Integrated Report 2022

December 16, 2022

Integrated Report2022

Introduction

The Inabata Group will continue to constantly takeon challenges—in an era of drastic change—
by using the sound and solid strength it has cultivatedfor more than 130 years, with the aim of improving
sustainable corporate value.
Starting from importing dyes in 1890, we have expanded our business around chemicals that form thefoundation of all kinds of industries, responding to the changing needs of our clients and society.

The Design of the Cover and Introduction Pages
The headshots on the cover, laid out over the background of the earth, are of InabataGroup employees working in various countries around the world. As a company that
operates in Japan and 18 other countries overseas, our employees are our greatest
asset. The down-to-earth daily activities of each and every one of our employees, who are
in close contact with customers and local communities, are the source of the InabataGroup’s value creation.

Contents
Introduction / Contents
Corporate Philosophy and DNA

Strategies

1
3

Message from the President
CFO Interview
Feature: “Our Challenges for the Future”

21
27
31

Growth Trajectory
The Evolution and Structural Reorganization of the
Chemicals BusinessAt a Glance
Medium- to Long-Term Growth Strategies
The Process of Value Creation
Business Model

1 Inabata Integrated Report 2022

Corporate GovernanceManagement
Outside Directors’ Three-Way Talk
Risk Management

Our Company
History of Our Challenges

5
7
9
11
13
15
17

Sustainability Management

Business Overview
Reports by Segment
Global Network
Reports by Region
Financial and Nonfinancial Highlights

Editing Policy

ESG Information

37
45
47
49

Supply Chain Management / Governance (Compliance,
Anti-corruption, Information security)

Environment
Society
Sustainability Data
Financial Information / Consolidated Subsidiaries andAffiliates / Corporate Information / About IR Activities /Stock Information

53
55
70
73

We prepare the Integrated Report as an important tool thatenables Inabata’s stakeholders to understand the company’sbusiness activities and distinctive initiatives for value creation. For
the Integrated Report 2022, with “to challenge” as the theme, thereport was edited to focus on the Inabata Group’s employees
working on the frontlines to achieve the goals of the medium-termbusiness plan NC2023.

77
81
87
95

Guidelines referenced:
The International Integrated Reporting Framework (IFRS Foundation)
Guidance for Integrated Corporate Disclosure and Company-Investor
Dialogue for Collaborative Value Creation by Ministry of Economy, Trade andIndustry (METI), etc.

103

Relevant period:
From April 2021 to March 2022 (Some information may not be limited tothis period)
Relevant organizations:Inabata & Co., Ltd. and its domestic and overseas Group companies

Inabata Integrated Report 20222

Corporate Philosophy and DNA

The Founder’s Passion and the Origin of Inabata

Love (ai) and Respect (kei)Katsutaro Inabata washing silk threads in the Rhone riverin the winter during his study abroad(by Sekka Kamisaka)

MissionPeople come first, based on the spirit of“love (ai)” and “respect (kei),”and together we strive towards contributing to thedevelopment of society.

VisionInabata Senryoten at the time of founding

To continually evolve, serving clients and society,through global operations and meeting theirchanging needs.

Our founder, Katsutaro Inabata, was born in Kyoto in 1862 as theeldest son to a family that ran the long-standing Japanese sweetshop, Kameya Masashige, which was a purveyor to the Imperial
Household. At an early age of 15, Katsutaro was selected to visit
France to study, sponsored by the Kyoto Prefectural government
which was aiming for industrial development. He not only
studied dyeing techniques at an engineering school in Lyon, butalso learned practical skills by working at the Marnas dyeing
factory. He studied applied chemistry afterward, focusing on
dyeing techniques at the University of Lyon. Katsutaro returned
to Japan in 1885 at the age of 23 and became a government
employee with Kyoto Prefecture. At 24, he started teaching at adyeing institute in Kyoto, where he leveraged the advanced
knowledge and skills in synthetic dyes and dyeing techniques hehad learned in France. In 1890, at the age of 28, he founded
Inabata Senryoten along with his wife and started a business asa dye distributer for St. Denis, a French company.
Apart from running his company, Katsutaro also devoted himself
to domestic production of dyes. In 1916, when Japan Dyestuff
Manufacturing Co., Ltd. was established under national policy,
Katsutaro was also involved in its establishment and was
appointed as auditor. When the dyeing industry was undergoinga crisis under the recession during World War I, Katsutaroemphasized the need to understand that a national businesssuch as dyeing surpassed the concepts of profit and loss.
In 1926, he took over as president and committed himself to thedevelopment of the industry.

The DNA of “love (ai)” and “respect (kei)”

IK Values- To cherish integrity and respect for people (ethics)- To continually challenge the limits with high ideals,
big dreams and great passion (aspiration)- To prize dialogue and teamwork, and to treasureprofessional growth of employees (organization)
Katsutaro Inabata, Founder

The IK logo emblazoned on Inabata Shoten’s
tenugui towel- To become the best partner of our clients, providing
solutions from the clients’ standpoint (role)- To grow with people across borders, sharing andrespecting diverse values with the aim ofco-prosperity (symbiosis)

Founder Katsutaro Inabata’s signature

3 Inabata Integrated Report 2022

In 2010, 120 years after Inabata was founded, the company had
grown to a global corporation with about 3,600 employees on aconsolidated basis. Katsutaro’s great-grandson and our sixthpresident, Katsutaro Inabata, felt the need to have a shared value
among ourselves to demonstrate the company’s strengths.
Selected employees from the company put their heads together
and formulated the new management philosophy, vision, andvalues that the company should stand for 10 years later. What isthe purpose of our existence? What matters the most is thespirit of love and respect that we have inherited. These values
have been loved and been our company’s unchanged motto
since its founding, along with the symbol of “IK,” which is takenfrom the initials of our founder. Another meaning behind our logo
IK is that love in Japanese kanji is pronounced “ai,” and respect“kei.” “Honesty is the only way to earn trust of society”—This is
one of the words left behind by our founder, which describes thespirit of love and respect. Our company’s history of over 130
years boasts a lineage of diverse businesses that contribute tosocial interests relevant to the times and that spirit has become
the unwavering guideline for sustainable growth in the medium
to long term.

