneration, etc., and the calculation method for theamount or number thereof (including the policy on deciding
the time or conditions for granting remuneration)

Policy on decisions regarding the remuneration,etc., of individual directors
a ．Basic policy

As the fixed remuneration of the Company’s directors, basic remuneration shall be paid at a certain time every month.
The amount of remuneration payment for individual directors
pertaining to basic remuneration (fixed remuneration) shall be determined based on the corresponding level for the position within
the remuneration limit approved by the resolution of the General
Meeting of Shareholders while taking into consideration the performance, financial condition, economic situation, market level, etc.

c ．Policy on decisions regarding the details of performance-linked
remuneration, etc., and non-monetary remuneration, etc., andAs a stock-based compensation stock option, which is non-monetary
remuneration, a share option that is granted by exercising the right at
one yen for one share shall be granted once every year as a rule. Notethat the number of options granted shall be determined based on thestandard corresponding to the position within the remuneration limit
approved by the resolution of the General Meeting of Shareholders.

e ．Policy on decisions regarding the rate of the amount of fixed
remuneration, performance-based remuneration, etc., or
non-monetary remuneration, etc., to the amount of remuneration, etc., of individual directors

The remuneration, etc., of internal directors shall include basic
remuneration (fixed remuneration), bonus (performance-linked
remuneration), and stock-based compensation stock option(non-monetary remuneration). The remuneration, etc., of outside
directors shall only include basic remuneration.
The rate of payment of the remuneration of internal directors
shall be set at the appropriate rate so that it will adequately function as an incentive to increase motivation and morale for improving shareholder value and to continue to improve corporate
value, while taking into consideration the post, duties, and trendsof other companies with the same business scale as the Company, etc., in a comprehensive manner.

f ．Matters related to decisions regarding the remuneration, etc.,
of individual directors
The amount of remuneration, etc., of individual directors shall be
determined by the Board of Directors meeting within the remuneration limit approved by the General Meeting of Shareholders
in light of the details of the deliberation at the Compensation
Committee, a voluntary committee. Note that the Compensation
Committee shall include the representative director and outside
directors to ensure the transparency and objectivity of decisions
pertaining to remuneration.

Evaluation of the eﬀectiveness of the Board of Directors
The Company’s Board of Directors analyzes and evaluates its eﬀectiveness and discloses an overview of the results every year.
In FY2023, we conducted a questionnaire survey of all directors andauditors regarding the composition and operation of the Board of
Directors, and the results of the survey were compiled, analyzed
and evaluated by the Board. As a result, we confirmed that the effectiveness of the Board is ensured.

40

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Plan for the future
PDCA cycle for improving the eﬀectiveness of the Boardof Directors
All directors & corporate
auditors Survey

Meeting of
independent officers

Deliberated by
Board of Directors

Improvement strategy evaluationand implementation toward next fiscal year
Corporate governance report disclosure

Main FY2023 initiatives
We manage corporate governance in line with the Basic Policy on
Corporate Governance, which we established based on the principles of the Corporate Governance Code.
The Board of Directors meeting was convened eleven times. Duringthat time, decisions were made on important management matters,
including management policy, budget development, and mattersprescribed in laws and the Articles of Incorporation. They also conducted monthly performance analyses and evaluations and discussed compliance with laws and the Articles of Incorporation, as
well as the appropriateness of operations.
The Audit and Supervisory Board is comprised of four auditors,
including three outside auditors. The Board meeting was convened eleven times to receive reports on important audit-related
matters and to discuss and resolve reported matters. The auditors
also attended important meetings such as the Board of Directors
meetings to audit and supervise the status of the directors’ performance of duties.They exchanged views with the President &CEO, senior vice presidents and division heads twice during theyear. The Audit and Supervisory Board also audited subsidiaries
and factories in accordance with audit plans. Furthermore, theauditors worked to increase audit functions by regularly exchanging views with an independent auditor and the Internal Audit Division.

The Appointment Committee, which is a voluntary committee comprised of the representative director and a majority of independent
outside directors and chaired by an independent outside director,
was convened twice. In consultation with the Board of Directors, theAppointment Committee deliberates on matters pertaining to theelection of candidates for directors and corporate auditors and reports the results of such deliberations to the Board.
The Compensation Committee, which is a voluntary committee
comprised of the representative director and a majority of independent outside directors and chaired by an independent outside
director, was convened twice. In consultation with the Board of
Directors, the Compensation Committee deliberates on theamount of compensation for directors and reports the results ofsuch deliberations to the Board.
To ensure the eﬀectiveness of the Board of Directors, the Company surveyed all directors and auditors on the Board’s structure andmanagement and then analyzed and evaluated the responses
during the Board meeting. As a result, the Company confirmedthat the Board’s eﬀectiveness was secured for FY2023.

Our Group will continue working to strengthen our eﬀective corporate governance system, which serves as the foundation of ahighly reliable and transparent management system.
We will evaluate the eﬀectiveness of the Board of Directors once a
year to ensure that it remains eﬀective.
Based on the results of the analysis and evaluation of theeﬀectiveness of the Board of Directors conducted in FY2023, theCompany will promote even earlier sharing of materials, ensuresufficient time for advance explanations, and increase the time fordiscussion at meetings in FY2024. In addition, we will work toincrease opportunities to discuss business strategies and risks.
Furthermore, while enhancing the training content for directors
and auditors through participation in external seminars, we will
work to enrich divisions’ report content to promote the understanding of outside directors on business details and businessexecution. We will also continue to improve governance by, forexample, providing opportunities for regular meetings between
outside directors, officers in charge and senior vice presidents.

