ES
G

Daiseki Co., Ltd.

ESG REPORT 2022

Environment

SocialGovernanceDaiseki Aims

Management Principles

Ideas, Plans, Structures, Actions
After conceiving of an idea, we consider it various ways, built organizationand other structures to realize it, and put our plan into action.

Our purpose
Making the best use of limited resources

An environment-creating company contributing
to society through the environment

CONTENTS
Daiseki Aims …………………………………… 1
The Story of Value Creation at Daiseki
Drivers of Daiseki Growth ………………… 3

Daiseki Group Performance by Business… 17
Special Feature 1:

ESG Reporting● Environment ……………………… 23● Society: People …………………… 33

Daiseki Core Business …………………… 5

A Conversation with Our External Directors● Society: Safety …………………… 37

The Daiseki Group Value Creation Process … 7

Corporate Governance Safeguards● Society: Local Communities …… 41

Top Message ………………………………… 9

Daiseki’s Corporate Value …………… 19● Governance ……………………… 43

Daiseki Group’s Priority Issues andSpecial Feature 2:

Materiality Assessment Process ……… 11

Daiseki’s Response to the Post-COVID

Progress of Vision 2030 (Our Long-Term

Landscape ………………………………… 21

Management Vision) and Our Long-TermBusiness Plan ……………………………… 13

1

Financial and Non-Financial Highlights … 15

Special Feature 3:

Non-Financial Information and Company
Information
Main Sustainability Reporting ………… 47
Third-Party Assurance …………………… 48

Daiseki’s Initiatives to Reduce Greenhouse

Third-Party Opinion ……………………… 49

Gas Emissions …………………………… 22

Daiseki Group Overview ……………… 50

Ethics Charter

Good-faith responsible action isat the heart of the Company.

A commitment to good-faith,
responsible action from each andevery one of our executives andemployees is at the core of ourposition as trustworthy membersof society and the first choice ofour customers. In recognition ofthis, we have established theDaiseki Ethics Charter to guideour business practices.

Code of Conduct
Code of Conduct is internal rules
for members of Daiseki.

We operate our corporate businessprioritizing social responsibility,
compliance of laws and regulations,and basic human rights to ensure
as members of Daiseki.“Code of
Conduct”describes basic internal
rules for executives and employees
to follow.

1. Societal Role and Responsibilities

We fully recognize our societal role and responsibilities as a company
providing intermediate industrial waste treatment. By following soundand appropriate business practices based on the principle ofaccountability, we strive to be worthy of the trust society places in us.

2. Compliance with Laws and Regulations

We work to implement internal control maintaining strict compliancewith laws, regulations, and company rules, and carry out appropriate
business operations and fair, good-faith business practices.

3. Respect for Human Rights and Promotion of an Open-Minded
Corporate Culture
We respect human rights and strive to promote a rewarding andopen-minded corporate culture.

[ Code of Conduct Articles ]1. Daiseki’s Basic Stance(1) Pursuit of sound business practices(2) Promotion of mutual understanding with wider society(3) Support for activities that make a social contribution(4) Respect for the global environment

2. Core Concepts for Employee Treatment(1) High expectations of employees(2) Respect for fundamental human rights(3) Provision of a work environment that fosters individual capabilities

3. Guidelines for Fair Business Practices(1) Compliance with the antimonopoly act(2) Appropriate approach to entertainment, gifts, and similar practices(3) Transactions with public institutions, handling of politicalcontributions and donations

4. Guidelines for Information Protection(1) Handling of trade secrets(2) Handling of inside information(3) Handling of intellectual property

Publication Details● Scope and Areas Covered by This Report
This report covers the ESG activities of the Daiseki Group as a whole.
However, some of its content refers only to Daiseki Co., Ltd. (which accounts forapproximately 57% of the Group’s net sales).
● Period Covered by This Report and Important Organizational Changes Occurring During This Period
This report covers FY2022 (March 1, 2021 to February 28, 2022). However, some
sections refer to activities and results occurring before or after this period.
No significant changes to the structure of our organization, our shareholder composition,
our business description, or other similar areas have occurred within the period covered.
● Date of Publication, Previous Publications, and Next Planned Publication
Date of publication: August 31, 2022. Previous publication: August 31, 2021. Next
planned publication: August 2023
● Division in Charge of Publication & Contact Information
Planning Division, Headquarters of Planning and Management, Daiseki Co., Ltd.
TEL: +81-52-611-6322 / FAX: +81-52-612-4382 E-mail: kankyo@daiseki.co.jp● Key Company Information
See our corporate profile, securities reports, shareholder communications, ESG reports(environmental reports, environment and society reports, CSR reports), website, or the
Sanpaikun Waste Information Network

2The Story of Value Creation at Daiseki

Drivers of Daiseki Growth

Daiseki was founded in 1958, before the word“recycling”was in common usage, and started out inthe manufacture of lubricating oil and recycling of waste oil. Since obtaining permission for industrial
waste management in 1972, we have been promoting building a recycling-oriented society with thephilosophy“Making the best use of limited resources.”
We will continue to contribute to the development of sustainable society through resolving social
challenges, as an environment-creating company.

Began our waste treatment andrecycling business as pollution became
an increasingly pressing issue
1972◦O btained permission for industrial
waste management in city of Nagoya
1973◦Opened the Hokuriku Works in thecity of Hakusan, Ishikawa Prefecture
1980◦O pened the Osaka office in city ofAmagasaki, Hyogo Prefecture
1982◦Opened the Kyushu Works inWakamatsu-ku, the city of KitaKyushu
1984◦C hanged the company name to
Daiseki Co., Ltd.
◦R eceived Chairman Award from
Clean Japan Center Foundation(current JEMAI) as a company
contributing for renewal materials
1990◦O pened the Kanto Works in thecity of Sano, Tochigi Prefecture

Daiseki Group’s journey
to value creation
Moved from refining oils and fats topetroleum sales and re-refining used oil
1945◦Founded oil and fat refining businessin Mie District of Mie Prefecture
1958◦Established Daido Sekiyu
Kagakukogyo Co., Ltd.
1963
◦Opened Nagoya Works in Minato-ku,
city of Nagoya
1966◦Opened Kyushu Works in Kokura-ku,
city of Kitakyushu
1970◦Opened Hokuriku Daiseki Co., Ltd. incity of Kanazawa, Ishikawa Prefecture

Founder Haruo Ito

Daido Sekiyu Kagakukogyo

Founding period (1945～1970)

Hokuriku Works

Kyushu Works

Kanto Works

Seminal period (1971～1990)

Daiseki’s achievement on value creation● Consolidated Net Sales (unit: millions of yen)

35,16037,22429,08026,96813,03013,315

2001
2002(Listed on First Section)

3

15,3802003

16,9492004

19,085

2005

31,477

21,644

2006

2007

2008

2009

2010

2011

Accelerating group development with anemphasis on recycling
2002◦O pened the Kansai Works in thecity of Akashi, Hyogo Prefecture
2003◦A warded first“Honest Company
Award”◦President Hiroyuki Ito received Ministerof the Environment Award (Award forcontribution to living environment
improvement) at National convention
for industrial waste and environment
2008◦Made Daiseki MCR Co., Ltd. a wholesubsidiary
2010◦Made System Kikou Co., Ltd. a wholesubsidiary2011◦S upported reconstruction efforts
following the Great East Japan
Earthquake2021◦R eceived the Japan Environmental
Management Association for Industry
Chairman’s Award at the Awards for
Resources Recirculation Technologies
and Systems◦E xhibited at the COP26 Virtual
Japan Pavilion2022◦D aiseki Eco. Solution received aSpecial Award at the ESG FinanceAwards◦Transferred to Tokyo Stock Exchange
Prime Market and Nagoya Stock
Exchange Premir Market

IPO for the company’s further growth
1995◦Listed on stock market
1996◦Established Daiseki Plant Co., Ltd.
(today Daiseki Eco. Solution Co., Ltd.)by dividing engineering department
1997◦O pened the Chiba Works in thecity of Sodegaura, Chiba Prefecture
1998◦R e c e i v e d J a p a n C o a s t G u a r dCommissioner Award and Maritime
Disaster Prevention Center Chairman
Award, recognized with heavy
crude oil collection work leaked
from Russian tanker Nakhodka in
the Sea of Japan◦Chiba Works was first certified for
ISO 14001 in the Company（JQAEM0304）
1999◦L isted on Tokyo Stock Exchange
and Nagoya Stock Exchange
Second Section
2000◦Alternatively listed on Tokyo Stock
Exchange and Nagoya Stock
Exchange First Section

Daiseki Eco. Solution

Chiba Works

Collection of heavy crude
oil leaked from Russian
tanker Nakhodka

Redesignated on Tokyo
Stock Exchange First
SectionRapid growth period（1991～2000）

50,80942,10036,51336,013

2012

2013

2014

45,7382015

Kansai Works

Daiseki MCR

System Kikou

Supporting recovery fromearthquake

Tokyo Stock Exchange
Prime Market Trademark

Development period（2001～Present）

49,18551,31354,08856,86751,53044,232

2016

2017

2018

2019

2020

2021

2022

（FY）

4

The Story of Value Creation at Daiseki
Daiseki Core Business

By considering waste asa resource, we contribute tobuilding a recycling-oriented
society
Generators

Users

Waste generators may not know
how to recycle their waste or how
the end product can be used - wesolve these problems for them.

Collection &Transportation

Industry &Society

We provide recycled productsthat fulfill user needs. We are also
involved in the co-development ofrecycled products.

Daiseki Operations

We turn the industrial
waste generated during
manufacturing processes

Intermediate
Treatment

into useful resources

Sampling

Analysis &Sorting

Recycling Rate

Daiseki’s received amount of materials to be recycled

87.7%

1,081,000tons(FY2022)(FY2022)

Note: See page 24 for definitions of“recycling rate”and“received amount of materials to be recycled”

5Combining a Variety of Technologies to Maximize
Recycling of Waste into Resources
Waste oil

SludgeWastewater

We recycle degraded lubricating
oils, produce recycled heavy oil
by separating out water content
and contaminants before rerefining it, and process waste oils
into supplemental fuels (coalsubstitutes) by adjusting theircomposition to meet user needs.

Through treatments including
dehydration, drying, and kneading(mixing with a treatment agent), we
recycle sludge into the raw
materials for cement. We minimize
the quantity of sludge that cannot
be recycled and outsource landfill
disposal of any remaining.

We separate out any oil content, which canbe converted into fuel; neutralize waste acids
and alkalis; then use activated sludge to purify
the water. After verifying that it conforms to
the water quality standards set by national
and local governments, we discharge thewastewater into rivers or sewer systems. We
also recover useable metals from wastewater.

Oils and other liquids

Muddy waste

Waste acids (pH 7 or lower) and waste alkalis(pH 7 or higher) in liquid form

Treatment and recycling processes

Treatment and recycling processes

Treatment and recycling processes

Waste oil treatment (vibration sieving machine)

Dehydrator

Activated sludge treatment

Waste oil treatment (centrifuge)

Drying device

Metal recovery device

Recycled fuels

Raw materials for cement

Metal slag

Note: Recycled fuels mean recycled heavy oil and supplemental fuels.

6

Daiseki’s Value Creation Story
The Daiseki Group Value Creation Process

As the premier company in Japan’s“venous industry,”
Daiseki is engaged in creating the value that society needs
INPUT

Foundation of Daiseki Group as anenvironment-creating company

1Japan-wide
network

2

Extensive businesstrack record

3Advanced
technologies

4

Expertise on
relevant laws andregulations

5

Robust inboundreceipt system

6Sound financial
structure

With a network of 41 bases across Japan,
the Daiseki Group provides comprehensive
services in the areas of industrial waste
treatment and resource recycling.

Boasting a track record of business with over
10,000 companies, we support the Japanesemanufacturing industry by proposing optimal
recycling methods in response to requests
from customers in all industries.
We have advanced technologies such as integrated
processing by Daiseki that simplifies processing by
combining difficult-to-treat wastewater, optimal
research and purification process by Daiseki Eco.
Solution Co., Ltd., recycling of waste batteries into JIS
standard lead by Daiseki MCR and safe and high-quality
waste oil cleaning by COW method by System Kikou.
Employees who are knowledgeable about
laws that are hard to understand, such as‘Waste Management and Public Cleansing
Act’or‘Soil Contamination Countermeasures
Act,’provide accurate guidance to customers
from the perspective of legal compliance.
We are equipped with an inbound receipt system
to process two million tons of waste annually andproperly dispose the waste. We also own over
200 vehicles for transportation, which establishes
the system to promptly respond to requests forcollection from customers and supports forrecovery from disasters,
While companies with capital over JPY1
billion account for approximately 1% of theindustrial waste treatment industry, Daiseki’slisting on the stock exchange in 1999 cameto be one of the first company specializing inindustrial waste disposal business.

BUSINESS

Conducting Business that Sees Indus
Resource and Strives to Solve Social

DaisekiWaste oil

SludgeTreatment and recycling

Treatment and recycling

Waste oil treatment(centrifuge)

Dehydrator

Group companies

Crude oil tank

Construction sludge

Crude oil tank cleaning

Intermediate treatmentof construction sludge

Treatment and recycling

Treatment and recycling

New business●M&A with the keyword of“environment”
and“recycling”as core businesses●Promotion of alliances including businesses
in different areas●Widening the range of items handled bydevelopment of recycling process technologies

Sale

Product assembl

Arterial industries

Our purpose
7

The recycling and industrial waste treatment industry is referred to as the“venous industry.”
Like veins that carry blood from the heart via arteries throughout the body,then return it back to the heart, the Daiseki Group sees its role as recycling waste generated bymanufacturers’production processes in the“arterial industry”as fuel and raw materials, thenreturning them to the manufacturers for reuse.

strial Waste as al Issuesely

OUTPUT

Maximizing Recycling of Industrial
Waste into Resources by Combining
a Variety of Technologies

OUTCOME

Creating Value by
Solving Social Issues

Recycled fuels

Wastewater

Recycling-Oriented Society

Treatment and recycling
Raw materials for cement

Activated sludge
treatment facility

Metal slag

We provide our customers witha product in the form of recycledmaterials and conserve resources
to contribute to the creation of arecycling-oriented society.

Environmental Protection
By providing waste purification
services, We support theenvironmental protection effortsof our waste-producing
customers.

Used batteries
Recycling

Inside of a tank after cleaning

Transitioning Away from Fossil Fuels

Waste lead melting process(rotary gas melting furnace)

Lead ingots●Growth in Asia bybusiness expansion
into foreign markets●Business expansion
into energy-relatedarea

Materials and parts processing

We manufacture and sellwaste-derived fuel in accordancewith government policies andmarket needs pertaining to thetransition away from fossil fuels.