Inabata Integrated Report 2022

4

Our Company Taking on the Challenges

We have continued to evolve as a company with value,
while empathizing with the needs of our customers and society.

1890−

Early Period

1945−

Growth Era

1984−

Reform Era

Amid the Great Depression,

After the devastation caused by World War II,

After losing its pillar of earnings,

the company took on the challenge ofdomestic production of dyes witha commitment that went beyond profits

Inabata built a foundation as achemical trading company andgrew into a publicly listed company

Inabata improved its portfolio management
and aggressively expanded overseas

Inabata Dye House established in 1897

New Osaka Head Office completed in 1954

Press conference announcing the launch of Sumitomo Pharmaceuticals

After the Sino-Japanese War, when the entire Japaneseindustry was in recession, our founder devoted himself
to producing dyes domestically while managing theInabata Senryoten.

In the midst of the post-war recession, Inabata expanded
its business fields to include synthetic resins andconstruction materials and grew to become a listedcompany by the 1960s. In 1976, the company established
Inabata Singapore as its first post-war overseas base, andsubsequently developed trading companies andmanufacturing and processing plants in Southeast Asian
countries. In addition, it adopted a corporate divisionsystem in order to strengthen its structure in anticipationof business expansion. With the establishment of thedyestuffs, chemicals, plastics, and machinery divisions,the business structure that forms the foundation of
today’s Inabata Industry was established.

Sumitomo Pharmaceuticals Co., Ltd. (now Sumitomo
Pharma Co., Ltd.) was established in October 1984 as a
joint venture with Sumitomo Chemical Co., Ltd. The
pharmaceutical business, which had been in operation fornearly 40 years since 1946, was separated from Inabata.
However, the bulk pharmaceuticals business was
succeeded by the chemicals division, as it handled a wide
range of products to meet the needs of society.
Moreover, Inabata focused on aggressive overseas
expansion while rebuilding its management base. It
particularly focused on the resin compounding businessto build a new earnings pillar.

He established Muslin Boshoku in 1895. After which hestarted business with Société Alsacienne deConstructions Mécaniques of France, which wasconsidered the best spinning and weaving machines
manufacturer at the time. He, then, established Inabata
Dye House, gathered the best machinery and technology,
and became the factory manager himself. Even duringharsh times, he advocated the need to commit to theunderstanding that a national business such as dyeing
surpassed the concepts of profit and loss and contributed
to the development of the business.
1890

Inabata Senryoten established in Kyoto

1897

Inabata Dye House established

1918

1961

Stock listed on Second Section of the Osaka
Securities Exchange

Inabata Shoten (Inabata & Co., Ltd.) established

1962

Stock listed on Second Section of the Tokyo Stock Exchange

Osaka Chamber of Commerce and Industry appoints
Katsutaro Inabata as its 10th president (until 1934)1966

Pharmaceuticals division expands its business byenhancing its structure

1926

Katsutaro Inabata assumes the presidency of The Japan
Dyestuff Manufacturing Co., Ltd.

1970

1943

“Inabata Sangyo” becomes the Japanese company name

1973

1944

The Japan Dyestuff Manufacturing merges into
Sumitomo Chemical Co., Ltd. Inabata & Co., Ltd.
becomes the exclusive distributor of dyestuffs,
chemicals, and pharmaceuticals for Sumitomo ChemicalCo., Ltd.

1922

5 Inabata Integrated Report 2022

1984

Pharmaceuticals division separated, Sumitomo
Pharmaceuticals Co., Ltd. (now Sumitomo PharmaCo., Ltd.) established as a joint venture with
Sumitomo Chemical Co., Ltd.

1988

Food division established1990

New Osaka Head Office building completed

1999

Listed on the first section of the Tokyo Stock Exchange
and the Osaka Securities Exchange

Business reorganized into IT & Electronics, Housing
Materials, Chemicals, Plastics, and Food segments

2000

1976

Inabata Singapore (Pte.) Ltd. set up to become the firstoverseas office after World War II

Inabata certified ISO 14001 (environment
management system)

2005

Inabata certified ISO 9001 (quality management system)

1979

Overseas division established

Introduced a corporate division system and establisheddyestuffs, chemicals, plastics and machinery divisions

2010−

The FourthFounding Period

As the value of trading companies was
being challenged,

Inabata developed diverse ways
to add value

A plastics compound manufacturing base
IK Plastic Compound Mexico, S.A. de C.V. (Mexico)

In 2010, Inabata celebrated the 120th anniversary of its
founding. As it was expanding its manufacturing andprocessing bases, the company responded to diverse
needs in the rapidly changing market by developing not
only a trading function but also a manufacturing andprocessing function that directly participates in
production. Today, it is a global company operating in
about 60 locations in 18 countries. In 2017, Inabata
formulated the IK Vision 2030, which describes how it
envisions itself in 10 to 15 years. With the spirit of “love”
and “respect” handed down from generation to
generation since its founding, the company continues to
evolve, eyeing the future.

2010

Mission, Vision, and IK Values are newly established tocoincide with Inabata’s 120th anniversary

2012

Business domains reorganized into Information &Electronics, Chemicals, Life Industry, Plastics, andHousing & Eco Materials segments

2019

Business domains reorganized into four areas:
Information & Electronics, Chemicals, Life Industry,
and Plastics

2022

Listed on the Tokyo Stock Exchange Prime Market

Inabata Integrated Report 2022

6

Our Company Growth Trajectory110

Full-year dividend ¥We have been developing our business overseas together
with our customers, and expanded our businessperformance while responding to changes in the world.