The Company submitted a report on corporate governance to theTokyo Stock Exchange to disclose information on the status of ourcorporate governance.
Corporate Governance Reporthttps://www2.jpx.co.jp/disc/49580/140120231205599463.pdf
The Company is strengthening its investor relations activities toensure timely and appropriate disclosure (information disclosure),transparency and accountability to shareholders. In FY2023, we
held 58 individual meetings with analysts and institutional investors to deepen their understanding of the Group’s management
policies, global strategies and capital policies. We also held two
financial results briefings for institutional investors. Acting as apresenter, the President & CEO provided a direct explanation to
analysts and institutional investors regarding the Group’s financialsummary, management policy, global strategy, medium-term
three-year plan, capital policy and other details. In addition, IR-related materials (in Japanese and English) were disclosed on the
Company’s website to enhance information disclosure.

41

CONTENTS

Company overview

Message fromthe President

Actual data
Number of Board of
Directors members

Value creation
story

Unit
PeopleT.Hasegawa Group’s
Sustainability

FY2021

CSR Policy 1 :CSR Policy 2 :Procurement

CSR Policy 3 :Environment

FY2022

Human rights and labor

6

8

8

％

33.3

37.5

37.5

Ratio of female directors

％

0

12.5

12.5

Number of Board of
Directors meetings held

Times

12

11

11

％

97.5

100.0

99.2

Times

11

11

11

100.0

100.0

97.7

Number of Audit andSupervisory Board meetings held
Average attendance rate at Audit andSupervisory Board％

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

FY2023

Ratio of independent outside directors

Average attendance rate at Board of Directors
meetings(Directors and Corporate Auditors)

CSR Policy 4 :Quality safety

See ESG Databook 2024 for ESG data other than the above.

42

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 5 : Governance -- Fair corporate activities ~Compliance~
Basic approach and policy
The Group regards compliance as one of the most important issues
in corporate activities. We have prescribed the T.Hasegawa Corporate
Code of Conduct and the compliance rules to ensure that the execution of duties by all directors and all employees complies with laws andthe Articles of Incorporation, as well as to fulfill the social responsibilities
of a company and disseminate them to all directors and employees aspart of eﬀorts to ensure compliance.

3. The T.Hasegawa Group appoints the officer in charge ofinternal management control as the chief supervisor for preventing bribery and corruption. We will work to improve thecompliance system by taking measures, including the provision of training to prevent bribery and corruption and theenhancement of the whistleblowing system.

Bribery and corruption prevention initiatives
We support the ten principles of “Human Rights, Labour, Environment
and Anti-Corruption” outlined in the UN Global Compact and haveestablished the T.Hasegawa Group Policy on Bribery and Corruption.
T.Hasegawa will continue to promote responsible management for
all stakeholders in order to create a sustainable world.

T.Hasegawa Group Policy on Bribery and Corruption
In light of international trends for strengthening laws and regulations on bribery and corruption, the T.Hasegawa Group established the following basic policy to ensure that our businessactivities comply with the laws and regulations of the countries
and regions in which we operate.
1. The T.Hasegawa Group observes all laws and corporate
ethics related to bribery and corruption prevention applicable in Japan and overseas in accordance with the “Compliance with laws and regulations,” “Actions towards customers,” and “Relationships with suppliers” sections stipulated in
the T.Hasegawa employment regulations and the T.Hasegawa Corporate Code of Conduct and does not allow any actof bribery or corruption.
2. The T.Hasegawa Group will never demand profits that canbe gained only through bribery, corruption, or other similarmeans under any circumstances. We also request cooperation from all domestic and overseas business partners involved in our Group’s business to understand the aim of thispolicy fully and to never look to the interest of the Group bysuch improper means.

* Corruption refers to any act of abusing one’s position or authority togain an unfair advantage, including bribery, excessive entertainment,
giving or receiving gifts, embezzlement, bid-rigging, collusion, andother forms of unfair competition, extortion, fraud, accounting
irregularities, money laundering, and the like.

Establishment of a tax policy
The circumstances surrounding tax have become more complicated due to our global development, so the Group is working tostrengthen tax governance to appropriately respond to tax risks,etc., in the countries and regions where we operate. As part of thiseﬀort, we have established the T.Hasegawa Group Tax Policy with theaim of raising the awareness of all Group directors and employees on
tax compliance.

nor engage in tax avoidance using regions known as tax havens. In international transactions, we observe laws, regulations
and tax ordinances of countries and regions as well as international taxation rules.
２．Ensuring transparency
The Group complies with relevant accounting and disclosure
standards that should be complied with and works to disclose
information to all stakeholders appropriately. If any tax problem
is pointed out, we will promptly implement improvement measures to prevent it from occurring again.
３．Minimizing the tax risk
Through a correct understanding of tax systems, the Groupaims to minimize the tax risk and improve corporate value. For
transactions in business activities whose tax interpretation is
unclear, we receive advice from experts to fully examine themand confirm with tax authorities as necessary in an eﬀort to
reduce the tax risk.
４．Tax governance
The Group receives advice from external experts regarding
changes in the business environment and amendments to thetax system, etc., of each country and region to ensure that
we accurately interpret tax laws and regulations. Each site responds to such changes in a timely and appropriate manner,and the Company has also established a system to share suchinformation quickly.