Raw material procurement(manufacturing industries)
Making the best use of limited resources(An environment-creating company contributing
to society through the environment)
8

The Story of Value Creation at Daiseki
Top Message

Aiming for the number 1 recycling
company in Asia
We contribute to development of sustainable
society with our own environmental
technology, protecting abundantnature environment
Tetsuya Yamamoto

President and Representative Director

We strengthen existing businesses andcreate new businesses with the favorable
wind of increasing environmental needs.
I took over the position of President and Representative
Director from former President Hideki Hashira in May
2022 and started managing the Daiseki Group, which is aleading company of material circulation area. My mission
is to utilize the Daiseki Group’s unique technologies of industrial waste recycling for customers’and society’s environmental needs of our customers and society such ascarbon neutral or circular economy, leading to new businesses and stronger existing businesses.
Let’s look back on FY2022. In this year, we recoveredfrom the influence of COVID-19 and expanded ESG
management. The Daiseki Group set up our long-term
m a n a g e m e n t v i s i o n“V I S I O N 2 0 3 0”i n F Y 2 0 19 . W eaccomplished consolidated net sales of 56.8 billion yen
and consolidated operating profit of 12.9 billion yen in
FY2022, which exceeded our initial target. This was a resultof our investments in technology with the favorable wind ofworld-wide increasing environmental needs. We have beentransferred to Tokyo Stock Exchange Prime Market in April
2022, and will lead this accomplishment to our further
sustainable growth and corporate value, to be the number
1 recycling company in Asia.

In this past year, we developed our ESG
management in the areas of environment,
society and governance.
As for ESG management, after disclosing information on
TCFD scenario analysis and evaluation by third party
guarantor company to CDP, one of institutions that provide
ESG evaluation, our CDP evaluation was improved to berank B. In the future, we will aim for rank A- or A by showing
leadership for our efforts in partnerships with customer
companies and related companies.
In the area related to society, we made donation for“Nation-wide rich ocean creating event”(Akashi City) thataims for water environmental protection, strengthening
partnerships with communities. Further, we invited teachersand students from The University of Tokyo, Nagoya

9

University and Nagoya Institute of Technology and held
environmental seminars to strengthen connections between
industrial and academic sectors. Also, we continue plant
tours for residents in surrounding area, companies, andinvestors for them to better understand our efforts forenvironment and environmental protection. Meanwhile with
employees, we worked on making improvements of laborproductivity and safety. As a result, we have attained therate of 100% for employees who took regular healthcheckup, introduced 24 hours health consulting service,extended the period of short time work, and were certified
as Health and Productivity Management Organization.
As for governance, we changed the structure of Board of
Meeting in May this year to consist of 3 external directors
and 3 internal directors, in order to accept independent
opinion of external directors. Also, we hold monthly
compliance study sessions attended by all employees, as anopportunity for employees to learn compliance and social
responsibilities. In the safety management system, we aremaking efforts to have zero accident by investigating
accident causes, taking countermeasures for improvements
and conducting safety patrols. Each employee’s pride andresponsibility as a“professional”will be the strongest power
for us to evolve. We will continue to create a workplacewith a secure and safe environment, where employees canhave motivation and joy to work, with all employees; andwe aim to be a company where employees do work thatmakes their families proud of.

We will contribute to society by promoting
recycling, focusing on purpose management
as an environment-creating company.
Now, we have announced our purpose to be“an environment-creating company contributing to society through theenvironment”by“making the best use of limited resources”
utilizing limited resources.”We have had our main environmental business since 1970s, before SDGs and ESG. Thereare countless materials called“waste,”but for us, waste is
not trash and everything is a valuable material as an important study subject. Our job is a dreamful job that finds thetrue value of materials on planet and contributes to recycling.
We use our proprietary environmental technologies bothto create a circular economy that recirculates waste for

The Daiseki Group’s purpose

Making the best use of limited resources

An environment-creating company contributing to society through the environment
Efforts for accomplishment
Application for certificate of SBTi

(initiative for reduction of greenhouse gas based on scientific basis)

Medium-term target

Reduce SCOPE 1 + SCOPE 2 emissions by 30% by FY2028
and SCOPE 3 emissions by 18%

Implementing management concepts
Promoting thorough understanding of complianceand observation of laws and regulations

Creating workplace that
individuals shine

Making the best use of limited resources

The Daiseki Group’s
Materiality

Long-term target

Reduce SCOPE 1 + SCOPE 2 emissions by 100% by FY2051
Note: See page 16 for definitions of SCOPE 1, 2, and 3.

society’s use by turning it into resources, and to continue
toward achieving carbon neutrality with reduced CO2
emissions during the recycling process. To attain thispurpose, we will promote not only expanding existing
businesses, but also alliance with companies with similar
policies, M&A and creating new businesses.
Of course, we have responsibility to attain carbon neutral
at our work sites as well. We will aim for certification of our
reduction target by SBT within this fiscal year. Our target isto reduce SCOPE 1 + SCOPE 2 emissions by 30% by switching
to power by renewal energy etc., and to reduce SCOPE 3
emissions by 18% by purchasing low carbon products, etc.
by FY2028. Also, we will promote electrification of large
vehicles such as tank trucks and switching to energy saving
equipment, aiming for carbon neutral by FY2051. Further,
considering that transmitting information to governments
and e s t ablishing rul e s ar e p ar t s o f D aiseki’s s o cialresponsibilities as well, we will proactively suggest
governmental policies to realize carbon neutral, throughdiscussion of circular economy at Circular Economy
Association, which we joined as a member this year, and GX
league, which is organized by Ministry of Economy, Tradeand Industry.

We aim for sustainable growth with mid andlong-term outlook by reviewing fiveimportant challenges.
In order for sustainable growth as“an environment-creatingcompany contributing to society through the environment,”theDaiseki Group has reviewed five important challenges anddefined them as the materiality, which are“making the bestuse of limited resources,”“Creating workplace that individuals shine,”“Eliminating industrial and environmental accidents,”“A company well-liked by local communities”and“Promoting thorough understanding of compliance and observation of laws and regulations.”These were determined bydeliberations at management meeting and approval by
Board of Meeting, after summarizing needs from interested
parties such as shareholders, customers, governments, local
residents and employees and internally assessing theimportance.
“Making the best use of limited resources”indicates for us
to create new values by proactively considering and taking

A company well-liked
by local communities

Eliminating industrial andenvironmental accidents

actions to realize carbon neutral, to create circular economy
society, to effectively utilize resources and to protect
environment.
With the challenge“Creating workplace that individuals
shine,”we aim to create comfortable workplaces thatfacilitate our employees’mental and physical health andallow them to mutually support one another with respectfor everyone’s differences. We also aim to be a company
where employees can win the trust of society and ourcustomers as professionals and do work that makes theirfamilies proud of. Based on these guiding principles, we willcontinue to work to be a company where employees
approach their work with scrupulous professionalism,
prioritize their colleagues, and deliver results as a team.
As for the challenge“Eliminating industrial and environmental accidents,”we handle industrial waste, etc., which can behighly dangerous or harmful, and we therefore consider
accidental spills and other incidents that could result in workrelated accidents for our employees or environmental impacts.
Work-related accidents are not only terrible for our employees
but also for the Company. Accidental spills betray the trust of
our customers and local communities. We invest the
management resources needed to prevent these kinds ofaccidents and are committed to eliminating them altogether.
In relation to the challenge“A company well-liked by local
communities,”Daiseki’s industrial waste treatment businesswould not be possible without the understanding of local
communities. We facilitate understanding of our businessamong residents and administrative bodies in the areas
around our facilities, and promote activities that contributeto communities through environment.
In relation to the challenge“Promoting thorough understanding of compliance and observation of laws andregulations,”since our business is conducted under licenses,
observance of laws and regulations is a key issue that must
be Daiseki’s top priority. We provide ongoing education for
all employees in order to increase awareness of compliancewith laws and regulations and prevent any violation due to
i n s u f f i c i e n t k n o w l e d g e . T h e D a i s e k i’G r o u p s E S G
management is a challenge to contribute to environment,
people and society and make better future. We will utilize
our environmental technology and knowledge to leaveabundant natural environment and convivial society for ourchildren in the future.

10

The Story of Value Creation at Daiseki

The Daiseki Group’s Priority Issues
and Materiality Assessment Process
The Daiseki Group aims to achieve continued sustainable growth as an environment-creatingcompany contributing to society through the environment. To this end, we recently identified fivematerial items and committed to furthering our efforts in response to them. We will work toenhance our corporate value from a medium- to long-term standpoint while incorporating ESG
perspectives.

Making the bestuse of limited
resources

Promoting thoroughunderstanding of complianceand observationof laws and regulations
As an industrial waste managementcompany, observance of laws andregulations is a key issue that mustbe our top priority. We provide
ongoing education for all employees
in order to increase awareness ofcompliance with laws and regulations
and prevent any violation due toinsuﬃcient knowledge.

11

With our own environmental
technologies, we will realize circular
economy that recycles waste to recirculate in the society as well ascarbon neutrality to reduce thee mi s s i o n o f C O 2 a t t h e t im e o frecycling.

The DaisekiGroup’s
Materiality

Creating
workplacethat individuals
shine
We aim for workplaces where
employees respect and support eachother and where they can work healthy
and comfortably, physically andmentally. Also, we aim for a company
where employees can win customers’
trusts as professionals and be proudof their own jobs for their families,
while growing themselves.

A company wellliked by local
communities

Eliminating industrial
and environmental
accidents

Daiseki’s industrial waste treatment
business would not be possible
without the understanding of thepeople living around them. We work
to facilitate understanding of ourbusiness among residents andpromote activities that contribute thecommunities through environment.

We consider work-related accidents,
accidental spills and other incidents
that could result in environmental
impacts as business risks and invest
in the management resources
needed to eliminate them altogether.

● Materiality Assessment Process
IPCC
1.5°
C Special Report

TCFD
scenario analysis

Reducing greenhousegas emissions

Environmental initiatives

Building a recyclingoriented society

Societal needs and expectations

Changes in external
conditions
Materiality

Preventing environmental
pollution from waste

Stakeholder feedback

STEP ❶STEP ❷STEP ❸

Identifying
relevant issues

Checking risks
and opportunities

The Daiseki Group’s
Environmental policies

Vision 2030, the Daiseki Group’slong-term management vision

Implementing
management concepts

Group-wide call forsuggestions for“materiality phrases”toencapsulate each of our
five priority issues

STEP ❹

Materiality
assessment(management
meetings, Board of
Directors)

STEP ❺

Continual review

Making the best use of limited resources

An environment-creating company contributing
to society through the environment

Daiseki group’s purpose● Each Issue’s Connection with the SDGs, Initiatives, and Performance Review
ESG Materiality
Materiality Issues

Priority Issues◦Circular economy

Making the ◦Carbon neutrality
best use of ◦Environment protection◦Strengthening trusted relationships withlimitedresources
customers as an environment-creatingcompany

FY2022
Initiatives

Stakeholder Impact on
Daiseki GroupInterest
Operations

We set medium- tolong-term goals for
reducing greenhouse Extremely Extremely
gas emissions and
high
high
worked toward thesegoals. We received a B
rating from the CDP.

Creating
workplacethat
individuals
shine◦Health Management (employee, family, supply chain)◦Diversity and inclusion◦Work-life balance◦Human resource development (nurturing employees to win
trusts from society and customers as professionals and to
be proud of own job for families)◦Workplace and company you can be proud of for yourfamily (employees and company make safe workplace thatis worth working for without any frauds)

We worked to create comfortable workplaces facilitating employees’mental andphysical health, and werecertified as an Outstanding
Health & Productivity Management Company (large
enterprise category).

Very high Very highEliminating
industrial andenvironmental
accidents◦Philosophy to put safety as the top
priority◦Nurturing employees who work safely as
professionals◦Danger prediction training, risk assessment◦Update and expansion of necessary
equipment

We implemented
thorough accidentprevention measures,
including inquiries into theroot causes of accidents
and safety patrols of ourcustomers’premises.

Very high Very high◦Building relationships and trusts with

We furthered our cooperation
with local governments
and universities, including
by participating in local
government events andgiving university lectures
at Daiseki.

residents in surrounding area
A company
well-liked by ◦Cooperation with autonomous anduniversities in surrounding area
local
communities ◦Company that roots in and contribute to
the local area through environment◦Compliance of related laws such as the

PromotingWaste Management and Public Cleansing
thoroughActunderstanding ofcompliance and ◦Employee trainings by compliance study
observation of laws
sessions
and regulations ◦Strengthening corporate governance

We worked to increase
employees’knowledge
and awareness of laws
and regulations throughcompliance study sessions
attended monthly by all
employees.

High

High

Very high Very highOverarching Aims

Related
Pages

P22
～32

P33
～36

P37
～40

P41
～42

P43
～46

12

The Story of Value Creation at Daiseki

Progress of Vision 2030
(Our Long-Term Management Vision)and Our Long-Term Business Plan
In the aim of achieving the scale and ability that will allow us to compete with the top international
players in the industry, the Daiseki Group is working toward Vision 2030, our long-term
management vision established in FY2019 and effective through FY2031.

Long-Term Management Vision

FY2031

Vision 2030

Long-Term Plan

● Consolidated net sales

Based on Vision 2030, we are advancing the 3-3
Project, which aims to triple both our net sales

JPY

FY2025

Medium-Term Plana n d o u r o p e r a t i n g p r o f i t a n d e s t a b l i s h t h e ● Consolidated net sales
Daiseki Group as a leader in the industry.
JPY

JPY

FY2018Goal Setting(Actual Performance)● Consolidated net sales

JPY 49.1 billion

Actual Performance● Consolidated operating profit
JPY

25 billion

the Daiseki Group aims to triple
69.0 billion BybothFY2031,
net sales and operating profit as● Consolidated operating profit
FY2022150 billion

16.3 billion

compared to FY2018 and become a leader
in the industry.

● Consolidated net sales
Actual JPY

56.8 billion● Consolidated operating profit
Actual JPY

12.9 billion● Consolidated operating profit

JPY 8.7 billion

FY2018FY2022

FY2025

FY2031

The Daiseki Group’s Core Strategies
Domestic Strategies◦Increase activity in currently underserved
areas through cooperation between
existing facilities◦Expand into new areas throughdevelopment of new operating bases
Overseas Strategy◦Commence market research geared toward
expansion into the Asian market
Development of Technologies and Equipment◦Raise our recycling rate
◦Increase range of items accepted fortreatment by adopting new technologies
and equipment
Group Strategy◦Enhance synergy by strengthening
cooperation, including exchange of humanresources

13

Personnel
Development
Existing
Businesses

New
Businesses

Work Environment◦Rewarding work environment where
employees can hope to grow
◦Gender-neutral work environment
Human Resources Development◦Stimulate exchange of human resources
between Group companies◦Expand education system◦Implement internal system inviting new
project applications
M&A Strategy◦M&A with an emphasis on environmentand recycling
Partnership Strategy◦Promote partnerships, including withother industries

In the aim of achieving our VISION 2030 goals,
we are moving forward with initiatives in line with our core strategies.
●Established a Corporate Planning Office within our Headquarters of Business Generalization, which sharesinformation about and monitors our progress on VISION 2030.
●Strengthening our processes for hiring and developing the human resources we need to develop new
businesses going forward.
●Moving forward with measures to improve work environments in order to create comfortable, highly
productive workplaces.

Progress of Our Long-Term Business Plan
❶ Opening Three New
Operating Bases

We plan to open a new facility in
the Hiroshima area after FY2025. We
have already acquired the land andare therefore moving forward with theprocess to acquire the necessary
operating license. We are investigatingsites for further two new bases aroundthe regions of Southern Kanto andTohoku.

❷E stablishing Three New
Core Businesses❸ Capturing 30% Domestic Market
Share in Our Core Businesses

Looking ahead to moves toward a
circular economy and a carbonneutral society, we will establish new
businesses to be developed into our
future core businesses. We aim toestablish three new core businesses, whose
concrete ideas are currently underconsideration.