Note: The shareholder
return policy was
substantiallyexpanded as ofFebruary 2022.

FY2021

Percentage of net sales

Net profit for the fiscal
year (Billions of yen)

Net sales (Billions of yen)

800

41

32

Overseas

Japan

59

%

%

700

Net sales¥

680.9
billion600

24

Net sales

Net profit

63¥

FY2001
500

53

25%

75

400

48
16

%

40
300

30

Net sales

270.2

¥

26

Net profit

23

billion200

21

Net profit

1.8

¥

6

33

36
12

23

8

10

6

6

10

10

4

6

Medium-term business plan

IK2013
2001

40

12

billionFull-year dividend¥

billion

20

Japan

0

22.3

Percentage of net sales
Overseas

100

28

2002

2003

2004

2005

2006

2007

2008

2008

2009

2010

2011

Lehman Brothers collapse

2012

NC201620132014

2013− Abenomics

2015

NC2020
2016

2017

2018

2019

NC2023
2020

2021

0

(Fiscal year)

2020− COVID-19
Note: Net profit = Net profit attributable to owners of parent (the same applies hereafter in this Integrated Report)

7 Inabata Integrated Report 2022

Inabata Integrated Report 2022

8

Our Company
The Evolution and Structural Reorganization of the Chemicals Business
Since starting from importing dyes in 1890, we have expanded our business aroundchemicals that form the foundation of all kinds of industries, responding to the changing
needs of our clients and society.

1890−

1945−

Early Period

The era of founding and growth

1984−

Growth Period

The era ofrestructuring
and revival

We started with the import and sales of dyes and dying & weaving
machines and expanded our business around the chemicals field.

We advanced into new
domains while strengthening
the pharmaceuticals business,amid post-war chaos in
the country.

Mask blanks

2010−

Reform Period

The era of challenges
and hardship

The era of progressand creation

We created new value by separating
the pharmaceuticals business andexpanding overseas bases.

We are striving to become ourclients’ best partner as a shosha,
or Japanese trading company,
providing manufacturing, logistics,
and finance solutions backed by ourhighly specialized knowledge.

Polarizing film materials forliquid crystal displays

Pellicles

Encapsulant for LEDs

Founder and dyes

Information &Electronics

Our founder went to study in France on government sponsorship at the age of 15. There, he studied cutting-edge
synthetic dyes and dyeing techniques of the time for eight years and brought back the knowledge to Japan.
1897

February 1920

Spinning machine (Société Alsacienne deConstructions Mécaniques)

Machinery division

April 1959

May 1983

April 1977

Machinery and
Metals division

February 1941
Closed down

Machinery andHousing Materials
division

Limited partnership company Inabata Koryo

Dyes
June 1918

Information &Electronics Div. I

April 1999

Machinery andElectronics Materials
division

IT and Electronics
division
Materials for solar power
generation

Restarted business with Société Alsacienne deConstructions Mécaniques in 1959 andestablished the Machinery and Metals division
Additives for plastics and rubber

Imported
pharmaceuticals

Information &Electronics Div. III
Renewable energy materials

Silicone

Chemicals for papermaking

Dyes for printers

Dyeing division

Perfumes

Information &Electronics Div. II

The perfume division separated in 1926 to become an independent
entity and a limited partnership company Inabata Koryoten isestablished. The name was changed in 1966 to Inabata Koryo.
Note: There is no capital relationship with our company now.

June 1918
Dye samples of Nippon Senryo Seizo K.K.

The Fourth Founding Period

Chemicals

January 1958

Trading division
October 1946

Pharmaceuticals
Department

Pharmaceuticals
Department

Pharmaceuticals

Chemicals Division

Chemicals department

January to
November 1933

Materials for insecticides

Succeeded the pharmaceutical substances businessPharmaceuticals business separated

October 1984

Sumitomo Pharmaceuticals Co., Ltd. (now Sumitomo
Pharma Co., Ltd.) was established as a joint venturewith Sumitomo Chemical Industry Co., Ltd. (nowSumitomo Chemical Co., Ltd.)Cornstarch

October 1975
Food division

Poleon Tablets
1941
Advertisement inShukan Asahi

Particle boards

Shrimp for processing

Adhesives for plastics

Started sellingcornstarch, which is apaste for cardboards, tothe food industry as an
auxiliary raw material forbeer brewing

Blueberries

April 2012

Life Sciences-related
products and services of
the Chemicals Division
integrated with
the Food division

April 2019

Chemicals Division and Housing& Eco Materials Division
restructured

Life Industry
Life Industry Division
Materials for regenerative
medication

October 1963
Housing Materials division

Vinyl chloride

October 1961

Plastics

1963 Entered the housing material industry
with the sale of adhesives for plywood

Plastics Division I

Plastics division
Plastics division spun off from Chemicals division
Also expanded market to durable consumer goods as the types of plastics
increased and processing methods advanced

Flow of major structural
reorganization and the timing of
the start of dealing in major items

9 Inabata Integrated Report 2022

Resins(Polypropylene, etc.)

Compounding of resins

Plastics Division II
Sporting goods

Film products

Inabata Integrated Report 2022

10

Our Company At a Glance

Related Data

We are advancing further by building a strong foundationin growth fields.