T.Hasegawa Group Tax Policy
Basic policy
The T.Hasegawa Group observes laws and regulations in accordance with the T.Hasegawa Corporate Code of Conduct,
fulfills its social responsibilities by properly performing tax
obligations in its operating countries and regions, and aims tocontinue improving corporate value.
１．Compliance with laws and regulations
The Group complies with relevant tax laws and appropriately
fulfills tax obligations. We do not use tax incentives for programs that do not correspond to the actual business condition

43

CONTENTS

Company overview

Message fromthe President

Value creation
story

Approach to animal tests

Compliance Committee

Compliance Committee members (as of December 21, 2023)
Committee Chair:
Takao Umino (Representative Director and President & CEO)
Vice Committee Chair:
Minoru Nakamura (Director and Senior Executive Vice President)
Member:Yoshiaki Chino (Representative Director and Deputy President)
Tetsuya Nakamura (Director and Executive Vice President)

Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :CSR Policy 5 :Board of Directors
Management status reportCompliance Committee(Committee Chair: President & CEO)
Quality
Assurance
Division

Compliance Committee(Committee Chair: President & CEO)
ReportGlobalBusiness
Division

Administrative
Division

Secretariat: General Aﬀairs Division/ Overseas
subsidiaries
Human Resources Division

Domestic
subsidiaries

Sales
Division

R&D
Division

Innovation

Whistleblowing system

ReportAuditing
Division

CSR Policy 6 :Governance

Quality safety

Board of Directors

Upon requests from the administrative authorities, however, animal
testing cannot be avoided in some cases.

The Compliance Committee was established in accordance withcompliance rules. It is chaired by the President & CEO and includes
directors as its members. The Compliance Committee regularly
investigates whether any illegal act has been committed in the
Company for the purpose of preventing an illegal act from beingcommitted, preventing a potentially illegal act from being ignoredor concealed, and, in the event of an illegal act, quickly ascertaining
the actual condition, discussing countermeasures, and correcting
the situation.

CSR Policy 2 :Procurement

Compliance Committee structure chart

The Group has a policy of not conducting animal testing in any
research and development for flavor and fragrance products anddoes not support any activities that involve animal testing.

SystemCSR Policy 1 :T.Hasegawa Group’s
Sustainability

Production
Division

Suspension
order
Improvement
instructions

ReportInternal service
Hotline/whistleblowing

Consultation

External service(lawyer)

Report on investigation
results /measures

Hotline/whistleblowing

Officers and employees

Whistleblowing system
We have established a whistleblowing system to receive reports on
illegal acts. In addition to multiple whistleblowing hotlines, we haveestablished a point of contact with external lawyers as a consulting
service independent of management. In the management of thewhistleblowing system, we make sure that the following matters
are communicated to all directors and employees of the Group: therelevant person asking for advice, whistleblower, and person cooperating in an investigation will not be treated disadvantageously
in any case as a result of seeking consultation or whistleblowing inaccordance with related laws and regulations and the compliancerules; and the Compliance Committee and the Secretariat of theCompliance Committee will collaborate with Full-Time Auditors toclearly state in the compliance rules that they will monitor the presence or absence of disadvantageous treatment.

Training and education on compliance
We work to foster a sense of respect for compliance by providing
training and education to all directors and employees regarding
laws and regulations related to the execution of their duties.

Development and implementation of internal control
In order to secure the reliability of financial reporting, we have established the rules on internal controls to develop and implement internal
controls pertaining to financial reporting and built a system to evaluate
the eﬀectiveness of the internal controls appropriately.

Internal audit
The Internal Audit Division conducts an internal audit of the Company’s operations based on the internal audit plan.

Koichiro Kato (Director and Executive Vice President)
Kenji Hasegawa (Director and Executive Vice President), and nineother members
Observer: Takehiro Matsumoto (Full-Time Auditor)

The division in charge of the whistleblowing system confirms thestatus of internal reporting with directors and employees of theGroup companies, regularly reports the confirmed status during theCompliance Committee that includes directors as members andreports the system management status to the Board of Directors.

Secretariat: General Aﬀairs Division/Human Resources Division

44

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :CSR Policy 2 :Procurement

Environment

FY2023 initiatives
We have established the T.Hasegawa Corporate Code of Conduct,
shared it with all directors and employees, distributed the Code,and made sure that they can be referred to at any time. In FY2023,
we conducted a compliance comprehension test for all employees to confirm whether they are aware of the behavior norms andthe Code that require them to be sincere and maintain an ethicalview as part of our eﬀorts to improve compliance awareness.
In accordance with the compliance rules, we held the Compliance
Committee once in FY2023. The Compliance Committee deliberates important matters concerning compliance, reports the results of the comprehension test, and so on. In FY2023, there wasno serious compliance violation that aﬀected the Group’s business continuity, and we confirmed that the Group’s business isbeing managed appropriately. Furthermore, since the comprehension test had 100.0% correct answers, we confirmed that employees had a deeper understanding of various rules related to compliance.
We have established a whistleblowing system in the Company
and its subsidiaries, as well as consultation and whistleblowing
hotlines in and outside the Company. Upon receiving any consultation request and report, we investigated the facts and considered the appropriate measures. The status of consultation andreporting at the Group companies is reported to full-time auditors
in the Compliance Committee. In addition, we included questions
regarding the whistleblowing system in the compliance comprehension test and encouraged all employees to understand thesystem to promote its use.
We take a firm attitude toward antisocial forces and organizations
that may pose a threat to social order and security and will ban
any relations with them. We also take strong action against unreasonable requests from them. Given that the T.Hasegawa Corporate Code of Conduct has stated that eﬀect, all directors and employees observe the Code. We constantly collect information fromrelevant administrative agencies and organizations, including thepolice. In the event of an incident, we have a system in place todeal with it promptly and systematically in close cooperation withsuch agencies, organizations, lawyers, and so on.