Daiseki’s 2021 domestic market shareis 10.5% for waste oil, 6.8% for waste
alkali and 4.6% for waste acid. Alongside
our goal to increase our market share by
opening new operating bases, as outlinedin ❶ above, we will also pursue sales
activities that effectively showcase
Daiseki’s intermediate treatments, whichemit less greenhouse gases during theprocesses.

The Daiseki Group aims to triple FY2018 levels for net sales and operating profit and become a leader in the industry
Target Performance Indicators and Value Drivers
Performance
Indicators

Value Drivers●N on-consolidated operating profit margin of 25% or more, consolidated operating profit
margin of 20% or more
● Consolidated ROE of 10% or more (FY2031 target: 15%)
● Steadily increasing our dividend payout ratio through dividend increases, stock splits, etc.

Net Sales Growth

Increasing Profitability

Increasing Efficiency● Increasing market share in both
Eastern and Western Japan● E xpanding peripheral businesses(subsidiaries, M&A)

● Improving recycling technologies● R educing costs by monitoring
variable and fixed costs● Improving operations● Improving capital efficiency
through capital investment, M&A,
and shareholder returns(dividend increases, share
repurchases, etc.)

Using Value Drivers to Create Value
Plan Going Forward
Fiscal Year

Unit: billion yen

2018

2022

2025

2031

Consolidated net Sales

49.1

56.8

69.0

150.0

Consolidated operating Profit

8.7

12.9

16.3

25.0

14

The Story of Value Creation at Daiseki

Financial and Non-Financial Highlights
Financial Highlights
Consolidated Net Sales(Millions of yen) ■ Consolidated Net Sales

Investment for equipment● Annual growth as compared to previous year （%）

75,00020

11.1

50,00051,31354,08851,53056,867

7,500
10
5,000

10.3

4.3

25,0009,97810,0005.4

49,185(Millions of yen)

5,748

6,408

4,038

0

2,754

2,500

(4.7)

0

2018

2019

2020

2021

-10

2022

0

2018

(FY)

2019

2020

2021

Consolidated Net Sales, Operating Profit, Operating Profit Margin

Profit attributable to owners of parent(Millions of yen)

(Millions of yen)

60,000■ Consolidated Net Sales■ Operating Proﬁt(Millions of yen)

● Operating Proﬁt Margin

15,000

22.7%

20.0％
40,00017.8%

49,18520,000

19.8％

17.7％
51,3138,777

54,08851,53010,865

9,107

12,940

10,242

2021

●

80

40

29.3

40

32.1

119.08

(JPY)
180
150

126.97

120
90

5,000

2022

5,833

6,110

7,044

8,376
6,521

30

0

0

2018

(FY)

60

2019

2020

2021

2022

(FY)

Note: P rofit per share was calculated considering the stock split with 1.2 share per ordinary share in
September 2021 and assuming that share split was conducted accordingly at the beginning of FY2022.

Consolidated ROE■ Dividend

60

113.72

4,000
2,000

2020

164.02
137.23(FY)

Proﬁt per share

56,867

Dividend, dividend payout ratio
(yen)

6,000

0

2019

●

10,0008,000

10,0000

2018■ Proﬁt

2022

34.0
56

Dividend payout ratio

36.7

56

36.5
60

（%）
40

(%)
15

30

10

9.9

9.6

2018

2019

11.1

10.4
9.0

46
20
5

20
10
0

0

0

2018

2019

2020

2021

2022

(FY)

Note: As of September 2021, shares were split at the rate of 1.2 shares per share,and dividend was actually increased without changing dividend per share

15

2020

2021

2022

(FY)

Non-Financial Highlights
Quantity of industrial waste received for recycling at Daiseki Group

Daiseki Group Recycling Rate

(Thousand tons)

(%)

2,500
2,000

● Recycling rate*
100

1,876

1,867

1,941

2,072

93.9

1,808

91.6

91.1

90.5

90.0

2019

2020

2021

2022

90

1,500
1,000

80

500
70

0

2018

2019

2020

2021

2022

* See page 24 for the definition of recycling rate

Daiseki’s Share of Domestic Industrial Waste* Recycled
(%)
15

●
●
●

11.2

(Thousand tons of CO₂)
150

11.1
9.7

10

8.7

9.1

5.3

5.3

7.5

7.0

10.5

148
Note1: S COPE 1: The Daiseki Group’s directgreenhouse gas emissions.
SCOPE 2: Indirect emissions associatedwith the use of electricity, heat, andsteam supplied by other companies(electricity only in the case of theDaiseki Group)
SCOPE 3: Indirect emissions notcovered by SCOPES 1 and 2 (othercompanies’emissions resulting fromthe activities of the Daiseki Group)
Note2: S ee third-party verification on page
48 for emissions of SCOPE 1,2 and
SCOPE 3 Category ①

100

6.8

5

50

4.5

4.1

4.6

28
14

0

0

2018

2019

2020

2021

2022

SCOPE1(FY)* F igures for domestic industrial waste taken from the Ministry of the Environment’s Survey Report on
Industrial Waste Generation and Treatment. Figures are actual for FY2018 through FY2020, preliminary for
FY2021, but FY2022 preliminary for FY2021 since the corresponding figures were not disclosed

SCOPE2SCOPE3

Daiseki Group Employees by Gender

Transition of ratio of Daiseki external directors(Individuals)

（%）

1,600

1,200

■ Female employees■ Male employees

14.8

14.9

(FY)

Breakdown of Daiseki Group Emissions (FY2022)

Waste oils
Waste alkalis
Waste acids

11.6

2018

(FY)

● Proportion of female employees （%）
20

15.5

16.3

15.6

60

50.0
15
40

800

141

156

156

121

129

695

736

771

802

848

2018

2019

2020

2021

2022

10

37.5

37.5

20
400

0

5

15.3
0

16.6

0
(FY)

Note: Full time employee only
(non-regular staffs, contractors, temporary employees, assignee, part time
employees and associate employees are not included)

2018
2019
2020
2021
2022
(FY)
Note: Based on securities report that describes business activities for each fiscal year

16

The Story of Value Creation at Daiseki

Daiseki Group Performance by Business
Each company within the Daiseki Group is working to create value in the domains of environmental
protection, resource recycling, and the transition away from fossil fuels.
In this section, we categorize our operations into four segments (Wastewater, waste oil, and sludge
recycling; Soil and plasterboard recycling; Lead recycling; Oil tank cleaning) anddiscuss our performance and initiatives for each segment.

Consolidated Net Sales

(FY2022)33,753 millions of yen
Soil and plasterboard recycling segment 17,082 millions of yen
Lead recycling segment
3,230 millions of yen
Oil tank cleaning segment
3,620 millions of yen(819) millions of yen
Intercompany eliminations
Total
56,867 millions of yen
Wastewater, waste oil, and sludge recycling segment

Consolidated Sales breakdownOil tank cleaning segment(FY2022)
Wastewater,
waste oil, and sludge
recycling segment

6.3%

59.3%

Lead recycling segment

5.6%

9,503 millions of yen
Soil and plasterboard recycling segment 2,102 millions of yen
Lead recycling segment
706 millions of yen
Oil tank cleaning segment
688 millions of yen(60) millions of yen
Intercompany eliminations
Total
12,940 millions of yen
Wastewater, waste oil, and sludge recycling segment

Consolidated Operating Profit breakdownOil tank cleaning segment(FY2022)

Wastewater,
waste oil, and sludge
recycling segment

5.3%

73.4%

Lead recycling segment

5.4%

Soil and plasterboard
recycling segment

Soil and plasterboard
recycling segment

16.2%

30.0%

Intercompany
eliminations(1.4%)

Intercompany
eliminations(0.4%)

Consolidated Net Sales Trends Unit of measurement Millions of yen

Consolidated Operating Profit Unit of measurement Millions of yen■ Wastewater, waste oil, and sludge recycling segment ■ Soil and plasterboard recycling segment■ Lead recycling segment ■ Oil tank cleaning segment■ Wastewater, waste oil, and sludge recycling segment ■ Soil and plasterboard recycling segment■ Lead recycling segment ■ Oil tank cleaning segment

34,36233,75331,551

14,0482,987 3,723

FY202017

Consolidated Operating Profit (FY2022)

14,9062,878 3,143

FY2021

9,503

8,969

8,283

17,0823,230 3,620

FY2022

1,237
188

531

FY2020

1,206

2,102
283 528706 688

FY2021

FY2022

Proportion of Capital Investment by Segment

(FY2022)

Wastewater,
waste oil, and sludge
recycling segment

Oil tank cleaning segment

3%

Trends in Capital Investment by Segment (Millions of yen)
■ Wastewater, waste oil, and sludge recycling segment ■ Soil and plasterboard recycling segment■ Lead recycling segment ■ Oil tank cleaning segment

66%

Lead recycling segment

5%

9,066

Soil and plasterboard
recycling segment

26%

2,664

1,800
680

94 138FY2020608

1,038

203 143

FY2021

203 133

FY2022

Note: Information for wastewater, waste oil and sludge recycling segment is derived from data of Daiseki Co., Ltd and Hokuriku Daiseki Co.,
Ltd. and information for soil and plasterboard recycling segment is derived from data of Daiseki Eco. Solution Co., Ltd., Green Arrow
Central Co., Ltd. and Green Arrows Kyushu Co., Ltd. Information for Lead recycling segment is derived data from Daiseki MCR Co., Ltd.
and information of oil tank cleaning segment is derived data from System Kikou Co., Ltd.

● Operating Conditions and Key Initiatives in Each Segment
Operating Conditions

Wastewater, waste oil, and sludge recycling segment● Wastewater
Our wastewater segment primarily carries out recycling of waste acids andalkalis generated by factories. Specializing in recycling hard-to-treat
wastewater, we boast a leading domestic market share.
● Waste oil
Our waste oil segment recycles waste oils and solvents generated byfactories and dealerships into recycled fuels. Recycled fuels are used as
replacements for fossil fuels such as coal and heavy oil.
● SludgeOur sludge segment primarily recycles sludge generated by factories intor aw m ate ri al s for cement . This recy cled slud g e i s u s e d b y c e m e n tcompanies as a replacement for limestone and other materials.

Soil and plasterboard recycling segment● Soil
Our soil segment cleans and recycles soil contaminated by civil engineering
works. Recycled soil is used as a construction material and a raw material
for cement.
● Plasterboard
We collect plasterboard from demolition sites, separate its components,
and recycle it into recycled plasterboard and raw materials for cardboard
and recycled paper.

Lead recycling segment

We collect used batteries and separate, dissolve and smelt theircomponents to recycle them into lead ingots. The lead ingots are used bybattery manufacturers.

Oil tank cleaning segment

We carry out cleaning works and similar operations for oil tanks andtankers’internal storage tanks, collecting the crude oil sludge accumulated
inside the tanks. Our cleaning technologies and systems are consideredindustry-leading both in Japan and overseas.

Key Initiatives◦Increase the processing capacities of ourKanto, Kansai, and Kyushu Works（during
FY2023）◦A cquire new customers by opening ourHiroshima Works（FY2025 onward）◦Investigate possibilities for opening facilities in
the Southern Kanto and Tohoku regions◦Increase customer interest in our provision ofrecycling and treatment methods with low
greenhouse gas emissions◦Increase our recycling rate
◦Expand the range of items accepted forrecycling through technological development◦R eliably conduct large-scale construction
projects in the Tokyo metropolitan area, theChubu region and the Kinki region◦S trengthen our sales work in the upstream
and consulting sectors◦A ugment treatment facilities at our usedplasterboard works（to be completed in May
2023）◦R e d u c e g r e e n h o u s e g a s e m i s s i o n s b yadopting use of carbon neutral LNG◦B egin construction of industrial waste
management facilities for used batteries (tobe completed in December 2022)◦Increase quantity of materials we can accept
by augmenting employees and facilities

18

A Conversation with Our External Directors

Corporate Governance Safeguards
Daiseki’s Corporate Value

1

SpecialFeatureAs a leading industrial waste recycling company, Daiseki is contributing to thedevelopment of a more sustainable society.
Against a backdrop of international calls for action on environmental issues, ourexternal directors had a conversation on the role Daiseki should play and theissues we will face going forward.

Exercising leadership on
environmental issues in the ageof carbon neutrality
Sahashi: Daiseki was founded in 1945 as an oil and fat refining
business, and had already branched into producing recycled oils
when it was incorporated as a company in 1958. 1958 is actually
the year I was born, yet by this time Daiseki was already looking
ahead toward a recycling-oriented society as part of its
management principles. I was an advisor to the Aichi Prefecture
Industrial Resource Recycling Association for many years and I cansay that there are no other companies taking such a diverse rangeof resources and reutilizing them for commercialization.
Kako: The Japanese government has set out a Green Growth
Strategy with a target of achieving net zero carbon by 2050. I think
Daiseki is uniquely well-placed to make an appreciable contribution
within the growing movement to effectively use our current
resources and aim toward building a society with net-zero

Norikazu Sahashi
External Director (Audit andSupervisory Committee Member)First election in 1987, he servedon Nagoya City Council for six
consecutive terms. Chairperson of
the Nagoya City Council from2005 to 2006. Took on his current
role in 2016 after serving as a
Daiseki Audit and Supervisory
Board Member in 2012.

19

greenhouse gas emissions.
Mizuno: Right now, great things are expected of business in theenvironmental sector and it feels like the time has come for Daiseki
to show leadership. I think we can contribute to society not only
within the industrial waste industry, but also by taking an assertive
stance, for example, by recommending to manufacturers
manufacturing methods and materials that facilitate recycling.
Sahashi: Momentum is gathering right now. With both businesses
and governments calling for action on environmental issues, thechallenge we must face going forward is whether we can remain at
the forefront and set new trends. We are lucky to be trusted
partners of government and often hear from our customers thatthey are confident in our unique ability to do things. We need tobe active in promoting ourselves as a manufacturing andenvironmental technologies company, too.
Mizuno: In the last few years, Daiseki has been progressing,through proactive capital investment, toward our goal of entering
the process industry. We can expect further increases in efficiency
going forward through application of the IoT and AI. Japan’senvironmental technologies are second to none and I therefore
believe that Daiseki technologies will be able to find worldwide
application.
Kako: At the request of the Ministry of the Environment, Daiseki
moved rapidly to provide support following the Nakhodka tanker
heavy-oil spill, the Great East Japan Earthquake, and the Chikuma
River flooding. I often see the possibilities for Daiseki technologies
and consider the help they could provide when I see reports ofvarious disasters overseas. I would like to see us further increase
capital investment in our research facilities. Recently, there has
been a lot of talk about focusing on research aimed at carbon
neutrality, but surely we cannot have too much forward-looking

Mitsuyo Kako

Promoting diversity and proactive
business expansion
Creating comfortable working
environments and assertive managementaligned with current developments

External Director (Audit andSupervisory Committee Member)
After serving on the staff of Aichi
Prefecture, she was appointed
trustee and board member of Aichi
University in 2016 (ongoing role).
Appointed board member of Chita
City Board of Education in 2018
(ongoing role).Took on her current
role at Daiseki in 2020.

research.
Sahashi: It’s a question of a management approach that aligns withthe direction the world is currently taking, looking ahead to 2050.
I would like to see proactive consideration of what Daiseki cando as an environment-creating company, and translation of thoseideas into initiatives.