FY2021Net Sales

Consolidated Results

Information & Electronics
Segment Assets

113.1

¥

billionNumber of
manufacturing andprocessing subsidiaries

1

Chemicals
Segment Assets

49.0

¥

billionNumber of
manufacturing andprocessing subsidiaries

2

Overseas network

18

Operating Profit

680.9

¥

billion

36
247.7

%

¥

billion

As of March 31, 2022

20.0

¥

billion

32
6.4

%

¥

billionoverseas
locations

About

60

bases

Number of employees

Composition of Products and Materials(Based on the Amount of Net Sales)

672 4,207

OthersNumber of employees by region

Unconsolidated

Environment
and energy

Consolidated

The Americas

EuropeNortheast Asia

Japan

6%

Displays
Semiconductors
and 5G

2%

4,207

11%

23%

Southeast Asia
and India

Digital printing

58%

12
78.6

%

¥

billion

11
2.2

%

¥

billion

Sales by region

Dyes and others
Automobile
componentmaterials
Construction
materials

The Americas

Functional
chemicals

Europe

5%

2%

680.9

Northeast Asia
Coating
materials

Japan

¥

28%

41%

billionSoutheast Asia
and India

24%

Life Industry
Segment Assets

21.1

¥

billionNumber of
manufacturing andprocessing subsidiaries

2

164.8

¥

billion%¥billion13
2.6

Number of
manufacturing andprocessing subsidiaries

16

Northeast Asia

191.2

Europe

¥

12.6

¥

%

Food products¥

billion(466 employees)

billion(75 employees)

The Americas

34.7

¥

Japan

billionSoutheast Asia
and India

Pharmaceuticals

161.7

¥

280.5

billion(264 employees)¥

billion(951 employees)

billion(2,451 employees)

OthersPlastics
Segment Assets

638.2

Home products

46
316.2

%

¥

billion43
8.6%

Materials forautomobiles
Films andsheetsConsolidated subsidiaries
Domestic:¥

billionMolding
materials

OA, electricaland electronic
products

21

7

Overseas:of them are manufacturing
and processing subsidiaries

36

Sales of manufacturing andprocessing subsidiaries

65.7

¥

billionNote: Simple aggregate value

Note: The amount of net sales for other segments was 0.0% and operating profit was 0.6%.

11 Inabata Integrated Report 2022

Inabata Integrated Report 2022

12

Our Company Medium- to Long-Term Growth Strategies

We will continue our challenge to create even greater value.
In order to elevate “how we envision ourselves” in our long-term vision to an even higher level, we have revised thetargets of the medium-term business plan upward, and we will continue our challenge to create value.

Consolidated net sales(after revision)

Target for FY2023

New medium-term business plan

New Challenge 2023

(NC2023)800.0¥

Long-term vision

Net sales

670.0

¥

16.5

Operatingprofit¥Ordinary
profit¥Net profit

17.0
16.0

¥

8

ROE

Net D/E ratio

0.3

Equity ratio

50billion*1

billionbillionbillion% or morex or less

800.0
¥20.5
¥21.5
¥22.5
10
0.5

¥

billion*2

billionbillionbillion% or more

40−50

1. Further development of corebusinesses and horizontal expansion
into growth sectors
2. Multi-faceted approach to markets withpotential for future growth and steadymonetization efforts

Sales and operating profit
generated outside of Japan

3. Intensification of investment targeting
future growth

or more5. Continuous review of assets andfurther improvement of capital andasset efficiency

Net sales and operating profit trends

6. Enhancement of human capitalutilization efforts(Billions of yen)
40

Stage 2IK Vision 2030
1,000

NC2023

900

30

800.0
680.9
600

50

%

20

20.5

20.0

• Fundamentally, we will ensure that dividend per share does not decline year on year by continually increasing our dividends.
• The target for total return ratio will be set at roughly 50%.
However, in a fiscal year where a substantial amount of cash inflow has been generated by the sale of strategic shareholdings, we willconsider future capital needs, the company’s financial condition, stock price, market conditions, and other factors in a comprehensive
manner, and implement shareholder returns without necessarily being bound by the above target for total return ratio.

13 Inabata Integrated Report 2022

Operating Profit
Stage 1% or more

Progressive dividends / Target for total return ratio of about

Net Sales(Billions of yen)
1,200

NC2020Estimated exchange rate Initial rate: USD1 = 105.00 yen Revised rate: USD1 = 120.00 yen*1 Initial sales target on a pre-application basis for the new revenue recognition standard: 700.0 billion yen*2 Revised sales target on a pre-application basis for the new revenue recognition standard: 830.0 billion yen

Basic Policy on
Shareholder Return70%

4. Further improvement of global
management information infrastructurex or lessApprox.

% or more

At least one-third of sales andoperating profit from businesssegments other thanInformation & Electronics
and Plastics segments

Key initiatives
After revision

trillion or more

Further enhancing multifaceted capabilities such as manufacturing,logistics, and finance, in addition to trading

In light of these current business conditions and future prospects, we have revised our numerical targets and indicators
for the final year of the plan. With the new targets, we will continue to aim to increase corporate value.

Initial1¥billionAs a result of Group-wide efforts to carry out this plan, the results for the first year (FY2021) exceeded the target figures
for the final year FY2023.

FY2023

IK Vision 2030

IK Vision 2030 outlines how the Group envisions itself around 2030. We will continue to enhance our trading company
functions, which are the foundation of our company, and actively invest in business fields and domains where we canharness our strengths at each stage of the medium-term business plan to achieve our long-term vision. We aim tofurther improve our profitability by optimizing our business portfolio in response to changes.

The three-year medium-term business plan, NC2023, is the second stage of our long-term vision.

Quantitative targets

Consolidated sales

Our vision for 2030

300

10

0

0

FY2017FY2018FY2019FY2020

FY2021

FY2022(forecast)

FY2023(target)Around 2030

Inabata Integrated Report 2022

14

Our Company The Process of Value Creation

With our human assets and highly specialized knowledge at the core,
we will create new value by leveraging our multifaceted capabilities asa shosha, or Japanese trading company.
A Sustainable
Becoming the Best Partner

As our customers expand their global presence, our strength lies in our ability to provide specialized services bysupplying them a wide range of materials that meet local needs. Our value creation originates from our human assets
of about 4,200 employees in Japan and 18 other countries around the world, as well as knowledge gathered from oureveryday business activities.
Our global-minded staff with highly specialized expertise in chemicals and other fields combine their advanced
knowledge with various functions, such as manufacturing and processing, distribution, finance and productdevelopment, to resolve issues faced by customers and generate new businesses in different regions in the fields ofinformation and electronics, chemicals, life industry, and plastics.