CSR Policy 3 :Human rights and labor

CSR Policy 4 :CSR Policy 5 :Governance

Quality safety

CSR Policy 6 :Innovation

Plan for the future
To prevent harassment in the workplace (including sexual harassment, harassment related to pregnancy, childbirth, childcare, andlong-term nursing care leave, and abuse of authority), we prescribe and share matters that employees should observe andadministrative measures to address problems arising from speech
and behavior in the harassment prevention rules. We recognize
the importance of harassment prevention from the perspective ofthorough compliance, so we conducted compliance training in
FY2023. The training covered harassment prevention and othertopics for all employees, including executive officers, loaned employees and temporary employees.

The Group will continue the above eﬀorts to increase each employee’s compliance awareness and work with Group companies toenhance and strengthen the entire Group’s compliance system.
We will continue to conduct a compliance comprehension test for
all employees once a year to confirm whether they are aware of
the behavior norms and the Code that require them to be sincere
and maintain an ethical view (target rate of taking the compliancecomprehension test in FY2024: 100%).
To promote the use of the whistleblowing system, we will include
questions regarding that system in the compliance comprehension test conducted once a year and encourage all employees tounderstand it fully.
We will continue to provide compliance training, including harassment prevention, to all employees, including executive officers,
loaned employees and temporary employees.
To promote a greater understanding of internal control, we will
provide training for new employees and new managerial staﬀ
once a year.

Indicator and targets
Compliance comprehension test: once a year, 100% examination rate
Harassment prevention training: once a year, 100% examination rate (all new managerial staﬀ are required to receive the training)* In FY2023, compliance training, including harassment prevention, was conducted for all employees, including executive officers, loaned
employees and temporary employees.employees and temporary employees.

Actual data

Unit

Scope

Calculation period
Time of calculation

FY2021

FY2022

FY2023Mid- to longterm target

Number of whistleblowing
cases

Case

Nonconsolidated

Fiscal year

6

7

9

−

Number of serious
compliance violations

Case

Nonconsolidated

Fiscal year

0

0

0

0

Number of compliancerelated training held

Time

Nonconsolidated

Fiscal year

6

5

4

−

Total fines

Yen

Nonconsolidated

Fiscal year

0

0

0

0

See ESG Databook 2024 for ESG data other than the above.

45

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :CSR Policy 2 :Procurement

CSR Policy 3 :Environment

Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 5 : Governance -- Fair corporate activities ~Risk management~
Basic approach and policy

System

We have developed internal rules on the risk management system,
which stipulate that the analysis, management, and considerationof measures for risks must be performed, mainly for relevant divisions. The rules also stipulate that the Risk Management Committee,
which is a cross-sectional organization of relevant divisions or thewhole Group, must be established to analyze, manage and consider
measures for risks that require a response from the Company or theGroup. In addition, as our basic approach to risk management, wehave established business continuity rules and their subordinate
rules (which are guidelines for continuing the Company’s businessin the event of a contingency or crisis) and shared them with all
directors and employees of the Company.

We have developed internal rules, and are analyzing, managing, andconsidering measures for risks, mainly for relevant divisions. In addition, the relevant divisions and the Risk Management Committee
analyze, manage, and consider measures for risks that require a response from the Company or the Group based on the risk management rules. The Risk Management Committee has been established
as a Group-wide organization that is chaired by the President & CEO
and consists of directors as members.
Risk Management Committee members (as of December 21, 2023)

Tetsuya Nakamura (Director and Executive Vice President)
Koichiro Kato (Director and Executive Vice President)
Kenji Hasegawa (Director and Executive Vice President), and eight
other members
Observer: Takehiro Matsumoto (Full-Time Auditor)
Secretariat: Corporate Planning Division

Committee Chair:
Takao Umino (Representative Director and President & CEO)Risk identification process

Vice Committee Chair:
Minoru Nakamura (Director and Senior Executive Vice President)
Member:Yoshiaki Chino (Representative Director and Deputy President)

The Group identifies risks by conducting annual company-wide risk
assessments in accordance with the risk management rules. The
risk assessment analysis results are reported to the Risk Management Committee and the Board of Directors. The Risk Management
Committee selects the priority risks to be monitored according to
the analysis results, and regularly checks them for progress.

Risk Management Committee structure chart

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

Auditing
Division

Quality
Assurance
Division

Sales Division

R&D Division

Production
Division

Secretariat: Corporate Planning Division

GlobalBusiness
Division

Administrative
Division

Overseassubsidiaries

Domestic
subsidiaries

46

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Main risks
The following stipulates the main risk items identified by the Group and the description of risks.
(As of December 22, 2023)

Risk item

Description of risks (impact on business performance if risks materialize)

Risks related to human rights

If an act that violates human rights were to occur in any business area involving the Group as a whole, it would lead to a loss of social credibility for theGroup and aﬀect its business performance.

Climate risks

Poor weather conditions will cause a slump in sales of final products in client industries (beverage industry, food industry, toiletries industry, etc.), which
will aﬀect the Group’s business performance.

Raw material procurement risks

Damage caused by abnormal weather (cyclones, hurricanes, etc.) in production areas, social unrest (terrorism, war, infectious diseases, etc.), accidents at
suppliers, etc., makes it difficult to procure raw materials and aﬀects our Group’s business performance.

Disaster and other risks

Damage caused by natural disasters (earthquakes, typhoons, etc.) or social unrest (terrorism, war, infectious diseases, etc.) at our Group’s production sites
will aﬀect our business performance.