Compliance awareness for all employees atall our domestic facilities
Sahashi: When we inspected our facilities throughout Japan, wewere conscious that our working environments are created by our
employees’scrupulous attention to systematic tidiness andorganization. We handle dangerous materials, therefore making
thorough safety measures is particularly necessary.
Mizuno: Headquarters is increasing cooperation with all facilities tocreate a framework supporting fully effective governance. These
efforts appear to be moving forward at present. In our work tostrengthen compliance, we are making efforts to improve ourwhistleblowing system and internal auditing through training andother measures.
Kako: Daiseki carries out business under licenses based on the
Waste Management and Public Cleansing Act. In this position,compliance with laws and regulations is vital. In addition to safety
aspects and fostering a mentality emphasizing legal compliance,
comfortable working environments and openness within theorganization are also part of compliance. I included requests
regarding the active participation of women in the survey
evaluating the efficient running of the Board of Directors, and I feelthat this sparked lively debate and engagement within the
Company.
Mizuno: Daiseki management has remained in the founder’s family
and our founder’s principles continue to be passed down. When we
also consider the examples of Toyota and othercompanies, we can seethat clear management
principles are a strong
point facilitating theshowing of leadership.
Alongside our role as“balancers,”I hope that I
and my fellow external
directors can also help
Daiseki to develop into a
company with the ability
to take the initiative inthe environmental sector.

Tour at Gifu Recycling
Center of Daiseki Eco.
Solution Co., Ltd.

Kako: On the subject of the active participation of women, which we touchedon earlier, Daiseki has launched a fiveyear“Action Plan for Promotion of
Women’s Active Participation,”startingin 2021. While this includes goals suchas increasing the number of female
sales personnel and the number ofyears they work with us, I would like to Meeting with female employees held
see specific measures like training and
by Director Kakointerviews set out more clearly. I hope
we will continue efforts as a leading company in the industry.
Mizuno: The Ito Review* puts forward a target of 8% ROE tosustainably increase corporate value. We’ve already achieved ROEof nearly 10%. Employee’s engagement, including factors such as
high salaries and job satisfaction, is directly linked to increases inoperating profit margin and workforce productivity, so I would liketo see Daiseki embracing change and putting this toward further
developing an attractive human resources system.
Sahashi: We were able to deal with the situation around COVID-19
vaccination by rapidly creating a system facilitating employee
vaccination. One of Daiseki’s defining characteristics is oursteadiness, our determination dose not to proceed until we areabsolutely sure. However, I hope to see speedy, forward-looking
decision-making and follow-through yield rapid progress for
Daiseki, allowing us to make a significant contribution in this era ofconcern for the environment.
Mizuno: We must ensure the continuation of steady management
and safety measures going forward. On the other hand, Daiseki hasa tendency to hit the brakes a bit too hard and, going forward, I
think we need to step on the gas in areas where we can expand. I
think it would be good to get in on the momentum surroundcarbon neutrality and make policy recommendations, conduct
outreach with manufacturers, and proactively promote our businessin the environmental sector.

Nobukatsu Mizuno
External Director (Audit andSupervisory Committee Member)Worked with Tohmatsu & Co. (nowDeloitte Touche Tohmatsu LLC)
before assuming directorship of
the Nobukatsu Mizuno Certified
Public Accountancy Oﬃce (ongoingposition). Took on his current roleat Daiseki in 2018.
*The Ito Review: the final report, published in August 2014, of the
Ministry of Economy, Trade and Industry’s“Competitiveness andIncentives for Sustainable Growth: Building Favorable Relationships
between Companies and Investors”Project, chaired by Kunio Ito, aprofessor at Hitotsubashi University at the time. This report gives
recommendations on company-shareholder relations and has
driven reforms in corporate governance.

20

Daiseki’s Response to
the Post-COVID Landscape2

SpecialFeatureThe COVID-19 pandemic has had an enormous impact on our stakeholders’living
and business conditions, as well as their daily lives.
Despite these circumstances, the Daiseki Group has been working to steadily
improve performance and return it to pre-COVID-19 levels.

Impacts of the COVID-19
Pandemic on Our Operations
In response to the spred of COVID-19 infection, theDaiseki Group has made e f f or t s t o reduce thepandemic’s harmful impacts on our Company andbeyond, and made it a priority to ensure the safety of
empl o y ees o f bo th the Daiseki Group and ourbusiness partners.

The Daiseki Group’s COVID-19 Measures● Provided new option to takevaccination leave
Daiseki Group granted special holidays, referred to as“vaccination leave,”to remove employee worries around
vaccination and contribute to ending the COVID-19
pandemic as soon as possible. (Vaccination leave taken in
FY2022: 415 employees took a total of 1,011 days of leave)● Promoted working from home andstaggered working hours
In order to reduce the pandemic’s harmful impacts, DaisekiGroup promoted measures and adopted the structures andsystems needed to enable staggered working hours andworking from home.

21

Impacts●Financial Impacts
Consolidated Net Sales (year-on-year)
Consolidated Operating Profit (year-on-year)

FY2021

FY2022(4.7 ) +10.3(5.7 ) +26.3
%

%

%

%

Although COVID-19 caused a downturn in the firsthalf of FY2021, we quickly entered a recovery phaseand were able to achieve record highs for net sales andoperating profit in FY2022.

● Utilized an online meeting system
Daiseki Group postponed unnecessary, non-urgent
business trips and opted to hold discussions and meetings
online whenever possible. We also worked to improvebusiness efficiency, using this opportunity to move forwardwith digitization and our shift to a paperless system.

● Promoted temperature checks, ventilation,
regular hand-washing and gargling,
and prohibition of eating in large groups
Daiseki Group encouraged all employees to check theirtemperature, ensure ventilation, and regularly wash theirhands and gargle, and also introduced measuresprohibiting eating in groups both inside and outside theCompany during the pandemic.

Daiseki’s Initiatives to Reduce
Greenhouse Gas Emissions

3

SpecialFeatureThe effects of climate change caused by global warming are increasing worldwide fromyear to year, and the creation of a carbon-free society is becoming an urgent issue.
As a leading company in the venous industry, the Daiseki Group will continue to reduce
our greenhouse gas emissions and contribute to building a more sustainable society.

Aiming for Zero Greenhouse
Gas Emissions by 2050

Emissions
SCOPE1SCOPE2◀Bringing in energy-saving equipment

Aiming toward carbon neutrality by 2050, theDaiseki Group will work to reduce our own emissions
alongside supporting our customers to reduce theiremissions.

◀Adopting use of electric powerby renewable energy

2022

Issues and Initiatives for Emissions Reduction❶ Switching to power originated from renewable energy sources
By 2027, the Daiseki Group plans to switch to energy
originated from renewable energy sources (renewableenergy) for all energy used to power operations at our works.

❷ Adopting use of equipment with low CO2 emissions
Energy-intensive business activities comprise operation ofactivated sludge blowers used in treatment of wastewater,using heating blowers for waste oil treatment, melting waste
lead in our waste lead
recycling process, andrunning large vehicles suchas tanker trucks and othercargo vehicles. As thisequipment deteriorates andrequires replacement, weRotary gas melting furnace
are switching it to energy(Daiseki MCR) uses LNG insteadsaving models.
of coke for recycling lead◀Deploying low-carbon
vehicles

2027

2030

2050

❸ Deploying low-carbon vehicles
We will aim for introduction of vehicles with low
greenhouse gas emissions, such as EVs and FCVs, once
they are available on the market.

SBTi(Initiative for greenhouse gas reduction targets
based on scientific basis)
Daiseki has set the following medium- to long-term targets forgreenhouse gas emissions reduction and submitted them forofficial validation from the Science Based Targets initiative.
Medium-term target

Reduce SCOPE 1 + SCOPE 2 emissions by 30% by FY2028
and SCOPE 3 emissions by 18%
Long-term target
Reduce SCOPE 1 + SCOPE 2 emissions by

100% by FY2051

22

E

ESG Reporting Environment

nvironment

Environment

Providing behind-the-scenes support for manufacturing and other arterial industries, Daiseki Group fulfills a vitalsocial role as part of the venous industry, recycling a maximum of the industrial waste we receive and effectively

utilizing resources, as well as striving to reduce the environmental impact of the waste treatment process.

Promoting Environmental Management
Developing environmental-friendly operation
through an environmental management system

Formulation of an Environmental Policy
and its dissemination to employees

The Daiseki Group has established an environmental
management system delivering environmental
management led by our President. Our Environmental
Headquarters, comprising Daiseki and our Group company
management teams, deliberates on and makes decisions
regarding priority matters concerning environmental
protection and climate change.

The Daiseki Group has established
an Environmental Policy based on
the Group’s shared core principles
and bringing together the corepolicies guiding environmental
initiatives at each of our groupcompanies. We’re raising employee
awareness of our Environmental
Policy among all staff and working toachieve our targets as an environment-creating company.

Structure of the Daiseki Group Environmental Management System
Daiseki President and Representative Director
Company-wide internal auditors
Hokuriku Daiseki
Daiseki Eco. Solution
Daiseki MCR
System Kikou

General Manager, Environmental Management
Environmental Headquarters
Environmental Task Force
Planning Division, Planning andManagement Headquarters
Works
ManagerWorks
ManagerWorks
ManagerWorks
ManagerWorks
Manager

Hokuriku Works

Kansai Works

Kyushu Works

Kanto Works

Chiba Works

23

Works
Manager

Headquarters Nagoya WorksManager, Environmental
Management

Daiseki Group Environmental Policy

Our system for monitoring compliancewith environmental laws and regulations

Daiseki, Daiseki Eco. Solution, and Daiseki MCR have acquired
ISO14001 certification, and manage compliance with environmental
laws and regulations through ISO-compliant
activities at all of our business sites. In
FY2022, the Daiseki Group received noadministrative sanctions (orders for
improvement, orders for action, or businesssuspension orders) under the Waste
Management and Public Cleansing Act, theAir Pollution Control Act, the Noise
Regulation Act, or the Offensive Odor Control
Act. Further, Daiseki Group faced no fines or ISO 14001 Management System
Registration Certificate
legal action with regard to environmental
matters.

Key environmental achievements in FY2022 (Daiseki Group)
Amount of materials
received for recycling

Recycling rate

2,072,000tons

90.0%(1,081,000 tons)

CO2 total emission(SCOPE 1 and 2 only)

42,000tons-CO2（87.7％）(30,000 tons-CO2)

Note: ( ) shows the number with Daiseki only

Perspective of the environmental load by Daiseki Group’s recycling business
INPUT
Amount of materials received for recycling
Others 8.8％
Lead-acid batteries
1.0％

Waste oil 19.8％

EnergySupplemental materials

117,000 969,000

Others 96,000 GJ

Raw material for petroleum products

City gas
98,000 GJ

tons

Waste, etc.
(raw material)

2,072,000
tons

2,000

Sludge 14.3％
Waste alkali 11.7％

Contaminated soil 36.2％
Waste acids 8.2％

Daiseki Group

Daiseki Group’s
Recycling rate

90.0

Water

kl

Waste oil treatment Treatment of waste acids and waste alkalis

tons

Recycled water (rainwater)

39,000

tons

Heavy oil B(Renewable
heavy oil)
54,000 GJ

Electric 349,000 GJ(3,000) GJ

782,000GJ

Diesel fuel185,000 GJ
Note: ( ) shows electric power from renewable energy

Sludge treatment

Contaminated soil treatment

Lead recycling

Waste oil

Waste acid and waste alkali

SludgeContaminated soil

Used lead-acid batteries

Recycled fuels(Recycled heavy oil/
supplemental fuel)Raw materials for cement(from waste)

Raw materials for cement(from waste)

Raw materials for cement(from contaminated soil)

Recycled lead

Usable metals, etc.

Purification & discharge(purification & discharge
after dehydration)%

Amount of materials received for recycling ー intermediate treatment residue (non-recyclable)
X100
Amount of materials received for recycling

Purification & discharge

Waste collection
Petroleum productmanufacturing

OUTPUT
Recycled products shipment
Recycled fuels:

Drainage to sewer or rivers

323,000tons

Purification & discharge

Petroleum products

1,400,000tons

Raw materials for cement(from waste): 261,000tons

Note: Discharged after purifying to the value under standard

9,000tons

Intermediate treatment residues(non-recyclable)

Useable metals and similar:

Raw materials for cement(from contaminated soil): 491,000tons
Recycled lead:
Other recycled materials:

12,000tons
290,000tons

3,000kl
Emission into the air

Incinerated

12,000tons CO2 total emission 42,000tons of CO2

Final disposal (landfill)

197,000tons

Note: Intermediate treatment residue is outsourced.

24

ESG Reporting Environment

The Three Pillars of Environmental Protection
Environmental
Protection
Pillar

1 Maintaining a high recycling rate

The Daiseki Group receives wastes such as waste oils, waste
acid/alkali, sludge, contaminated soil, and lead-acid batteries
from our customers and recycle them into recycled fuel, rawmaterials for cement, usable metals, recycled lead, etc.

Recycling rate
(FY2022)90.0%

Note: See page 24 for a definition of“recycling rate”

Environmental
Protection
Pillar2

Contributing to reductions in fossil fuel usage andgreenhouse gas emissions through recycled fuels

Daiseki’s Recycled fuels areclassified as fuels recycled fromwaste materials “( waste-derived
raw materials and fuel”) andwhen reporting the amount ofemissions from energy, theProjection of a scenario in which fossil fuels
are partially replaced by recycled fuels
Scenario using
fossil fuels
5,313t of CO2

amount of emissions derived

Scenario featuring partial
replacement with recycled fuels

Proportion replaced withrecycled fuels deducted from(adjusted) CO2 emissions

from utilization of them can be

2,313t of CO2

deducted from total emissions.
Total CO2 emissions

Fuel type

Total CO2 emissions (adjusted)

Adjusted total
Fuel usage
CO2 emissions(kl)(t of CO2)

Emission factor Fuel usage CO2 emissions(t of CO2/kl)(kl)(t of CO2)

Heavy oil C

3.00

1,500

4,500

Heavy oil A

2.71

300

813

Recycled
fuels

2.63

0

Total

—

1,800

Replacementwith recycled
fuels

500

1,500

300

813

0

1,000

0*

5,313

1,800

2,313

* When reporting greenhouse gas emissions in line with the Act on Promotion of Global Warming Countermeasures, we report adjusted
emissions alongside basic greenhouse gas emissions. Greenhouse gas emissions associated with the use of waste-derived raw materials
and fuels are deducted from the adjusted emissions. Also, greenhouse gas emissions associated with the use of waste-derived raw
materials and fuels are also excluded from the scope of greenhouse gas reporting based on the Act on Rationalizing Energy Use.