Societyfor Solving Customer Issues

Input

External
environment
Transition to a
decarbonized andcircular society

Demographic changes

Outcomes

Financial capital
Equity ratio

45%*
Robust financial baseTechnological innovation

Geoeconomic
confrontations

Functions

10,000 companies
Social and relationship capital
Established

132 years ago

Manufacturing& Processing

Logistics

People withengaging personalities
p. 17
Expertiseat the macro andmicro levels

Life Industry

Product
Development

Networking
capabilities

p. 41

Medium-termbusiness plan
Stage 1

Stage 2NC NC
2020 2023

Long-term
vision

IK
Vision2030

Finance

Plastics

with a network of locations
and a strong customer basep. 43

Materiality

Strengthening theFoundation for
Business Continuity

60 bases
18 countries* As of March 31, 2022

Management Foundation

Customer

Employees(organizational culture)

About
in

Other issues

Creating
Sustainable Value

p. 37
p. 39

TradingGlobal business
Growing awarenessof sustainability

Information &Electronics

Chemicals

Approximately

Customers

Supporting ourcustomers throughadded value that meets
their needs

Materiality

4,207
Employees in overseas trading
Customer base
Suppliers and customers

Businesses

Peoplewho carry on the spirit ofLove (ai) and Respect (kei)Human capital
Number of employees
on a consolidated basis*

subsidiaries: 828 employees*
Growing respect forhuman rights and diversity

Strengths(Governance, risk management, finance)

Creating a work
environment where
people can act globally,find their work worthchallenging, and helps
them growShareholders

Substantial returns
through increased
shareholder value
Society (symbiosis)

Contributing todevelopment of society
by creating economic,
environmental, and social
value through business

IssuesMateriality (major issues for management)
Strengthening
the Foundationfor BusinessContinuity

Respecting human rights in the spirit of love (ai) and respect (kei) and growing
together with local communities
Fostering and strengthening the human capital driving the value creation
Enhancing governance and risk management

15 Inabata Integrated Report 2022

Contributing to a decarbonized and circular society, sustainable useof natural capital
Creating
Sustainable
Value

Contributing to safety, security, and well-being
Providing value through resilience in procurement and supply functions

Inabata Integrated Report 2022

16

Our Company Business Model
Business Model Example

We create and provide the value our customers need by performinga variety of business functions, with trading at the core.

Inabata maintains a diverse range of business functions with trading at its core, drawing on the strengths we havecultivated over more than 130 years of history as a source of people with engaging personalities. By maximizing its
capabilities to formulate and implement optimal schemes, we provide added value which meets the needs of ourcustomers and the demands of society.

Strengths

Functions

Peoplewho carry on the spirit ofLove (ai) and Respect (kei)Manufacturing& Processing

Logistics

People withengaging personalities
Expertiseat the macro andmicro levels

Trading

1

Manufacturing& Processing

Trading

Plastic compound business

By starting the compounding business at seven locations
in seven countries, mainly in Asia, we are able to offer not
only trading functions but also the added value that ourcustomers expect, and this has become the strength forwhich we are preferred by our customers.

The plastics business, which is one of Inabata’s key
businesses, expanded overseas using the strength of theplastic compound manufacturing business (compounding
business) and grew to a segment that accounts for 46%*of our consolidated net sales. As Japanese electronics
manufacturers transferred their production bases toSoutheast Asia in the latter half of the 1970s, we followed
suit, building our first overseas manufacturing andprocessing base in Singapore. And as our customers in theoffice automation (OA) and automotive industries
broadened their businesses globally, we expanded our
network of trading companies and manufacturing andprocessing bases in Southeast Asia, China, and Mexico.
Many of our major customers have production basesaround the world and need supply and distribution
services for materials of the same quality.

What are plastic compounds?
Kneading and coloring
pigments, additives,
other resins, etc.
Base resin

Plastic compounds
Coloring, addition of weather
resistance function, etc.

Product
Development

Networking
capabilities
with a network of locations
and a strong customer baseFinanceBusiness model for the plastic compound business
Asia

Local factoryof resinmanufacturer

Base resin

Strengths

North America

Inabata’s local
trading operation
andcompounding
factory

Plastic
compoundproducts

Expertise

Based on a spirit of “love (ai)” and “respect (kei)” whichholds people in high regard, we have high ethicalstandards and passionate aspirations. We approach
problem-solving from a global perspective and endeavor
to be trusted by our clients to become their best partners,
and the source of our sustainable value is our team ofengaging people with high levels of interpersonal skills.

The source of our value creation is the most up-to-date
information, obtained by staying close to our customers.
We add value to the information we steadily collect fromdaily sales activities from macro and micro perspectives,and provide value by leveraging our strengths.

Networking capabilities

Our financial base

Our value creation is supported by a customer base of
more than 10,000 companies, built up over more than 130
years, as well as our network of trading companies andmanufacturing and processing bases, which has grown toapproximately 60 locations in 18 countries since the1970s through proactive global expansion.

A strong financial base is necessary to provide financing
functions to meet clients’ challenges, such as reducing
capital burden and avoiding foreign exchange risks. For
the NC2023, we will maintain our financial soundness bytargeting a net debt-to-equity ratio of 0.5 times or less.