Quality risks

Damages resulting from product defects, which aﬀect the Group’s business performance.

Economic and other risks

Economic conditions, economic trends and financial conditions in the countries in which the Group operates, as well as trends in consumer spending,which are aﬀected by these factors, may cause a slump in our customers’ sales of final products, thereby aﬀecting the Group’s business performance.

Environmental risks

In the event of stricter environmental and other regulations in Japan or overseas, the Group’s business performance will be aﬀected by increased costs,
restrictions on business activities, and other factors.

Impairment loss risks

If the market value of the Group’s assets declines significantly or if the profitability of the business deteriorates, the application of impairment accounting
will result in an impairment loss on fixed assets, which will aﬀect the Group’s business performance.

Subsidiary management risks

In addition to Japan, the Group has positioned overseas markets as growth drivers while strengthening its global operations in the Asian region (particularly
in China and Southeast Asia) and the United States. However, in the event of fraud or misconduct due to insufficient management (corporate governance)of domestic and overseas subsidiaries, the Group’s business performance will be aﬀected by deterioration of the corporate image and loss of credibility.

Exchange rate fluctuation risks

Financial statement items denominated in local currencies of overseas subsidiaries are converted into yen for the purpose of preparing consolidated
financial statements, and the exchange rate at the time of conversion aﬀects the Group’s business performance.

Information security risks

If information assets related to the Group’s business activities are lost, destroyed, or leaked to outside parties due to cyber-attacks, computer virus
infections, system failures, or other causes, it could lead to the suspension of operations and loss of the Group’s social credibility, which wouldaﬀect business performance.

For details on the risks, refer to the Securities Report.
FY2023 Securities Report : Business and other risks
https://ssl4.eir-parts.net/doc/4958/yuho_pdf/S100SIRV/00.pdf

47

CONTENTS

Company overview

Message fromthe President

Value creation
story

CSR Policy 1 :T.Hasegawa Group’s
Sustainability

CSR Policy 2 :Procurement

Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Main FY2023 initiatives
Risk Management Committee
The Risk Management Committee discussed risk management
plans, including risk analysis and management, evaluation reports
on response to high-priority risks, annual risk management plans,
and the planning and implementation of countermeasures. In
FY2023, the Risk Management Committee was convened once.

Business continuity (BCP)
In order to continue business operations in the event of a contingency or crisis, we have established business continuity rules andbusiness continuity guidelines. We disseminated the content
among all directors and employees and conducted firefighting
training and safety confirmation training based on a large-scaledisaster scenario.

Information security
The Group ensures the appropriate use and management of its
information assets by developing information security rules, including the Basic Policy on Information Security and CountermeasureStandards, and by developing an information security organizational structure. By combining multiple systems, security tools andmonitoring services, the Company has created an environment thatenables early detection, defense and response. In addition to focusing on warning all directors and employees regarding information
security through regular education, notifications, etc., on information security, we regularly conduct training to handle and respondto incidents.

* The Information System Chief Supervisor shall be the officer in charge or
responsible officer who controls the Information Systems Division. The
Information System Chief Supervisor shall be responsible for supervisingand managing company-wide information security. However, anInformation Security Chief Supervisor may be appointed separately.
* The Information Security Committee Chair shall be the officer in charge.
* Under the Company’s system, any important matters regarding
information security are to be submitted and reported to the Strategy
Committee and, as necessary, the Board of Directors.

Internal audit
The Internal Audit Division conducts internal audits of the Company’s operations based on the internal audit plan.

Intellectual property rights

Information security organization chart

Board of Directors
Strategy Committee
Information System Chief Supervisor(officer in charge or responsible officer who controls Information Systems Division)

The importance of intellectual property rights is increasing year by
year due to the growing awareness of them in society and various
measures taken by the government. The Group has established theLegal Division as a division responsible for controlling intellectual
property rights. The Legal Division acquires achievements obtained
through research and development, etc., as intellectual property
rights and utilizes them to provide the Group’s high-quality andhigh-value-added products.

Information Security Chief Supervisor
Firefighting training at the Fukaya Facility

Information Security Committee

Information Systems
Division

Each division
Information Security Supervisor(head of relevant division)
Information Security Administrator(appointed by Information Security Supervisor)

Firefighting training at the Itakura Facility

User

Plan for the future
We will continue our eﬀorts to reduce risks, while monitoring
mainly priority risks in accordance with the risk management plan
formulated by the Risk Management Committee. We will regularly
identify potential risks and work to avoid and reduce risks andprevent a crisis from occurring.
Specifically, we will conduct annual risk assessments covering theGroup companies once a year to identify company-wide risks. The
Risk Management Committee will report the risk assessment analysis results and select priority risks. For identified priority risks, theCommittee will report the progress (follow-up) twice a year tocheck on the progress of the necessary responses.