25

Environmental
Protection
Pillar

3 Waste treatment with low-greenhouse gas emissions

While incinerating untreated industrial
waste emits significant levels of CO2, Daiseki isable to offer treatment methods with lower
CO 2 emissions than incineration. In the
categories of waste oil and sludge, outsourcing
recycling and treatment to Daiseki reduces ourcustomers’SCOPE 3 Category 5 (Waste
Generated in Operations) emissions to zero.*1
Outsourcing to Daiseki also enables customers
to report lower SCOPE 3 greenhouse gas
emissions to CDP and other environmental
ratings agencies.
By promoting improvement of recycling
capacity and active sales activities, we aim tohigher the reduction effect for Greenhouse Gas
emissions to more than 680,000 tons of CO2
by FY2025.
Note: The following trial calculations are based on
FY2022 results for our oil-water separation andfuel conversion treatments, two of our mainprocessing methods. These theoretical figures
estimate the reduction in CO2 emissions effectedby our treatments, as compared to a scenario in
which our customers simply incinerate their waste.
*1

*2

*3

*4

*5
*6

*7

The Database on Emissions Intensity for Accountingof Greenhouse Gas Emissions, etc., by Organizations
Throughout the Supply Chain (Ver. 3.1), publishedb y the Minis tr y o f the Environment, se t s theemissions intensity (quantity of greenhouse gas
emissions per a given unit of activity) for recyclingof waste oil and sludge to zero.
Calculated on the basis of CO2 issuing from thecarbon contained in waste (based on emissions
f a c t o r s f r o m t h e M i n i s t r y o f E n v i r o n m e n t’sGreenhouse Gas Emissions Accounting andReporting Manual).
Calculated by totaling 1–3 below (fromDaiseki FY2022 processing results)
1. CO2 generated through fuel consumption
by boilers used for oil-water separation
2. CO2 calculated according to the amount ofelectricity used for neutralization, biologicaltreatment, and other processes
3. CO2 equivalents of the CH4 and N2O generated
by wastewater treatment
CO2 emissions from incineration without othertreatments are calculated by applying a waste
solvent ratio to the waste oil emission factor,
accounting for 145,000 tons of the 281,000
tons of supplemental and other fuels Daisekidelivered in FY2022, with water accounting
for the remaining 136,000 tons. These figuresfluctuate every year depending on the ratio ofwaste solvent to water in the products wedeliver.
CO2 calculated according to the amount ofelectricity used for fuel-conversion treatments,
based on Daiseki’s FY2022 processing results
In the mid-term management plan, it is expectedthat Daiseki’s non-consolidated sales for FY2025
will be 120.55% compared to FY2022.
The target was set based on an assumption that theeffect of reduction of CO2 emission is proportionate
to the sales.
In FY2021, annual CO2 emissions per household
were 2.88 tons
(According to the FY2021 Survey on Actual CO2Emissions in the Household Sector)

Comparison when treating one ton of waste oil
2,920kg of CO2

98.8% reduction(Trial calculation based on FY2022 processing results)

Reduction of

121,000 tons of CO

2

32.8kg of CO2
Incineration without
other treatments*2

Daiseki’s oil-water separation &fuel-conversion treatments*3(Recycling into recycled heavy oil)

In FY2022, Daiseki delivered

42,000 tons of recycled
heavy oil

Comparison when treating one ton of waste solvent
1,600kg of CO₂

98.2% reduction(Trial calculation based on FY2022 processing results)

Reduction of

443,000 tons of CO

2

27.8kg of CO2
Incineration without
other treatments*4

Over

Daiseki’s Fuel conversion
treatments*5(Recycling into supplemental fuel)Supplemental fuels deliveredby Daiseki
in FY2022:

281,000 tons

564,000 tons of CO reduced
2(Equivalent to the annual CO2 emissions of 190,000 households*7)

Target by FY2025:

Over

680,000 tons of CO * reduced
2

6(Equivalent to the annual CO2 emissions of 230,000 households*7)26

ESG Reporting Environment

Climate Change Scenario Analysis
Daiseki has established a Risk Management Committee and conducts risk management every quarter, including
assessment of climate change risk. Consideration of risk impacts and frequencies is not sufficient to give a full
picture of climate change risk, so we have opted to conduct analyses of set scenarios.

Projected 4.0℃ Scenario●A mount of greenhouse gas emission is large with insufficient countermeasures, and in 2100 the airtemperature will rise in 4℃ compared to the temperature in industrial revolution
In this scenario, there is a lack of clarity around policies aimed at
decarbonization, and carbon pricing and other regulations on fossil
fuel usage are not strengthened. Although businesses become moreaware of decarbonization to some degree, they do not choose lowcarbon products at the expense of raising their costs. In thissituation, energy costs do not change. With no reduction in fossil
Possible Situation
Lack of clarity on greenhouse gas
emissions regulations
Remaining at current level ofbusinesses’emissions reduction efforts
4.0℃ Scenario(Little to nointervention)

Increased severity of typhoons,
torrential rain, and other natural
disasters
Rising sea levels and other changes in
the marine environment

fuel usage and demand for recycled fuels expected to beunchanged, Daiseki expands our recycling operations in thiscategory. In response to predictions of increase in number ofweather disasters over the medium- to long-term and the possibility
that these could damage our customers’works, Daiseki develops
systems to provide reconstruction support.

Impact Assessment

Response

No change in energy costs

Remains at current level

No change in demand for Daiseki’s lowemissions industrial waste treatment services

Expanding our industrial waste treatment
business operations

No change in demand for recycled fuels

Expanding our recycling operations in therecycled fuels category

Risk: disasters force Daiseki and/or ourcustomers to cease operations

Securing our supply chain in preparation forpotential disasters

Opportunity: Daiseki receives more contracts
from our customers to provide
reconstruction support

Developing systems to support reconstruction

Risk: flooding forces Daiseki and/or ourcustomers to cease operations

Calling on local governments to construct levees
and raise the height of defenses, if necessary

Projected 1.5°
C Scenario● Temperature rise in 2100 will be within 1.5℃ with strict policy for climate change introduced
In this scenario, greenhouse gas emissions regulations such ascarbon pricing systems and carbon taxation are adopted,
resulting in increased energy costs, so we respond by adopting
the use of renewable energies and deploying low-emissions
vehicles and processing equipment. Fossil fuel usage also
decreases, lowering demand for recycled fuels in turn andbringing expectations of decrease in sales. Conversely, demandfor our low-emissions industrial waste treatment services and raw
Possible Situation
Greenhouse gas emissions regulations
are strengthened (carbon pricing
systems and carbon taxation are
adopted)1.5℃ Scenario(Controls
applied)Advances in businesses’emissions
reduction efforts

No change in likelihood of typhoons,
torrential rain, and other natural
disasters
No change in the marine environment
such as rise in sea levels

27

materials increases. In anticipation of this kind of paradigm shift,
Daiseki will shift our focus to material recycling. Material recyclingis the recycling of waste into products retaining close to their
original functionality. This removes the need for the incinerationor landfill that would be required for disposal and avoids using
natural resources, thereby allowing us to contribute todecarbonization and resource recycling.

Impact Assessment

Response

Risk: Increased energy costs

Adopting use of power by renewable energies
and low-emissions equipment

Opportunity: Increased demand for Daiseki’slow-emissions industrial waste
treatment services

Proactively expanding our industrial waste
treatment service operations

Risk: Reduced fossil fuel usage⇒ Reduced demand and raw materials forrecycled fuels⇒ Reduced sales of recycled fuels
Shifting operations from recycled fuels tomaterial recycling
Opportunity: Increased demand for raw
materials and industrial waste
treatment services with low
emissions
No change in risk of disasters forcing Daiseki
and/or our customers to cease operations

Remains at current level

No change in number of contracts forreconstruction support received from ourcustomers

Remains at current level

No change in risk of flooding forcing Daiseki
and/or our customers to cease operations

Remains at current level

Analysis of the Financial Impact of These Risks and Opportunities on Our Business Activities● 4.0℃ Scenario
Increased profit from new business (market opportunity)
JPY10.0 billion

JPY5.0 billion

Positivefinancial impact

JPY2.2 billion
JPY450 million
FY2023–FY2030 (short-term)
JPY100 million

JPY80 million

Negativefinancial impact

JPY4.84 billion
Increased profit from industrial waste treatment and recycling business(market opportunity)
JPY1.125 billion

Increased profit from sales of recycled fuels (market opportunity)
FY2031–FY2050 (medium-term)

From FY2051(long-term)

Increased energy costs due to carbon pricing systems (regulatory risk)
JPY200 million

Reduced profit due to halt in operations caused by natural disaster(acute physical risk)
JPY1.35 billion
JPY2.70 billion● 1.5℃ Scenario
Increased profit from new business (market opportunity)
JPY10.0 billion
JPY5.0 billion

Positivefinancial impact

JPY13.75 billion
JPY5.5 billion
JPY270 million
Increased profit from sales of recycled fuels(market opportunity)
FY2023–FY2030 (short-term)
JPY410 million

JPY80 million

Negativefinancial impact

Increased profit from industrial waste treatment and recycling business(market opportunity)

FY2031–FY2050 (medium-term)

From FY2051(long-term)

Increased energy costs due to carbon pricing systems (regulatory risk)
JPY820 million
Reduced profit due to halt in operations caused by natural disaster(acute physical risk)
JPY160 million

Decreased revenue of sales in recycled fuel (market risk)
JPY900 million

Note: P ositive and negative financial impacts that affect operating profit of the year are calculated. For the basis of
calculation, see“Basis of calculation of financial impact to business activities with risks and opportunities.”

28

ESG Reporting Environment

Management Strategy Based on Our Scenario Analysis

Environmental Policy

Materiality

Long-Term Management Vision

Management
PolicyDaiseki Planning andManagement
Headquarters

Reporting on the resultsof our activities

Review of scenario analyses

Daiseki’s eachWorks and each groupcompany

Management level(Environmental Headquarters,
Management Meeting,Board of Directors)

Incorporation into our
Medium- to Long-Term Business Planand Annual Business Management Policy

Decarbonization and Low-Carbonization Initiatives●R eceiving a B rating from the CDP(Daiseki Group)● Switching to power from renewableenergy sources (Daiseki Group)

In FY2022, the Daiseki Group received a B rating in response
to our information disclosure through the CDP Climate Change
2021 Questionnaire. By carrying out TCFD (Task Force on
Climate-related Financial Disclosures) scenario analysis, as well
as disclosing information on and obtaining third-party verification
concerning our total greenhouse gas emissions, we were able toimprove our rating from the D we received in the previous
financial year. Going forward, we will continue our environmental
protection, resource recycling, and carbon neutrality initiatives
and aim to further improve our rating.

In order to reduce greenhouse gas emissions associated withour business activities, we have recently begun to adopt the useof power originated from renewable enegy sources (renewableenergy). In FY2022, we began using renewable energy at our
Kyushu Works and Chiba Works. We plan to introduce the use ofrenewable energy at all Daiseki Group facilities and in all of ourGroup companies by FY2028, reducing our SCOPE 2 emissions tozero.
The Daiseki Group has registered and announced this plan aspart of the RE Action – Declaring 100% Renewable initiative.

RE Action – Declaring 100% Renewable initiative logo mark
CDP Climate Change 2021 score report29

● Endorsement of the GX League (Daiseki)● Joining the Circular Economy Association (Daiseki)

In February 2022, Daiseki declared our endorsement of the GX
League Basic Concept, a framework announced by the Ministry of
Economy, Trade and Industry. The GX League was founded as aplace to discuss and create a vision of a sustainable, carbonneutral future for 2050, a place to discuss market creation andrulemaking in the carbon-neutral era, and a place for companies
to conduct voluntary emissions trading to achieve their carbonneutral targets. As Japan’s premier venous industry company,
Daiseki hopes to use the GX League to share information withother companies and countries and make policy recommendations.

Daiseki joined and was inaugurated as a member of the
Circular Economy Association (a general incorporated
association) in February 2022. The Circular Economy Association
is an organization established to promote the development andimplementation of business within a circular economy model, in
the aim of realizing a circular economy capable of sustainable
development while efficiently utilizing our limited natural
resources. Daiseki believes that, going forward, our Company
must incorporate the circular economy concept into our businessactivity. To facilitate this, we are exchanging information withothers and further exploring our future business model throughthe Circular Economy Association.

Circular Economy Association logo markSlide material about the GX League Basic Concept (Ministry of
Economy, Trade and Industry)● Attracting customers with our results forgreenhouse gas emissions reduction (Daiseki)
We have prepared materials summarizing the greenhouse gas
emissions reductions delivered by our services, and we are using
these to attract customers. Daiseki’s strengths lie in our lowemissions industrial waste recycling and treatment services andour recycled fuels, which can reduce emissions as a substitute forfossil fuels. In the aim of achieving carbon neutrality, calls foremissions reduction are mounting in many manufacturingindustries throughout Japan, and the number of companies using
these services is growing.

● Bringing in energy-saving equipment (Daiseki)
Daiseki is pursuing energy-saving measures to reduce ourgreenhouse gas emissions during treatment of wastewater. In
October 2021, we installed a preheater in order to reduce theenergy consumption of our evaporator-concentrator. Preheatingwith a preheater allows us to reduce our CO 2 emissions byapproximately 4.8%.

Overview of a preheater installed in an evaporator-concentrator for prewarming

Our materials explaining the effect of greenhouse gas emissions reductions we deliver

30

ESG Reporting Environment● Supplying biodiesel for marine vessels(Daiseki Eco. Solution)● Adopting the use of carbon-neutral LNG(Daiseki MCR)

We started to work on applying biodiesel fuels forvessels, and in the beginning of FY2023, we implemented
trials to supply to the Port of Nagoya by Ship to Ship
method, for the first time in Japan. We will work on
verifying the effectiveness of biofuels for coastal vessels
in the future, and if the supply with this method isrealized, the use of biofuels for vessels will innovatively
promoted and we will be able to significantly contributeto realization of carbon neutral and circular economy.

In April 2014, in order to reduce the significant quantityof CO2 emitted during the lead recycling process, weinstalled a rotary gas melting furnace that uses LNG
instead of the traditional coke. This was followed in
March 2022 by a switch to carbon-neutral LNG in placeof LNG. Carbon-neutral LNG offsets LNG with carbon
credits from forest conservation, tree-planting, and otheractivities, and is certified carbon neutrality by the Carbon
Neutral LNG Buyers Alliance.
For more information, please
see the Daiseki MCR website
at the link below.
https://www.daiseki-mcr.com/
carbon_neutral.html

Certificate of Carbon Neutral City
Gas Supply

Left: The Tahara Maru tugboat (Sanyo Kaiji) supplied with biofuel
Right: The fuel-supply vessel Jyuho Maru (Toyota Tsusho) supplying biofuelGreenhouse Gas Emissions Reduction Targets and Results
The Daiseki Group recently set medium- to long-term targets for reducing our greenhouse gas emissions. We
submitted our targets to the SBTi (Science Based Targets initiative) and are now waiting for official validation.
We will continue to make consistent efforts toward achieving carbon neutrality.

The Daiseki Group’s Medium- to long-term targets for greenhouse gas emissions reduction
Reduction targets for total emissions under SCOPES 1 and 2 (tons-CO2)

Reduction targets for total emissions under SCOPE 3 (tons-CO2)

42,000148,000
29,000

Reductionof 30%
Base year
FY2022

Target year (mid-term)
FY2028121,000

Reductionof 18%

0

Target year (long-term)
FY2051

Reference year
FY2022

Goal year
FY2028FY2022 greenhouse gas emissions figures at the Daiseki Group

Emissions (tons-CO2)

SCOPE1
Direct greenhouse gas emissions by
the Daiseki Group(from energy sources only)

SCOPE2
Indirect emissions associated with the use of electricity,heat, and steam supplied by other companies(electricity only in the case of the Daiseki Group)

SCOPE3
Indirect emissions not covered by SCOPES 1 and 2(other companies’emissions related toa business’s activities)

28,00014,000148,000

Note : See third-party verification on page 48 for emissions of SCOPE 1,2 and SCOPE 3 Category ①

31

The Daiseki Group’s Initiatives for Preventing Environmental Pollution
Measures for air pollution control● Rigorous measures to control fineparticle pollution

Dust collectors are installed in our plants that handle sludge,
particulate matter, and hazardous materials, preventing release offine particles from our worksites. Also, we have installed
apparatuses that humidify particulate waste within our processing
equipment, as well as large-scale dust collectors.
Scrubbers, as well as air
showers and footwear
cleaning equipment for
personnel, have also been
installed in our Daiseki MCR
plants in order to prevent
release of lead, a hazardous
material, into the ambient air.