Local factoryof resinmanufacturer

Base resin
Relatedmaterials

PeopleLocal factoryof parts
molding
manufacturer

Inabata’s local
trading operation
andcompounding
factory

Automotive,
OA, homeappliances

Plastic
compoundproducts

Local factoryof parts
molding
manufacturer

Relatedmaterials

Mainlyautomotive

Immediate response to customer transfers to otherlocations possible through information sharing

Information sharing on
customers and markets

Updated information on customers andmarkets through compounding business contributes
to expansion of trading businessInformation sharing on
customers and markets

Japan
Inabatahead office

Resin manufacturer’shead office

Collaborative value leveraging
specialized knowledge andnetwork of bases

Providing diverse value
through one-stop service
Manufacturer ofmolded parts

Product manufacturer’shead office

Having a manufacturing function enables us to gain more in-depth access to our customers’ production plans, new product development,
and other information, which is a huge strength in the trading company business.
* Of the 680.9 billion yen in consolidated net sales for FY2021, sales in the plastics segment amounted to 316.2 billion yen (46.4%).

17 Inabata Integrated Report 2022

Inabata Integrated Report 2022

18

Our Company Business Model
Business Model Example

Trading2

Business Model Example

Collaborative
creation

Vertically integrated businessin the food sector (Awaji Island Project)

Against the backdrop of a declining and aging population,
the number of workers in Japan’s agriculture and fisheryindustries is continuing to decline. We view this situation
as a business opportunity, and we are working to develop a“vertically integrated business” in the food sector in
conjunction with our local partners.
The Inabata Group’s integrated management ofagricultural and fish products—from procurement toprocessing, transportation, and sales—not only optimizes
the process, but also improves their added value anddevelops new sales channels. By expanding thesebusinesses, we hope to contribute to the revitalization of
the local economy.
As an example, our consolidated subsidiary, Inabata Fine
Tech, is currently moving forward with two projects on
Awaji Island in Hyogo Prefecture. In recent years, fish hauls
in the Seto Inland Sea to Osaka Bay, where Awaji Island islocated, have been sluggish for reasons such as rising sea
water temperatures. The company therefore establishedthe themes of creating local employment, securing stable
income for fishery businesses, and developing new fisheryresources on Awaji Island for these projects. The company
is working to develop sustainable businesses which offer
Awaji Island-branded processed seafood products throughcollaboration with local fishing cooperatives andprocessing companies.

Trading

3
Logistics

Own warehouse operationin Indonesia

In Indonesia, which has seen remarkable economic growth
in recent years, the logistics infrastructure had not kept up
with the rapid increase in the flow of goods, and the problemof overdue deliveries had become a serious problem.

• Awaji Island Wakame Seaweed ProjectWith the cooperation of a local seafood processing
company and a fishery cooperative, Inabata Fine Tech
conducts integrated and systematic cultivation of wakame
seaweed, supplies safe and reliable products, creates local
brands, and develops new sales channels. The company isalso working to minimize loss by developing products
which utilize the parts of the seaweed that go unused.
• Awaji Island Shirasu Baby Sardine Project
We purchase basic ingredients from fishing cooperatives
on Awaji Island and conduct integrated management of allprocesses, up to product processing, with the cooperationof local fishery processing companies. We have also
introduced color sorting machines to improve quality andare working on development of value-added products, suchas kit products for prepared food items by volume retailers.

Inabata Indonesia set up large warehouses with a storage
capacity of 5,000 tons to solve this problem in 2016, and it
has expanded them even more at present, managing
warehouses with a scale of 10,000 tons. It has developed a
new warehouse business in Indonesia by managing its own
inventory storage and transportation of plastics products,
which was earlier being outsourced to local warehouses.

the industrial park. To improve the efficiency of logistics, thecompany carefully selected a site where it would bepossible to consolidate warehouses for inventory storage.
Moreover, the company was also able to achieve the samelevel of logistics management as in Japan and meetcustomer expectations by using a warehousing company
with which we have a long relationship of trust in Japan as
our local partner for our own warehouse operations.

If the logistics route is complicated, such as going throughmultiple locations, it can adversely affect the efficiency ofdesign in the production process. To eliminate theseconcerns, the company selected an optimal location for
constructing the warehouse. The ground at the site is stable
and located along the main road connecting the port andInabata’s warehouse (Indonesia)

Logistics solutions using our own logistics warehouses
BeforeSupplier:
Resin manufacturer

Warehouse

After
Parts molding maker:
Local factory

Supplier:
Resin manufacturer

Parts molding maker:
Local factory

Inabata’s
local
warehouse

Shirasu Baby Sardine Project

Fishery cooperatives
on Awaji Island

Direct purchasing
Expansion of sales channels

Basic
ingredients

Inabata
Fine Tech Co., Ltd.
Cooperating factories on the island(processing, sorting, pH adjustment)
Improved quality control throughmeasures such as the introductionof color sorting machines

Consigned processing

Products

Products

Volume retailers
Convenience stores
Food service
providers
Process
manufacturers

Ensuring safe products while simultaneously promoting
and encouraging the use of local products
By leveraging the combined strengths of the Inabata Group, which has offices throughout Japan and overseas, we are expanding sales
channels for our products and proposing new applications.

19 Inabata Integrated Report 2022

Consolidating warehouses that had been scattered across locations
to cover all the steps up to product storage in-house
Before establishing our own warehouse operation, we were using five warehouses belonging to local warehousing companies.
However, by consolidating our own warehouses to three locations, we have greatly improved our logistics efficiency. This has not only
solved the problem of delayed deliveries but has also enabled us to respond with even shorter delivery times.
Inabata Indonesia has succeeded in differentiating itself from its competitors as a sales agent capable of storing customers’ products
at its warehouse.