48

CONTENTS

Message fromthe President

Company overview

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

CSR Policy 6 : Innovation
Basic approach and policy
The Company is working to find unique flavors and fragrances bydeveloping them and identifying new aroma components throughtechnologies for creating fragrances and creating taste, analysis, synthesis, and ingredient development. The Company is also
working to streamline and improve the efficiency of manufacturingmethods.
By responding to customer needs and potential demands whilestarting from the solution of social issues, we will lead to new
product development and new business exploration from the perspectives of “responding to health consciousness,” “contributing tofoodtech,” “providing health and enrichment,” and “solutions for an
aging society.” Through flavors and fragrances, we aim to realize richand healthy lifestyles and contribute to the creation of a sustainable
society.
─ Contribution to society through the flavor and fragrance business ─Responding tohealth consciousness

Providing health andenrichment

Contributing to foodtech

Solution for an aging society

Natural environment
We are developing flavors, fragrances, and ingredients that contribute to reducing the use of valuable food resources in processed
foods without sacrificing consumers’ preferences. In synthetic
chemical studies, we aim to develop environmentally conscious
ingredients by continuing to reduce the amount of solvent used andreplace toxic substances with improved manufacturing processes
while taking into account green chemistry. Specifically, we are using“The IFRA Green Chemistry Compass,” published by the IFRA, toevaluate the conformity of our chemical processes to green chemistry based on the 12 articles related to green chemistry. This clarifies issues to be addressed and enables more efficient improvement
activities. We contribute to reducing the thickness of PET bottles
and saving resources through the development of ingredients thatenhance the flavor of natural raw materials and other ingredientsthat supplement the sensation of carbonation, which will lead to theprotection of biodiversity and food resources. As part of our own
Circular Economy initiative, we began experimental cultivation oflemongrass in Koumi-machi in 2023 using botanical residue compost from our affiliated company, Koumi Compose.

Joint research partners: universities and research institutes
Through knowledge sharing and opinion exchange, we strive toabsorb cutting-edge research and improve our technology.

Relation with stakeholders
Customers
We provide the ideal flavors and fragrances for customer needs byproviding high-quality and high value-added products.

Examples of customer success cases
We integrate marketing data and sensory evaluation data to visualize customer issues and make proposals that support productdevelopment. We have also developed a unique communication
tool called Aroma Value Visualizer®, which visualizes the valueof flavor and fragrance by combining physiological response
measurements such as salivary gland activity and technologies,
and Aroma Rainbow®, which expresses fragrance in color. We use
these techniques and tools to share issues with customers in order to respond accurately to customer requests.

Governance
The Business Solution Division, which was established in 2020, is
strengthening collaboration between the Sales, Marketing and R&D
Divisions. Under the strategy of the Business Solution Planning Department, we will systematically work to provide our customers withhigh-quality and high value-added products while aiming to help
solve social issues and achieve sustainable growth.
In addition, the R&D Center serves as the backbone of our flavor
and fragrance development. The Flavor R&D Center, the Fragrance
R&D Center and the Technology R&D Center pursue research intheir respective specialized fields and collaborate with each otherto combine their achievements, thereby strengthening our researchand development capabilities.

Organization chart

Business Solution
Division

Sales DivisionMarketing Division
Business Solution
Planning Department

R&D Division( 1 ) Fragrance Division
The domestic market for cosmetic fragrances is now in a mature
stage, and competition among domestic and overseas fragrance
manufacturers is becoming even more intense. In addition, we arealso facing rising raw material prices due to changes in the resource
environment.
Under these circumstances, we have been working to continue improving our perfumery technology while placing the highest priority
on safety, quality and environmental issues. Furthermore, we havebeen conducting research and development in cooperation withsales and marketing. Utilizing our perfumery, analysis and synthesis
technologies, we worked on the development of highly perfectedfragrances with long-lasting and diﬀusive characteristics, proposed
new product forms in terms of application, reliably identified customer needs based on preference and marketing surveys, and conducted research that led to cost reductions. As a result, many of our
products have been adopted by customers both domestically andinternationally.
As we continue promoting globalization, we are also further
strengthening our technical support based on market research inoverseas countries and regions while making every eﬀort to acquire
new customers.
Our Chinese subsidiary, T.Hasegawa (Shanghai) Co., Ltd., is strengthening sensory evaluation and research on applications in addition to
its Perfumery R&D Division in order to respond to diversifying customer needs.

49

CONTENTS

Company overview

Message fromthe President

Value creation
story

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Strategies( 2 ) Flavor Division
In the flavor market, competition among domestic and foreign flavor
manufacturers has become more intense. In addition, customers’
product life cycles are becoming shorter.
Under these circumstances, we have been working together withour customers in research and development to accurately grasp thediversification of lifestyles and changing tastes and to respond immediately to customer needs. We have also researched and developed flavors that reproduce realistic natural aromas or that combine
new flavoring materials using various extraction and processing
technologies in addition to flavor-enhancing materials that impartrichness, thereby actively presenting these to our customers tomeet their needs. Furthermore, we conducted research and development on new applications of flavors, which resulted in the adoption of our manufactured goods in major new products by domestic
and international customers.
In addition, as we aim for globalization, we are developing flavorsthat meet the unique tastes of each country and researching theirapplications to our customers’ products. While strengthening technical support for our overseas subsidiaries and distributors in various countries, we have steadily increased our customers’ adoptionof our products.
The R&D Division of US subsidiary T.Hasegawa USA, INC. has been
expanding research on applications to customers’ products and has
been successful in acquiring new customers. T.Hasegawa (Shanghai)Co., Ltd. is strengthening and expanding the Flavor R&D Division,
the Applied Prototype Production Division and the Basic R&D Division so as to respond to customer needs.