Controlling water quality ofdrainage water
Daiseki processes the wastewater we receive by firstneutralizing, coagulating, and dehydrating it, then applying a
biological treatment in the form of the activated sludge method,and finally discharging it into sewers or rivers. We have alsoestablished our own standards that go beyond the legal
requirements for the discharge of drainage water and formulated
emergency response procedures to be followed if a risk of
exceeding our own required levels is identified.
Daiseki Eco. Solution’s recycling centers are installed withdrainage water
treatment equipment and purify water before
discharging it.

Activated sludge processing facility that can purify
organic substances (Daiseki Nagoya Works)
Daiseki’s large-scale dust collector(Daiseki Kanto Works)● Controlling emissions of air pollutants
For small boilers used at all Daiseki works, and we measureemissions of SOx, NOx, and other air pollutants biannually. In
FY2022, all works maintained emissions at or below required levels.

Measures to prevent off-siteleaks from our worksites

At Daiseki, we install dikes around storage tanks to preventthe already unlikely event of wastewater seeping into the soil,
groundwater, or off-site.

● Measures against unpleasant odors
Daiseki takes steps to counter unpleasant odors from the waste
we receive by analyzing samples of that waste before it isdelivered to us and, in cases where it generates significant
unpleasant odor, determining in advance whether to accept its
delivery and the treatment methods to be used. We are working
to prevent odors within our plants by eliminating odor of exhaustgas with a deodorizing device before releasing to the air.

Deodorizing device by scrubber method with high deodorizing effects (Daiseki Kyushu Works)

Storage tank installed with dikes to prevent
wastewater seeping (Daiseki Kyushu Works)

Biodiversity

The Daiseki Group contributes to preserving biodiversity in thefollowing ways:
1. Reducing the environmental impacts associated with plant
operations and transportation, and monitoring environmental risk.
2. Protecting plant and animal habitats through purification ofdrainage water.
3. R educing impacts on biodiversity by supplying recycled
products and industrial waste treatment services with low
greenhouse gas emissions.
4. Protecting local flora and fauna by maintaining greenery andattractive landscaping within and around our facilities.

32

S

ESG Reporting Society: People

ocial

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

Health Management and Diversity
We clarify management challenges to resolve by Health Management and work on promoting diversity.

Promoting Health Management

Certification of Health and Productivity
Management Organization

Daiseki established health management strategy in
FY2022. We will clarify challenges to resolve and promote
necessary investments and concrete actions. Management
challenges and health strategies that have been decided to
implement are as shown below.

Daiseki and Daiseki MCR have been working on maintaining andimproving employees’physical and mental health and creating
workplaces easy to work at, and Daiseki and Daiseki MCR werecertified as“2022 Heal th and Productivity Management
Organization.”We will aim for obtaining White 500 Certification
and Bright 500 Certification by creating work environments where
employees can show high performances.
Certificate of
Daiseki 2022
Health andProductivity
Management
Organization

Certificate of
Daiseki MCR
2022 Health andProductivity
Management
Organization

Health management strategy map

33

Main accomplishment related to society in FY2022 (the Daiseki Group)
Training hours per person

Turnover Rate

Paid Leave Acquisition Rate

7.2hours/person

2.5％

60.5％

（7.8hours/person）（1.3％）（62.9％）

Note: Numbers in ( ) shows for Daiseki non-consolidated

Deployment of healthmanagement to suppliers

Daiseki promotes health management with partner companies.
In FY2022, we requested managements of partner companies towork on preventing overworking and conducting proper medical
exams at a meeting with partner companies.

The Daiseki Group’s Promotionof Diversity
Women
156

Concerns for Healthy Employee Minds and Bodies

The Daiseki Group’s attendance rate of Regular Medical Checkups
and Comprehensive Health Examinations (FY2022)
（%）
Regular Medical Checkups

Comprehensive Health
Examinations

100

96.6

Attendance rate

Men
848

Women
3

FY2022 end
Total 1,004● Regular Medical Checkups andComprehensive Health Examinations

The Daiseki Group continues to provide periodical medical
exams for all employees to maintain and improve health. We also
facilitate comprehensive health examinations for employees aged
35 and over to ensure the early detection and treatment of illness.

Managers by Gender

Employees by Gender

Men
187

FY2022 end
Total 190

Note: Full-time employees only

Note: Full-time employees only

New Graduate and Mid-Career Managers Hires by Gender (New Graduates)
Mid-Career
155

New Graduate
35

Women
7

FY2022 end
Total 190

Men
20

FY2022 end
Total 27

● Stress Checks
The Daiseki Group has been conducting stress checks for all
employees. Employees experiencing high levels of stress arereassigned appropriately based on their requests as well asinterviews and consultations with physicians.
The Daiseki Group’s Stress Checks implementation
Fiscal Year（%）

FY2021

FY2022Stress check implementation rate

91.2

90.0

Proportion of highly stressed employees

6.9

8.7

Health lectures by occupational health physician
Daiseki’s Kansai Works
provides health lecturesby occupational healthphysician twice a year.

Note: Full-time employees only

Note: Full-time employees only

Average Length of service by Gender Average Annual Salary by Gender10.4 years

Male
FemaleWomen

7.5 years

Note: As of FY2022 end Full-time employees only

Directors by Gender
Women
1

Men

7.43 million yen
4.81 million yen

Note: 1 As of FY2022 end Full-time employees only
Note: 2 Male average age: 42.4 years old,
Female average age 37.7 years old

Men5

As of May 26, 2022
Total 6

Health lecture(Daiseki Kansai Works)

34

ESG Reporting Society: People
Supporting the Realization of aWork-Life Balance● Voice from Male employees who acquired Childcare leave VoiceIn FY2022, 16 Daiseki Group employees utilized childcare
leave, of which four were male employees. In terms of
COVID-19 countermeasures, we introduced a staggered
commute system, a telework system and a special leave systemfor employees with young children who need cares for them athome due to kindergarten and elementary school closures. Also,
the period allowed to have short work hours was extended to
the year the employee’s child turns six years old.

I appreciate that I was able to know how
hard childcare was, and that I was able
to have life style I do not have normally.
Daiseki Nagoya Works Production Division 3 Division Chief

Toyokazu Yamai

I took Childcare leave and short work hours after my second
child was born in June 2021. While my wife was in hospital in
preparation of delivery, I lived alone with my daughter, and I
was able to experience a life
style that I do not normally
have, taking her to and picking
her up from kindergarten or
cooking with her. After
Childcare leave, taking shortwork hours was very helpful tohelp my wife by taking mydaughter to and picking her up
from kindergarten.

Acquisition of Paid Leave and Maternity/Childcare Leave at the Daiseki Group
Fiscal Year

2021

2022

Paid leave acquisition rate (%)*1

58.8

60.5

Utilized maternity leave (people)

3

7

Men who utilized childcare leave (%)*2

‐

10.8

Women who utilized childcare leave (%)*2

‐

85.7

The Daiseki Group’s turnover (FY2022)
Male employees Female employees
Turnover (%)*3

2.2

3.8

Total
2.5

*1 Paid Leave Acquisition Rate shows the rate of paid leaves employees acquired within the leaves given*2 Childcare Leave Acquisition Rate shows the rate of employees who acquired childcare leave within thenumber of employees who had newborn in that fiscal year
*3 Turnover Rate shows the rate of employees who resigned in FY2022 within the number of employees in
February 2022

Shareholding association system

Target and performance for human resource

Daiseki regards employees as human assets and grants
shareholding association incentive which is 15% of reserve amountas a part of benefit to support employees to have own company’sshares, so that they have an interest for the company management.

To promote Health Management and diversity, the Daiseki Group
has set concrete target figures.
Actual and target figures related to human resources for FY2022
ActualTargetTurnover Rate

2.5% (1.3%)

Below 2% (below 1%)

Paid Leave Acquisition Rate

60.5% (62.9%)

80% or more
(80% or more)

1.5% (1.6%)

By FY2027 10% or more
(10% or more)

Rate of Female Managers

Attendance at shareholding association at Daiseki

Note: ( ) shows figures for Daiseki only

Fiscal year

2021

2022

Number of shareholding
association members (people)

492

545

Attendance rate forshareholding association (%)

77.1

81.4

Human Resource Development and Workplace Improvement Efforts
We aim for company’s continuous evolution by enhancing Human Resources Development and creating
environment where employees can work comfortably. We plan to conduct employee engagement surveys
starting in FY2023.

Efforts for nurturing human resources● Employee trainings

The Daiseki Group actively conducts trainings considering that
employees are our human capitals.
In FY2022, we started trainings for Vice Works Manager, AssistantDivision Chief at Administrative Department and Evaluator, in
addition to trainings for Division Chiefs and Chiefs.
Total training hours at the Daiseki Group (FY2022)
Contents

Total training hours (hours) Total number of attendees (people)

Compliance study session 5,535 (5.1 hours per employee)
Training per job levels

1,339

48

Evaluator training

406

116

Other trainings
Total

35

11,071563
7,843 (7.2 hours per employee)

483
11,718

Employees

Transformation of actions
Reformation of individual
awareness

Supervisor

Promotion of Employee
Training Culture

Promoting a shift in roleawareness
Communication of each role
Feedback of results(Image)Company

Clariﬁcation of roles
Provision of growth
opportunities

Efforts to improve workplaceenvironments● Work Environment Improvement Project
Daiseki has been engaged in the“Work Environment
Improvement Project.”This involves in-house improvement
activities aimed at creating a workplace where all employees
can work in health and safety. Improvement proposals areposted on the Daiseki in-house bulletin board as improvement
reports for all employees to review. In FY2022, we
improvements were made by introducing air-conditioning cloths,
promoting effective workflows with electric contract documentsor reports, and extending the period allowed to take short work
hours for childcare from up to the time when the employee’schild turns three years old to the time the child turns six years
old. Going forward, we will continue responding to employee
requests and feedback.

● Reducing overtime work byoutsourcing
Daiseki Chiba Works outsourced part of day shift works anddriving tasks in FY2022 for employees to realize work-lifebalance and reduce overtime work based on actions at otherlocation within Daiseki.
Day shift work deals with visitors or handling requests ofindustrial waste disposals. Driving task deals with collecting
wastewater, etc. from customer plants with large vehicles. The
outsourcing was started after training persons and confirmingthat we could rely on them. Reduction of overtime work byoutsourcing was as follows.

●Day shift work: 107hours/month●Driving work:

64hours/month● Voice from employees who work while raising children● Voice from employees who have improved their work environment Voice

Extending the period of short work
hours enabled me to both work andtake care of my children

To realize the workplace where
employees are appreciativefor each otherI had been taking short work hours until my child turned three
years old. However, I felt that it would be difficult to keep
working without short work hours until my child enrolls
elementary school due to taking to and picking up my childfrom kindergarten, so I consulted with my supervisor if we could
extend the period of short work hours. My supervisor
immediately spoke with Human Resources Department, and theperiod of short work hours was extended to the time when thechild turns six years old. I am very grateful for coworkers’
understanding and cooperation.

“Thank You Report”is Nagoya Works’unique and new activity
for employees to give reports to express appreciation each otherwith the purpose to“build the culture to communicate good
aspects of people and recognize each other.”The number ofreports has been gradually increasing since May 2021 when theactivity was started, and now almost 100 reports are submitted
each month. I have been given positive feedbacks with comments“I have more opportunities to say thank you,”“I can recognized
good aspects of my coworkers”
or“I’m more motivated forwork.”

Daiseki Hokuriku Works Production Technology Division Technician
Ayako Mori

Daiseki Nagoya Works Environment Department Assistant Division Chief
Shima HoriChildcare

36

ESG Reporting Society: Safety
SafetyTo ensure employee safety, we are revising our safety management system andpromoting safety and health activities.

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

Establishment of Safety and
Health Management System

Safety Promotion Manager
Appointment

The Daiseki Group appoints each entity’s President as thechief representative, and select representatives for Safety and
Health at each site to build Safety and Health Management
System. Also, we share information of accidents at the DaisekiGroup to prevent similar accidents.

“Safety Promotion Office”have been established at each
Daiseki business site managed by“Safety Promotion Manager”
appointed to promote safety. The president delegates theauthority to promote safety to a person in charge at each
worksite who provides guidance to staff and implements various
safety measures.

Daiseki’s Safety and Health Management System
President and Representative Director
Headquarters of Business Generalization
Safety Management Department
Works Manager

Cooperation

Safety Promotion Manager*1
Safety Promotion Oﬃce

Safety Manager*2

Health Supervisor*2

Safety and Health Committee Member＊１ Delegated to authorities related to safety management by President and Representative Director＊２ At the Chiba Works, which has less than 50 employees, it is not necessary to appoint a Safety and Health Manager, thus a Safety and
Health Promoter has been appointed

Safety and
Health Policy

Safety and Health activities

The Daiseki Group establishes
Safety and Health Policy at eachcompany and promotes prevention of accidents, and Safety and
Health. We put safety as the top
priority and work on creating theworkplace where employees canwork safely and healthy.

At Daiseki, Safety Promotion Offices at each business site
conduct the following occupational health and safety activities.

❶ Training with the correct knowledge for risk prediction❷ Checking collecting works at customers sites❸ Thorough investigation on the cause of accidents
and information sharing
Safety and Health Policy (Daiseki)

37

Daiseki Group Work-related
Accident Record

Safety Trainings

In 2021, the Daiseki Group had 6 accidents accompanied bylost worktime and 7 accidents not accompanied by lost
worktime. Accidents accompanied by lost worktime included
falls, heatstroke, limbs caught in objects, etc. and accidents notaccompanied by lost worktime included touching wastewater,
traffic accidents, etc.

To prevent accidents, the Daiseki Group gives daily instructions
and alerts at monthly safety meetings for the sites that handle
hazardous materials. In addition, safety training is conducted forall employees. Employees who took safety trainings have given
feedbacks that they could understand the awfulness ofaccidents and points to focus on to prevent accidents.

Daiseki Group Work-related Accidents

Daiseki Group Safety Training* (FY2022)(cases)

2017
2018
2019
2020
2021
January- January- January- January- JanuaryDecember December December December December

Year
Fatalities

0

0

0

0

0

Accidents accompanied
by lost worktime

7

7

7

7

6

Accidents not accompanied
by lost worktime

9

10

5

2

7

Daiseki Group Occupational accidents (frequency rate)*
10.00

7.50

●
●
●

Manufacturing industry
Industrial waste treatment industry
Daiseki Group

7.36

6.95

0

Number ofattendees

April

Reflection on accidents in FY2021

340

1,020

June

Hazardous materials such as acid and alkali

339

1,018

Method for analyzing process of accidents
Septemberand hearing (for Safety Promotion Office)78

26

Study session to recognize
October dangerous situations (for drivers
with services of three years or less)

23

46

November Danger of static electricity, fire fighting

343

1,026

December Prevention of traffic accident

341

1,022

Danger of electrocution, danger
January of fall (for drivers, plantFebruary employees and sales personnel)

405

405

Danger Prediction Training
2.68

2.21

1.21

1.31

2021

2022

(FY)

* Frequency rate: Total number of casualties due to occupational accidents per
million total working hours (accident frequency).