Inabata Integrated Report 2022

20

Strategies Message from the President

We will continue to aspire toward sustainable growth,in order to be a trading company that is neededby society in a timeless way.
Business performance for FY2021

Achieved record sales and profits, and exceeded
the final target for the NC2023 in the first year of
the plan

Katsutaro Inabata
President

In April 2021, we launched our three-year medium-termbusiness plan, the New Challenge 2023 (NC2023), whichis the second stage for our long-term Vision, the IK Vision
2030. In FY2021, the first year of the plan, the U.S. and the
EU region showed increasing signs of an economic rally as
the spread of COVID-19 infections subsided. In China, theoverall economy has been improving, despite the impactof factors such as the city lockdown in Shanghai.
Meanwhile, in Japan, although the recovery of consumer
spending, employment, and other sectors has been
delayed, the economy is on a recovery trend as corporate
earnings continue to improve.
Amidst these circumstances, in order to accomplish theNC2023, all Group companies worked together toimplement key initiatives, which included further
developing our core businesses such as information &electronics and plastics, strengthening development inmarkets with future growth potential such as mobility andnew energy, and reviewing our strategically held shares.
As a result, our consolidated net sales in FY2021, reacheda record high, a significant recovery from the previous
fiscal year, when they suffered a decline due to the impact
of COVID-19. In terms of profit, operating profit, ordinary
profit, and net profit each reached record highs, eventhough it was the first year of the three-year plan, andexceeded the targets for the final year, FY2023.
In light of these recent business conditions, changes in thebusiness environment since the NC2023 was formulated,
and future prospects, we have taken our target figures andindicators for FY2023, and revised them upward.

Business environment and market outlook

A difficult year for the company due to soaring
prices for resources and energy, as well asa backlash from the strong performance ofthe previous fiscal year
With COVID-19 still far from over and the growing impactof the situation in Ukraine on the global economy, it isexpected that the business environment for FY2022 will

Net sales

Operating profit(Billions of yen)(Billions of yen)

1,000

577.5

680.9

25.0

800.0

730.0

19.5

FY2021

FY2022(forecast)

14.9
12.5

500

0

20.5

20.0

FY2020

FY2021

FY2022(forecast)

0

FY2023(target)FY2020

FY2023(target)NC2023Business performance for FY2021
Net Sales

¥
ROE

680.9

12.8

billion¥

20.0

billion

0.17

¥

21.6

times

¥

billion

45.0

22.3

billion(Reference) Exchange Rate

Equity Ratio

Net D/E Ratio*%

Net Profit

Ordinary Profit

Operating Profit%

US$1 =

112.39¥* Net D/E ratio = (interest-bearing debt − cash and deposits) / equity capital

21 Inabata Integrated Report 2022

Inabata Integrated Report 2022

22

Strategies Message from the President

Post-revision targets for the final fiscal year of the NC2023 (FY2023)
Net Sales

Operating Profit

800.0

¥

billion

20.5¥

Ordinary Profit

Net D/E Ratio

ROE

10

% or more

0.5¥

billion

21.5

Net Profit

40–50

Approx.

billionAssumed Exchange Rate

Equity Ratio
times or less

22.5

¥

billion%

US$1 =

120¥

Key initiatives for the medium-term business plan NC2023
1. Further development of core businesses andhorizontal expansion into growth sectors

4. Further improvement of global management
information infrastructure

2. Multi-faceted approach to markets with potential
for future growth and steady monetization efforts

5. Continuous review of assets and further improvementof capital and asset efficiency

3. Intensification of investment targeting future growth

6. Enhancement of human capital utilization efforts

remain even more uncertain. Furthermore, it is possiblethat the transitory factors that contributed to ourstronger-than-expected performance in the previous fiscal
year—such as continued high-level production of flat
panels, which is expected to exceed actual demand fromflat panel manufacturers, duplicate orders in anticipation ofshortages of semiconductors and raw materials, andstockpiling of inventory—have subsided, and there may be
a coming backlash.
We have positioned FY2022, as a “year to take onchallenges” in order to overcome this complex and
uncertain situation, and reach a new stage of growth.
Rather than being satisfied with our current good
performance, the entire group will make sure to
implement the key initiatives of NC2023 with a greater
sense of urgency to achieve the targets for the final fiscal
year, which were revised upwards.

NC2023 key initiatives

Promoting the sustained expansion of corebusinesses and the establishment of future
growth businesses
There are six key initiatives in the NC2023. I would like toexplain the three pillars of our growth strategies: further
development of core businesses and horizontal
expansion into growth sectors, a multi-faceted approachto markets with potential for future growth and steady23 Inabata Integrated Report 2022

monetization efforts, and intensification of investment
targeting future growth.
With regard to further development of core businesses
and horizontal expansion into growth sectors, our sales offlat panel-related materials increased amid continued
growth in demand for PCs and information equipment,
and sales of new materials related to organic LEDs grew,particularly for smartphones. As the businessenvironment remains difficult, with automobile
companies revising their production plans downward dueto the COVID-19 pandemic, we are steadily increasing ourshare of major products in the automotive and mobility
fields, including electronic device materials for in-vehicle
use and resins for vehicle-related parts. We will continue
to develop our core flat panel and automotive-related
businesses, and at the same time, strengthen our
expansion into growth areas, such as next-generation flat
panels and materials for electric vehicles (EV) and plug-in
hybrid electric vehicles (PHEV).