(3) Basic R&D Division(common to Fragrance Division and Flavor Division)① Research on synthetic flavors and fragrances

We have developed synthetic flavors and fragrances that characterize the aroma of our products while also improving manufacturingmethods to streamline the manufacturing process of existing products and develop manufacturing methods for flavors and fragrancesthat consider environmental conservation (sustainability). As an example, for one of the synthetic raw materials in production, we haveswitched from a process that uses raw materials from rare plants
to an upcycled process that uses by-products from the flavors andfragrances industry.
② Research on natural products

We have developed an aroma analysis method using various aroma
collection methods and the latest analytical equipment to improve
the accuracy of analysis of trace aroma components, thereby
clarifying the composition of aroma components in many natural
products and applying it to the development of flavor and fragrance
products. In addition, we have been developing flavor materials using extraction technology to utilize natural flavors as well as natural
pigments, natural antioxidants, and other functional food materials
as naturally derived materials. Meanwhile, we continued to develop
fruit processing methods and flavors compatible with fruit processing in cooperation with the Flavor R&D Center.
③ Research on sensory evaluation, physiological response and biotechnology

We have developed original evaluation methods using measurement technologies in sensory evaluation and physiological response(head blood flow, muscle potential, etc.) and utilized them in our
proposal activities. In addition, we continue to conduct basic R&D
on microorganisms and enzymes, as well as the development offlavor-enhancing ingredients through the application of these R&D
results.
④ Other research related to flavor and fragrance development

We continued R&D on high value-added flavor and fragrance
products using emulsification, powdering and other formulation
technologies suitable for flavor and fragrance applications, as wellas rationalization through process improvements in flavor and fragrance manufacturing. Furthermore, we developed new, safe foodingredients that meet the needs of the market.

Opportunities
Social challenges to which the Group can contribute with its technology
Increasing interest and need for creating a sustainable society
Possibilities of flavors and fragrances to create new value

Measures
Sustaining R&D investments
Proposing activities using marketing data and AI
Speedy development: accurately identifying and rapidly responding
to customer requests and latent needs
Detailing responses to customers
Responding to increased demand for alternative raw materials triggered by climate change
Absorbing advanced technologies and knowledge through active
exchange of views with universities and research institutes
We have set out KPIs for maintaining and improving the ratio of
R&D expenses to sales and for continuing open innovations. We
are working to strengthen product development and proposals bypromoting joint research with universities and research institutes
to continue developing new technologies while also continuing to
improve our organizational structure.

Development of an organizational structure
Collaborating between the Sales, Marketing and R&D Divisions toform the Business Solution Division has advanced, and the speedof responding to customers is accelerating. To achieve customer
success, we have strengthened information sharing with reference
to marketing data, technical materials and research results, with theaim of further promoting solution sales.
We continue to focus on research and development to increase
sales, and the percentage of R&D expense in FY2023 was 8.0%
(consolidated basis).

T.Hasegawa Group’s proprietary technologies

Many of our proprietary technologies are showcased on our website.
Top ＞ Research & Development ＞ Our technology
https://www.t-hasegawa.co.jp/research/technique
For a new technology, we have developed NANOLYS®, an innovative
solution for all sensitive skin around the world. This information is available on our website.
https://www.t-hasegawa.co.jp/nanolys

50

CONTENTS

Company overview

Message fromthe President

Value creation
story

Product development and proposals
We oﬀer proposals that integrate marketing data with sensory evaluation data. We also promote the active use of intellectual property,
such as sensory evaluation data, to strengthen the linkage between
compounding, analysis and application and to develop new, uniqueproducts.

Presentation of aroma components related to bitter oranges
Given that bitter oranges are used to flavor sweets, liquors, andperfumes, two diﬀerent methods extract the essential oil from its
flowers, each with diﬀerent properties. Although these essential
oils, called orange flower absolute and neroli oil, have very diﬀerent
fragrance characteristics, the components that contribute to theiraroma have not yet been clarified. Therefore, the Company investigated the diﬀerences in aroma between these essential oils.
Based on the results of the sensory evaluation of essential oils, thecharacteristics of each oil were listed. The important aroma components of the essential oils were identified by the Aroma Extract
Dilution Analysis method. Furthermore, by comparing with fresh
flowers, we were able to clarify the important components of thefragrance of bitter orange flowers and the aroma components characteristic of fresh flowers.
This research result was presented at the 67th Symposium on
Fragrance, Terpene and Essential Oil Chemistry (Chiba University,
Chiba, Japan) on October 28-30, 2023, under the title of “Studyon Important Aroma Components of Bitter Orange (Citrus Aurantium) Flower Essential Oil.” It was selected for the Best Presentation
Award.

External collaboration
To strengthen product development and proposals, we are striving
to absorb cutting-edge research and improve technology throughknowledge sharing and opinion exchange, and we are continuously
promoting joint research with universities and research institutes.
Number of joint research projects: 15 (FY2023 result)

Expression of fragrance with color
The Company is developing Aroma Rainbow® as a new way of expressing fragrance. To academically clarify what similarities exist
between expressing fragrance with “color” and with “words,” weconducted a joint research with Professor Tadayuki Wakata of Wase-

T.Hasegawa Group’s
Sustainability

CSR Policy 1 :Procurement

CSR Policy 2 :Environment

CSR Policy 3 :Human rights and labor

da University (currently Shonan Institute of Technology). A psychological examination of the “impressions” of colors and fragrances
was conducted using verbal and color expressions.
The results showed commonalities among “verbal evaluation of fragrance impression,” “color evaluation of fragrance impression,” and“verbal evaluation of color impression,” indicating the possibility thatcolor reflects the impression of fragrance and that fragrance canbe expressed non-verbally. The results of these studies have beenpresented at the 2019, 2020 and 2021 Japanese Association for the
Study of Taste and Smell.
In addition, 25 pairs of synonyms used to describe aromas andtastes were investigated using a newly developed iPad application
to investigate the colors that harmonize with the images of thesynonyms. The results show that for almost all of the synonyms,
the harmonizing colors are also in a pairwise relationship. Professor
Wakata presented the results of this research orally at the 7th Asia
Color Association Conference (ACA) 2022 (Taipei, online) on October 20-21, 2022, under the title of “EXPRESSION OF IMPRESSIONWORDS WITH COLOR.”
These results strongly suggest the potential of color to express
invisible fragrances and the images that consumers hold in theirminds or to supplement the meaning of words that describe fragrances. We believe that this will expand the possibilities of Aroma
Rainbow®.