Daiseki Group Occupational accident rate (intensity)*
0.50

Total training
hours (hours)＊Total safety training hours are included in total training hours on page 35

5.00

2.50

Description

Timing

0.48

●
●
●

Manufacturing industry
Industrial waste treatment industry
Daiseki Group

Daiseki conducts Danger Prediction Trainings to prevent
accidents in transporting and processing high-risk industrial
wastes. In FY2021, we held lectures by external instructors. In
FY2022, employees certified as trainers gave lectures to leaderlevel employees at each site, establishing the system that eachsite promotes prevention of accidents.

Number of attendees for Danger Prediction Training at Daiseki
FY2021

FY2022

82

132

0.40
0.30
0.20
0.10
0

0.17
0.07
0.06

2021

0.06
0.04
2022

(FY)

* Intensity: Total number of working days lost per 1,000 total actual working
hours (degree of accident severity).

Danger Prediction Training (Daiseki Kanto Works)

38

ESG Reporting Society: Safety

Safety trainings for partnercompanies

Efforts to prevent accidents

Since Daiseki outsources collection of industrial wastes withhigh risks, we conduct safety trainings for those companies. In
FY2022, we invited managements of partner companies at eachsite, explained the cause of accidents in the previous year andthe points to instruct, and requested them to prepare
instructions easy to understand for drivers.

At Daiseki, 6,557 near miss accidents were reported in
FY2022. Safety Management Department and Safety Promotion
Office make responses to the cases that need countermeasuresthat were reported. For example in FY2022, we installed mirrors
to prevent accidents when making turns in offices, or painted
pipes to prevent collisions of vehicles in plants, etc.

Painted pipes in plant toprevent collisions(Daiseki Chiba Works)
Safety trainings for partner companies (Daiseki Kyushu Works)

Safety trainings utilizing videos

Promoting BCP(business continuity plan)

For drivers, to have knowledge of waste acid or waste alkali,
etc. and vehicles is necessary to properly handle industrial
wastes. Daiseki started safety training utilizing videos. For
example, we made a training video demonstrating a conditionof vacuum vehicle when it sucks bubbling liquids and when adeformer suppresses bubbles in lab scale. We show this todrivers for their trainings.

Daiseki operates hazardous material facilities at each worksite
and makes every effort for safety management. To prepare for
the Nankai Trough megathrust and other major earthquakes,
disaster prevention drills are held annually at all worksites
assuming tsunami and fire scenarios and annual drill to form
disaster countermeasure office are held at headquarters andworksites. In FY2022, 344 employees joined the disasterprevention drill and 45 employees joined the drill to form
disaster countermeasures office. Each worksite prepares BCP(business continuity plan) to determine responses at the time ofdisasters.

Picture from safety training video for prevention of leakage accidents

Disaster drill (Daiseki Kanto Works)

39

Safety and Health activities at System Kikou
System Kikou, which particularly handles dangerous tasks within Daiseki Group,
implements following safety and health activities at each site as the effort to create aworkplace with zero danger.
❶ Risk Assessment❷ Sharing information of work-related accidents❸ Safety and Health Patrol

Cleaning inside of a tank (System Kikou)

Risk assessment matrix (System Kikou)

Efforts to eliminate unsafe conditions
In order to eliminate unsafe work environments for drivers,
we make improvements with customers’supports as well.
If improvements are difficult to make, we inform drivers of therisks and review work procedures, etc.
Also, Safety Management Department and Safety Promotion
Office staffs ride together to the working sites and check theprocedures, equipment and controls to make necessary
improvements.
Unsafe conditions eliminated at Daiseki customers’sites (FY2022)
EliminatedIn process or under negotiation

35 cases

8 cases● Establishment of waste information sharing system Voice

Promotion of accident prevention by“opinion box”system

Daiseki Nagoya Works Technology Department Production Technology Division
Sho Sugisaki Technician

At Nagoya Works, we have established an information
sharing system“opinion box”to further promote preventionof accidents while processing waste. With this system,
dangerous matters that need requests to customers to
improve the way to generate wastes or responses to them
are centralized to manage, and automatic emails
promoted responses and madeinformation sharing effective.
Based on this system, sales
personnel can give cautions tocustomers in advance andeliminate dangerous conditions.

40

ESG Reporting Society: Local Communities
Local Communities

The understanding of neighboring communities is essential for the operation of anindustrial waste treatment business.
While striving to engage in proactive dialogues and exchanges, we are also engaged insocial contributions leading to the invigoration of local communities.

Conducting Tours at Daiseki Works
Daiseki conducts tours at its works for customers thatgenerate industrial waste and residents in surrounding area as
needed 912 people from 537 companies participated in these
tours in FY2022. Tour attendees are asked to participate in a
sur v e y e v al ua t ing t he w ork s in t erms o f t idine s s andorganization, safety conditions, employee attitudes and otherfactors on a scale of 0–5 points, and respondents gave Daiseki
an average 4.7 points in
FY2022.

Donation by“Corporate
Hometown Tax Donations”
Daiseki made donation to Akashi City utilizing“Corporate
Hometown Tax Donations,”as a support for abundant and safe
ocean business related to environment in October 2021. Thissystem is for companies to make donations for local community
formation projects certified by the government, with businesses
that“utilize donations for formation of the city, people andworks”as the subjects.

Plant tours are held regularly
inciting residents in surroundingarea (Daiseki Hokuriku Works)

Support for Recovery from Environmental Pollution
Accidents Caused by Natural Disasters
At Daiseki, each business site engages in recovery activities inthe event of environmental pollution accidents that occur at
nearby factories, on roads, in rivers or other locations due totyphoons and other natural disasters. Kanto Works supported
recovery from environmental contamination accident that
happened with a cargo ship grounding offshore Hachinohe,
Aomori in August 2021, by collecting heavy crude oil and cargos
that overflew.
Supporting recovery from anenvironmental contamination
caused by cargo ship grounding
offshore Hachinohe (Daiseki
Kanto Works)

Awarded ESG Finance Award Japan(Daiseki Eco. Solution)

Daiseki Eco. Solution was awarded“Special Award”inenvironmental sustainable corporate section of the Third“ESG
Finance Award Japan”organized by Ministry of the Environment.
With the Special Award, Daiseki Eco. Solution was highly
recognized with efforts for TCFD and contributions to material
circulation (circular economy)
focusing on improvements
for handling materials withless life cycle CO2 emission,etc.
ESG Finance Award Japan
Special Award

41

Appreciation letter from Akashi City (Daiseki Kansai Works)

Material Circulation Technology
and System Award
Daiseki applied to the Forty Seventh“Material Circulation
T e c hn o l o g y a n d S y s t e m A w a r d”o r g a ni z e d b y J a p a n
Environmental Management Association for Industry with atheme“Recycling Business of Renewable Fuel with the Raw
Material of Waste Solvent, etc.”and was awarded“Japan
Environmental Management Association for Industry Chairman
Award.”The purpose of the award is to contributes to Reduce,
Reuse and Recycle of waste, find excellent businesses andefforts andpromote/spread themto develop
circulatesystems.

Certificate of Japan Environmental Management Association for Industry
Chairman Award on Material Circulation Technology and System Award

Disseminating and Exchanging Information with Local Communities and Stakeholders
Daiseki makes an effort to engage in dialogues with residents living near our facilities, and strive to disseminate
information through events that attract attention related to the environment and briefing sessions for investors
and other stakeholders.

Exhibition at the COP26 Virtual
Japan Pavilion

Daiseki joined COP26 Virtual Japan Pavilion organized by
Ministry of the Environment in November 2021.
We transmitted information that Daiseki’s recycling product,
recycled fuel is utilized as a substitute of coals and heavy crudeoil, that it helps reduce use of fossil fuel, and that Daiseki’swaste recycling reduces greenhouse gas emission by 99%
compared to simple incineration.

Industry-Academia Collaboration
Efforts with Universities
Daiseki invited teachers and students from The University ofTokyo, Nagoya University and Nagoya Institute of Technology
and held environmental seminars. We introduced Daiseki’sindustrial waste management business and efforts on recycling,
and gave tours for the plant and actual works. Also, in responseto request from Graduate school of Nagoya University, oure mp l o y e e g a v e a l e c t ur e r e g a r din g in du s t r i al w a s t emanagement as a part-time teacher.

Presentation slide for COP26 Virtual Japan Pavilion

ESG Briefings for Institutional
Investors

In January 2022, we held second ESG briefing session for
institutional investors to explain Daiseki's ESG activities. At thistime, we introduced the relationship between environment,
which is Daiseki’s strong point, and the profit and loss ofbusinesses.

Nagoya University environmental field seminar (Daiseki Headquarters)● Lecture regarding industrial waste management

Voice

Showing Daiseki’s interesting
environmental business to young people

Daiseki Headquarters Human Resource Planning Devision Chief

Ryuko Baba

ESG briefing slides

In response to request from Graduate School ofEnvironmental Studies, Nagoya University, I gave a lecture
regarding waste management in a class called“front lineof environmental issue solutions.”The purpose of thislecture was to show concrete efforts and outlook on
challenges and future for complicated and various
environmental issues to students
who learn environmental issues. I
introduced the history of Japan’swaste management and circular
economy and carbon neutral
which are among top topics,
along with Daiseki’s activities.

42

G
ESG Reporting Governanceovernance

Compliance

For Daiseki Group, which expands businesses with permissions, assuring complianceand meeting social responsibility and public responsibility are the most important issues
for corporate management.

Basic Approach to Corporate Governance

Daiseki positions corporate activities that comply with laws
and social norms as the most important issue for improving
transparency and soundness in corporate management. We
adopted the Company with Audit and Supervisory Committee
system, with an Audit and Supervisory Committee comprising
three outside directors, further enhancing the supervisory
function of directors. One of external directors is a woman, who
gives recommendations from a female perspective.
In May 2020, Daiseki introduced an executive officer systemwith the aim of clarifying business execution responsibilities,
streamlining management and accelerating decision-making.
Further, the authority necessary for conducting daily corporate
activities is delegated to the works managers at each of the six
worksites and the presidents of six Group companies, with theManagement Meeting held with the participation of directors,
executive officers, works managers, directors of consolidated
subsidiaries and other staff.

Daiseki's Corporate Governance System
General meeting of shareholders
Appointment and dismissal
Audit, etc.

Board of Directors

Consultation
ReportProposal and report

Appointment and dismissal

Appointment and dismissal

Audit and Supervisory Committee
Appointment and Compensation Committee

Cooperation

Selection, dismissal and supervisory

Representative Director

Direction
ReportAudit oﬃce

Internal Control System Promotion Committee
ReportDirection

Compliance Committee
Risk Management Committee

Management Meeting(Directors, Executive Oﬃcers, Works Managers,
Directors of consolidated subsidiaries, etc.)

ReportDirection

Each department, Works, Consolidated subsidiary

43

Internal Audit

Accounting audit

Accounting auditor

Main accomplishments related to governance of FY2022 (Daiseki)

Board of Directors

Held

21 times

Audit and Supervisory
Committee

Held

Ratio of external directors
within all directors

14 times

Basic Approach to Internal Controls

Based on the Companies Act and the Ordinance for
Enforcement of the Companies Act, Daiseki established thefollowing system for ensuring the appropriateness of operations(hereinafter, the“internal control system”).
❶W ithin the Daiseki Ethics Charter, Daiseki established three guidelines
for corporate behavior that convey its stance on growing anddeveloping alongside society: Social roles and responsibilities,
compliance with laws and regulations, respect for human rights andthe fostering of a free and open corporate culture.
To achieve perpetual development as an industry leader, Daiseki hasdeveloped an internal control system and strives to embody its Ethics
Charter.
❷T he Board of Directors formulates basic policies for internal control,
provides instructions and supervision on the implementation status ofinternal controls, confirms maintenance and operational status andreviews basic policies and countermeasures when necessary.
❸D aiseki established the Internal Control System Promotion Committee
chaired by the President and Representative Director to ensure
reliable financial reporting through the establishment andmaintenance of internal control system programs.

Risk Management
Daiseki established Risk Management Regulations in 2006 toaddress various risks including earthquakes and other natural
disasters, occupational accidents and information leaks.
Additionally, we created a risk map and established a response
system defining responsible departments for each risk
classification.
The Risk Management Committee, which plays a central role inrisk management, is chaired by the President and Representative
Director and manages risks facing the Daiseki Group thoroughly
and comprehensively. The Audit Office audits the risk management
status of each department, reports the results to the Risk
Management Committee and the Board of Directors on a regularbasis, and deliberates and decides on improvement measures.
Also, in FY2022, we began discussing risk analysis in light ofclimate change based on TCFD recommendations at theEnvironmental Headquarters and Risk Management Committee
meetings, with progress confirmed at Management Meeting andresults reported to the Board of Directors.

(as of May 26, 2022)

50%

Compliance System

Daiseki established a Compliance Committee in May 2002
and formulated an Ethics Charter announced within and outside
the Company. Compliance Committee chaired by the President
and Representative Director works on grasping the status ofcompany-wide compliance systems established and its
problems, analyzing compliance risks at each department andembodying countermeasures. For the cases where the DaisekiGroup management or compliance officers at each department
find problems related to compliance, we have established asystem to report to compliance committee immediately andthoroughly operate that system,

Compliance System
Compliance Committee

PurposeTo plan various measures fostering compliance awareness throughout theorganization and conﬁrm the status of awareness among employees.
Composition

Chairperson : President and Representative Director
Deputy chairperson : General Manager, Headquarters of Business Generalization;
General Manager, Headquarters of Planning and Management
Member : Director in charge of Headquarters of Business Generalization;
Managers of Departments of Headquarters & Assistant Managers;
Manager of Audit Oﬃce

Secretariat
Secretary General: General Manager, Headquarters of Planning and Management
Clerical work: Human Resources Department (in charge of promotion of compliance)

Compliance Oﬃcer:
Managers & Department Managers (heads of each department and work site)

Person to be in charge of compliance: Employees at job levels of Assistant Site Manager,
Deputy Department Manager or higher

Employees

44

ESG Reporting Governance

Whistleblower Protections
The Daiseki Group established a compliance consultation
counter where employees can directly consult with The Daiseki
Human Resources Department or corporate lawyers that is easy
for employees to use, and thoroughly operate it informing theimportance of it. When employees consult, the consultation
counter will investigate the matter, determine the countermeasure to prevent it from happening again with the related
departments and implement it thoroughly, company-wide. The
w hi s t l e b l o w in g s y s t e m s t ip ul a t e s t h e p r o t e c t i o n o fwhistleblowers so that employees who make report suffer noadversity. All information from whistleblowers handled in thestrictest confidence only by those who respond in thewhistleblower system so no information is leaked to the outside.

Information Protection and Management
In 2005, we formulated Personal Information Protection Rules
to ensure all officers and employees maintain a thoroughunderstanding of appropriate personal information protectionsin an effort to strengthen management.
Based on the Information Security Basic Policy, we strictly
manage and control the creation, use, removal and storage of
information. In FY2022, there were no incidents involving theleak of personal information.