Synthesis of DAMASCENOLIDE®, a rose aroma component
DAMASCENOLIDE® is a compound with a citrus-like scent that is a
key aroma component of roses and is a useful fragrance compoundthat imparts naturalness to roses. In collaboration with the Laboratory of Molecular Design, Tokyo University of Agriculture, we haveconducted research on analogs of DAMASCENOLIDE® to develop
new, superior fragrance compounds. Having synthesized a total of
40 analogs of DAMASCENOLIDE®, we have presented nine analogs
at a conference on their synthetic methods and aroma characteristics. As shown in the figure, we found that each of them had acharacteristic aroma. We are currently testing their usefulness as
fragrances, but their use is expected to increase the desirability ofvarious products.

CSR Policy 4 :Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Contribution to society
Responding to health consciousness── Bringing delicious taste to low-sugar, low-salt and low-fat foods
We develop ingredients that enhance sweetness, umami and saltinessin response to the development of products that pursue a “healthy andgood taste” for customers. Furthermore, we also propose ingredientsthat add delicious flavor to food with reduced sugar and salt content. In
addition, by developing products that impart a sense of fat and oil anda rich, full-bodied eﬀect, we are proposing ingredients that add a senseof satisfaction to low-calorie, non-oil products.
Contributing to foodtech
── Solution for the lack of food resources
As part of the development of flavors to replace depleting food sources, we also oﬀer a flavor series that can replace savory natural raw materials and alternative compounded flavors for citrus essential oils. To
address the shortage of vanilla beans, we are developing materials thatcan produce a vanilla taste even when the amount of vanilla beans is
reduced by applying compounded flavor and heat reaction technology.
In addition, we have developed a compounded flavor based on aroma
analysis. By combining that flavor with emulsified oils and fats, we areproposing an ingredient that can complement the flavor of milk.
For plant-based food, which eﬀectively reduces the environmental impact, we have Plant React®, an ingredient that adds the flavor and tasteof animal products without actually using animals and contributes toreproducing the distinct flavor.
Koku Jyuwa®, which is generated by using the power of enzymes in natural vegetable fats and oils, contributes to reducing the use of oil andfat ingredients of supply concerns by imparting a rich, full-bodied eﬀect
to foods.
We also re-examined the quality of food products to ensure that theguarantee period was successfully extended, thereby reducing foodwaste.

Providing health and enrichment── Bringing fragrance to living spaces and developing new technologies for skin care products
We are developing high value-added and long-lasting fragrance materials that can provide fragrance in situations where it is needed.

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CONTENTS

Company overview

Message fromthe President

Value creation
story

We are also working to develop original pre-liposomes, which canbe combined with various products (including milky lotion, cream,skin lotion, and hair care items) and provide an innovative solution
to all kinds of skin problems.

Solution for an aging society── Improving quality of life in hospitals and nursing homes
As a solution to various unpleasant odors in our daily lives, we research and investigate such odors themselves in detail and use theobtained data to develop fragrances that help reduce or eliminate
them. In addition to developing masking materials for daily odors to
improve the hospital and nursing care environment, we use near-infrared spectroscopy (NIRS) and develop Swallowing Map TM as partof our eﬀorts to facilitate eating and add good taste to nursing carefood.

CSR Policy 1 :T.Hasegawa Group’s
Sustainability

Procurement

CSR Policy 2 :CSR Policy 4 :CSR Policy 3 :Environment

Human rights and labor

Social action through the flavor and fragrance business
The Company participates in the tree planting and product development programs of the Harumeki Foundation, which was established tosupport people with vision impairment. Written by our researchers, we
also published a book called “An Illustrated Guide to the Mysteries ofFragrance and Flavor” (Publisher: Kodansha). The book explains scents,
flavors and fragrances in an easy-to-understand manner. The royalties
on the book are donated to food bank activity groups.

Quality safety

CSR Policy 5 :Governance

CSR Policy 6 :Innovation

Periodic odor survey (twice/month) and noise survey around the
R&D Center. Environmental (odor) patrols are conducted aroundthe perimeter and on nearby public roads. During the patrols, trash
pickup is also conducted.
Provision of samples and job referrals to public institutions (National Institute of Health Sciences, open to the public).
Cooperation of researchers in lectures and talks at high schools
and universities (high schools from which the relevant researchers
graduated).

Top ＞ Sustainability ＞ Social Contribution
https://www.t-hasegawa.co.jp/en/sustainability/social
Support for tours and job introductions for nearby students at the
R&D Center (Kawasaki City High School for Science and Technology).
Provision of drinking water and temporary shelter for the nearby
residents of the R&D center in the event of an emergency.

Indicator and targets
Indicator

Unit

Scope

Calculation period
Time of calculation

FY2021

FY2022

FY2023Mid- to long-termtargetR&D expenses asa percentage ofconsolidated sales:
Approx. 8% ofconsolidated sales

R&D expenses

Billionyen

Consolidated

Fiscal year

47

50

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Number of patentapplications/ Numberof domestic
applications inparentheses

Case

Consolidated

Fiscal year

33 (25)30 (25)24 (16)−

Number of joint
research projects
with externalorganizations

Case

Consolidated

Fiscal year

14

12

15

Continue to
conduct theactivities

See ESG Databook 2024 for ESG data other than the above.

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