Respect for Intellectual Property Rights
We formulated employee invention regulations to address
inventions and other intellectual property created by employees
while on the job. By clarifying the attribution of rights toemployee inventions and guaranteeing inventor rights, we areworking to increase motivation for research and development.
Number of intellectual property rights(FY2022 end) (cases)
Number of intellectual
property rights

Patents holding

Patents pending

42

Compliance with the Excellent Industrial
Waste Disposal Company Certification System
The purpose of this system is to create an environment inwhich generators of industrial waste can easily outsource
treatment to excellent certified businesses and to promote theproper treatment of industrial waste. If an industrial waste
disposal company with a track record of five years or moremeets certain standards, a seal of excellence will be printed on
the permit and introduced on the Industrial Waste Information
Net website.
Daiseki was the first operator to be certified under thissystem by the city of Nagoya in 2011, and as of February 28,
2022, we were certified as excellent by a total of 49 local
governments (45 prefectures and four cities).

45

The Certification of the Excellent Industrial
Waste Disposal Company by Nagoya City

Developing Sound Corporate Activities
We are responsible for meeting stakeholder expectations
through sound corporate activities, compliance with relevantlaws and regulations and fair business relationships.
❶ We engage with all business partners in good faith, justly and fairly.
❷ We establish mutually beneficial relationships with business partners
and aim for stable growth and development.
❸ We conduct corporate activities in accordance with social norms andstandard business practices.
❹ We build an internal control system for the purpose of ensuring thereliability of financial reports.
❺ We aim to enhance shareholder returns as profits grow.

Observing the Act on Prohibitionof Private Monopolization and
Maintenance of Fair Trade
We have established and adhere to the following rules.
❶ We do not discuss or enter into agreements that mutually restrict
free corporate activities.
❷ We do not use one’s position to influence business transactions.
❸ We do not make inappropriate displays or provide excessive gifts orprizes.

Treatment of Entertainment and Gifts
We comply with the following guidelines.

❶ We don’t entertain or give gifts to business partners and otherstakeholders beyond the scope of social conventions and common
courtesies.
❷ We don’t entertain or give gifts to current or former civil servant
employees, except when permitted by laws and regulations.
❸ We don’t provide our shareholders with entertainment or gifts thatexceed the scope of social conventions and common courtesies.
❹ We don’t give any favors to antisocial forces (extortionists).

Transactions with Public Institutionsand Handling of PoliticalContributions and Donations

Effectiveness evaluation of Boardof Directors

Effectiveness evaluation of Board of Directors held in FY2022
was conducted, and its results were reported and discussed at
Board of Directors. The evaluation results are as follows.

Transactions with public institutions, as well as politicalcontributions and donations, are handled as follows incompliance with relevant laws and regulations.

❶ Task implemented●Evaluation subject…Board of Directors held in September 2020 through August
2021●Person in charge of evaluation…All Directors●Evaluation implementation period…September 2021
●Overview…Items to be evaluated◦Basic management policy, decisions of strategies anddecisions related to important business execution.
Items related to agenda discussion of monitoring◦items related to structure, deliberation and operation ofBoard of Directors❶W e act with thorough consideration for sociality, commonality,
necessity, etc.
❷W
 e do not make illegal political contributions.

Protecting Human Rights
We respect the basic human rights of its employees andstrive to prevent discrimination and human rights violations on
the basis of race, creeds, gender, physical disabilities or otheranomalies. To this end, power harassment workshops for all
managers are conducted regularly by an outside lecturer.
Additionally, we are conducting training aimed at preventing
sexual and power harassment for new managers. Further, the
Human Resources Department regularly interviews employees
to monitor for human rights violations.

❷ Analysis and evaluation results❶W e respect the basic human rights of employees and do notdiscriminate on the basis of race, creeds, gender, physical disability,or for other reasons under any circumstances.
❷W e protect personal privacy.
❸W e don’t engage in sexual harassment or other acts that violate
human rights.
❹W e create a corporate culture in which employees have mutual
respect for one another.

●Questionnaire results…Generally positive (management of the Board of Directors,
matters related to the agenda, etc.)●Effectiveness of Board of Directors…Confirm that it is generally secured❸ Measures to realize effectiveness●Three items pointed out as improvement was
required were as follow.
◦Early distribution of handouts of Board of Directors
meeting◦Increase communication on status reports from eachdepartment◦Reinforcement of cooperation with external directors
and study on information provision

Directors skill matrix (as of May 26, 2022)
Name

Title

Age

of
Gender Term
officeCommittee

Tetsuya Yamamoto

President andRepresentative Director

57

M

27

Yasuo Ito

Vice President andRepresentative Director

49

M

12

Koji Amano

Directors

61

M

19

Norikazu Sahashi

Independent External
Directors

63

M

6

○

○

Nobukatsu Mizuno

Independent External
Directors

69

M

4

○

○

●

●

Mitsuyo Kako

Independent External
Directors

68

F

2

○

○

●

●

C

B

○

●

●

○

●

A

Audit

O

●
●

G

●

S

M

F

S

T

●

●

●

●
●

●

H

●
●

●
●
●

Note: A: Appointment, Reward Committee C: Corporate management B: Business knowledge O: Operation strategy G: Global S: Sales marketing
M: Management risk F: Financial accounting S: Sustainability T: Technology innovation H: Human resource, education, diversity46

Non-Financial Information and Company Information
Main Sustainability Information
Environment (the Daiseki Group)

Society (the Daiseki Group)

SCOPE1 Emission Breakdown (FY2022)

（t of CO2）SCOPE1 Emission

Diesel fuel12,663

City gas

4,868

Others6,372

Heavy oil B (Recycled heavy oil)

SCOPE3 Emission
66,717

2. Capital goods

11,259

4. Transportation and distribution (upstream)

13,093

3. Activities related to fuel and energy not included in SCOPE1 and 2

40,1907. Employees’commute

2,116

6. Business trip

14. Franchise

15. Investments

FY2022

14,24614,153

105,450

147,369

Energy consumption

(thousands of GJ)
FY2021

FY2022

184

185

91

98

59

54

88

96

339

Heavy oil B (Recycled heavy oil)
OthersEnergy intensity

(people)7(people)Category

FY2022Training-related investments

(millions of yen)0

FY2022Training-related investments

27

Specific health guidance rate

（%）
FY202225(%)

FY2022

Smoking rate*

12*Percentage of employees who were subjected to specific health advisory within those who took medical checkups

Number of Shareholding Association Members(thousands tons)
FY2021

186

Number of nursing leave utilization

Category

Note: Calculated with amount of materials received for recycling at Daiseki as thedenominator and energy consumption as the molecule

Water consumption(people)FY2022

Smoking rate

0.38

Water consumption

39

FY2022

Employees who needed specific health guidance rate*

FY20220.42

Flexible work arrangements utilization(hour)FY2022*Percentage of employees who needed specific health guidance within those who took comprehensive health examinations（GJ/t）FY2021

Energy intensity

Category

Category

349（3）*Figure in the parenthesis indicates renewable energy

39

Nursing leave utilization

0.021

Note: Calculated with amount of materials received for recycling at Daiseki as thedenominator and the emission for SCOPE 1 and 2 as the molecule

City gas

FY2021

Short work hours utilization

FY2022

0.023

Diesel fuel100

Category（t of CO₂/t）

FY2021

Electricity* (power by recycled energy)

100

15

Number of short work hours utilization

27,738SCOPE 1 and 2 emissions intensity
SCOPE 1 and 2 emissions intensity

100

Average monthly overtime hours

27,148SCOPE3

100

Number of flexible work arrangements utilization

（t of CO2）SCOPE2

FY2022150 Not applicable

FY20210

FY20210 Not applicable

CO2 Emission

FY2022 end

0

Re-employment rate of applicants (%)

0 Not applicable

SCOPE1

FY2021 end

Average monthly overtime hours

1,867

13. Lease assets (downstream)

3

Re-employment rate of retirees (%)

3,826

12. Disposal of sold products

Mid-career hire rate*

Number of handicapped persons employed（people）

613

11. Use of sold products(%)
FY2022

Employment of handicapped persons and re-employment

327

10. Conversion of sold products

Category

Number of foreigner employees（people）

0

9. Transportation and distribution (downstream)

86
132

Number of foreigner employees

945

8. Lease assets (upstream)

786*Percentage of manager and higher position employees within new hires

6,416

5. Wastes generated by businesses

Regular positions

Mid-career hire rate

(people)FY2022 end

Not categorized（t of CO2）

1. Purchased products and services

Category

General positions

3,835

SCOPE3 Emission Breakdown (FY2022)

Breakdown of regular positions and general positions

Number of Shareholding
Association Members*(people)FY2021 end

FY2022 end

622

694

*Number of shareholding association members within group

FY2022956

969

Implementation of Environmental Management
FY2022

Number of business sites

41

Number of sites certified for ISO 14001 or Eco Action

19

Number of sites that implemented audits related to environment and laws and regulations

19

Governance (Daiseki or the Daiseki Group)
Number of directors

As of May 26, 2022
FY20223
3(1)Internal director

External director

Number of Board of Directors (times)

Attendance rate (%)( ) shows female (people)

Compensation for executives
Directors

Number of executive (people)

47

Compensation amount (million yen)

5
223

External Directors(Audit & Supervisory Board Member)

3
5

FY202221
98.2

Number of committees held
Nomination and Remuneration Committee

FY2022(Excluding Audit & Supervisory Board Members)

Number of Board of Directors held and attendance rate

Audit and Supervisory Committee

R&D cost
R&D cost(times)
FY2022

1
14(millions of yen)
FY2022110

Third-Party Assurance48

Non-Financial Information and Company Information
Third-Party Opinion
Professor, Nagoya Institute of Technology, Graduate School of Engineering

Eizo Hideshima
Born in 1966. Served as an assistant at Engineering Department of Kyoto University in
1992, obtained a Doctorates in 1996 (engineering), served as an instructor at Nagoya
Institute of Technology in 1998, became a professor at Nagoya Institute of Technology
Graduate School in 2012. Gives lectures such as“Sustainable environment study,”etc.
Outside of Nagoya Institute of Technology, he also serves as the Chief Advisor of JICA
Brazil urban transportation human resource development project, Visiting Researcher ofStanford University, Chairperson at Aichi Prefecture Urban Development Council,
Chairperson at Society of Global Business, Executive Director and Branch Chief at Japan
Association for Planning and Public Management, etc. He has written books including“Environmental Regulation and Impact Assessment,”etc.

It has been a long time since circular economy was first
proposed. Much time was needed for the word“sustainability”known commonly, and I expect that this willbe the case for“circular economy”as well.“Sustainability”
was originally used to seek for the balance among (natural)environment, economy, and society, but it is often suggested
in Japan with the issues such as deteriorating naturalenvironment and depletion of natural resources. We can justuse the words“environmental issues”for those matters. I
speculate that this is the reason that“sustainability”does not
become very common in Japan. Of course, it is not about
the word itself but how it is correctly understood andrealized in policies by governments or communities, andcompanies or individuals’activities. It feels that the word isused more correctly and commonly in developing countries.
It is probably because it is essential to balance this issue
with“poverty,”which is a social and economical problem. In
contrast, here in Japan, we have established life styles
where we consume resources in high volume after theperiod of high economic growth, with products
manufactured and distributed accordingly. We did not highly
recognize social diversities so far, including disparities ofincome. With these situations, we cannot clearly see yet
how circular economy will be common in our society. It isconcerning how products and services will be handled indifferent markets, or how economical growth can berealized.
Daiseki Co., L t d. has been sincerel y dealing withenvironment issues as its company business. This reportshows that the company recognizes waste management as49

environmental and economical matter, which is a leading
view with the concept of circular economy, and that there isa deep insight for the positioning of the company itself. The
word“Venous Industry”only reminds of the industry activities
at downstream of product life cycles.
Waste is generated from many kinds of industries.
Therefore, Daiseki Co., Ltd. knows waste management invarious industries. There are many waste management
techniques for many areas, with different selections,combinations, and applications. It is not clearly said in thereport, but it seems that the company also provides
consulting services for other companies that need waste
management in some ways. I felt that the company canhighlight that more.
Currently, many companies describe their environmental
policies on their website. If circular economy is to bepromoted, that cannot be all described in the page ofenvironmental policies. Companies will need to assess
product life cycles, disclose the results, and consider what
type and fluctuation of material and energy to bear costs forand add values with. Therefore, it can relate to marketingstrategies of the companies they have businesses with.
For almost two years, not only Japan, but also the wholeworld has experienced the pandemic. The pandemic is notover yet, but the structural changes of industries andlogistics caused by the pandemic are seen gradually andmore clearly. I think that this report, next year, will include
the change on how to handle industrial waste managementwith these changes.

Daiseki Group Overview● Corporate Overview
Company name

Daiseki Co., Ltd.

President and Representative Director Tetsuya Yamamoto
FoundedNovember 1, 1945

Established October 1, 1958
Head office● Stock information

as of February 28, 2022

Securities code

9793

Listed stock exchangeTokyo Stock Exchange Prime Section
Nagoya Stock Exchange Premier Section

1-86, Funami-cho, Minato-ku, Nagoya-shi, 455-8505

Round lot

TEL: +81-52-611-6321 (Representative)

Total number of authorized shares

79,200,000 stocks

Total number of stocks issued

51,000,000 stocks

Number of stock holders

5,307

FAX: +81-52-611-0160 (Representative)
TEL: +81-52-611-6322 (Head office)
FAX: +81-52-612-4382 (Head office)Capital6.382 billion yen (as of February 28, 2022)

Sales(consolidated) 56.867 billion yen	(non-consolidated) 32.881 billion yen(year ended February 28, 2022)
Listed market	Prime Section of the Tokyo Stock Exchange,
Premier Section of the Nagoya Stock Exchange
Number of employee (consolidated) 1,076(non-consolidated) 710 (as of February 28, 2022)

100 stocks

From March 1 through end of
February of the following year

Fiscal year
General Meeting of Shareholders

May of each year

Shareholder registry administrator

Mitsubishi UFJ Trust andBanking Corporation

Audit company

KPMG AZSA LLC.

● Rating information

Rating and Investment Information, Inc. (R&I)◦Rating A- ◦Announced on December 9, 2021

● Daiseki Group Overview
Daiseki Co., Ltd. [Nagoya city]
Waste collection, Intermediate treatment and recycling
Manufacturing and sales of petroleum products
Daiseki Eco. Solution Co., Ltd. [Nagoya city]
Soil pollution survey, purification process, etc.

● Assessment by a third party

CDP

B

MSCI

BBB

CDP－Climate Change

2021＊Included in MSCI Japan Empowering Women Select Index (WIN) in 2020
Hokuriku Daiseki Co., Ltd. [Kanazawa, Ishikawa]
Manufacturing of lubricant and sales of petroleum products

Daiseki-MCR Co., Ltd. [Utsunomiya, Tochigi]
Lead refining, recycling of used batteries

System Kikou Co., Ltd. [Minato-ku, Tokyo]
Cleaning work and related work for tank storage equipment

FTSE Overall ESG Score 3.3＊Included in FTSE Blossom Japan Index in 2022

Nikkei SDGs ★★★
Toyo Keizai SDGs

Utilization of human resources A, Environment AA,
Corporate governance A, Sociality A, Basic A,
Growth potential AA, Profitability, AAA, Safety AA,
Size AA

Green Arrows Central Co., Ltd. [Tokai, Aichi]
Plasterboard recycling
Green Arrows Kyushu Co., Ltd. [Kasuya-Gun, Fukuoka]
Plasterboard recycling

50

Daiseki Co., Ltd.
1-86 Funami-cho Minato-ku, Nagoya, Aichi, Japan, 455-8505
https://www.daiseki.co.jp/english
Published in Aug. 2022