Going forward, we intend to further enhance theseenvironment-related businesses. As part of these efforts,
we have launched a recycling business for plastics
products. Although it is not yet a large-scale business, wehave established collection networks at the regional level,in cooperation with logistics companies, to manufactureand sell recycled raw materials and products. In the future,
we plan to establish this as a circular business model andexpand it to other regions, including areas outside Japan.
With regard to the third initiative, intensification of
investment targeting future growth, the Business Planning
Office was established in July 2021 as a new head officeorganization to search for investment projects from a
broader perspective, in addition to the conventional search
for investment projects spearheaded by the sales
department. In collaboration with outside consultants, we
screen a wide range of investment opportunities, andresults are beginning to show, with several investment
opportunities emerging that we had heretofore notencountered. After carefully considering risks andopportunities, as well as the cost of capital, we intend toutilize the funds created through measures such as the
reduction of strategically held shares to proactively makeinvestments that will lead to the expansion of our trading
company business.
In our long-term Vision, the IK Vision 2030, we laid out agoal of having at least one-third of our sales and operating
profit from business segments other than the Information& Electronics and Plastics segments, but instead, thepercentage of sales and operating profit from theInformation & Electronics and Plastics segments has
increased as a result of engaging in the aforementioned
growth strategies. However, this is also a sign that there
are still many new seeds for growth in the Information &Electronics and Plastics segments. On the other hand, I
feel that we are seeing an increase in projects which cut
across segments, such as the Environment and Energy,
Automotive and Mobility, and Life Science and Medical
fields. Since segment classifications are not necessarily
absolute, our policy is to focus on strengthening lateral
cooperation between segments and steadily nurture theseeds of new businesses, rather than adhering to
numbers like “one-third.” Going forward, we would like topursue an optimal business portfolio, with an eye toward a
reorganization of our segment classifications.

Strengthening our management foundation to
support sustainable growth

Transitioning to a company with an audit andsupervisory committee, and implementing
further improvements to supervisory functions
We have been striving to make improvement of our global
management information infrastructure as part of ourefforts to strengthen our management foundation to
support sustainable growth. We plan to create an

As for the markets with potential for future growth in thesecond initiative, the commercialization of renewableenergy-related businesses is progressing on schedule.
Specifically, we are working on products such ascomponents and materials for systems for photovoltaic
power generation and storage, as well as biomass fuelsales. Furthermore, we have also entered the hydrogenenergy field through activities such as domestic sales ofhydrogen generators and fuel cell systems fromoverseas ventures.

Inabata Integrated Report 2022

24

Strategies Message from the President

those targets an objective in itself. Led by Director
Hagiwara, who joined the Board of Directors in theprevious fiscal year, we have set up opportunities forengaging in dialogue with women in Staff positions(career-track employees) and also with theirsupervisors. If, through these efforts, we all develop amutual awareness of the environment for each of ouremployees to maximize their potential and the issues
they face, then continue to work steadily to resolve
those issues, we believe that the entire company will
be revitalized.

Composition of the Board of Directors

Directors(excluding audit and supervisorycommittee members)

7

Directors(audit and supervisorycommittee members)

4

Percentage of Independent
Outside Directors

55%(6 out of 11)

OutsideDirectors

environment that enables seamless handling ofmanagement information both domestically andinternationally in conjunction with the renewal of our coresystems in Japan.
We are also working on the use of RPA (Robotic Process
Automation) mainly at overseas offices, and at present, wehave deployed it to part of daily operations at several
offices. We are seeing steady results in areas such as theautomation and streamlining of inventory management,
and going forward, we plan to expand the number oflocations where the system is installed, while aiming foreven more effective utilization. We will make active use of
these latest technologies to promote digital transformation(DX). In the future, we will further enhance the Group’s
trading company functions by establishing a system thatcan respond in a prompt and flexible manner to customers
placing and receiving orders in complex ways.
Furthermore, enhancing and improving corporate
governance is another important management issue. We
have been continuously working to make improvements,
and in order to further strengthen the supervisory function
and further accelerate management decision-making, we
made the decision to transition from a company with anaudit & supervisory board to a company with anestablished audit and supervisory committee, which wasapproved at the Ordinary General Meeting of Shareholders
in June 2022. After the transition, the majority of the Boardof Directors will consist of outside directors, and we would
like to strengthen the Board’s supervisory function in its
capacity as a monitor of business execution, which willlead to further enhancement of corporate value.
In addition, we will continue to focus on efforts to ensure
diversity on the Board of Directors.
Furthermore, we are also focusing on reviewing ourholdings and further streamlining our funds and assets.

25 Inabata Integrated Report 2022

OutsideDirectors

During the three-year period of the NC2023, we intend to
reduce the balance of strategically held shares by 50%,
relative to the remaining balance as of March 31, 2021.
This plan is progressing as planned in the first year of theNC2023. In addition, we have added a new policy to
reduce our strategically held shares by 80% over the
next five years through March 31, 2027. We intend toallocate the profit from the sales to investments aimed at
growth and enhanced shareholder returns from along-term perspective.

Promotion of sustainability management

Through our business activities, we will work tosolve a variety of issues and contribute to
making a sustainable society a reality
People come first, based on the spirit of “love (ai)” and“respect (kei),” and together we strive towards
contributing to the development of society. This is the
management philosophy we have adopted, and we havecontinued to manage our business with a respect forpeople which is based on trust. We believe that thisphilosophy of respecting people and society cancontribute to making a sustainable society a reality, whichis the goal of the world today. Based on this management
philosophy of respect for people, that we have held since
our founding, and in order to contribute to addressing abroader range of social issues through our businessactivities and achieve sustainable growth, we establishedthe Sustainability Basic Policy in November 2021, andidentified the materiality (important issues) among
various environmental and social issues that we should
address in June 2022. Going forward, we plan toestablish specific numerical targets and action plans foreach issue of the materiality and incorporate them into
our management plan.

Climate change and other environmental issues are
long-term risks that will have a significant impact, not only
on our company, but on society as a whole. We believethat it is our company’s responsibility as a corporate citizen
to make Group-wide efforts to reduce greenhouse gas
emissions, reduce waste, and recycle resources. At thesame time, the trend toward a decarbonized and circularsociety is also a business opportunity for us. We intend tofurther expand businesses that contribute to reducing ourenvironmental negative impact, such as renewableenergy-related businesses and sales of recycling-oriented
materials and products.
Another important long-term issue is training andenhancing human capital. For a trading company whose
greatest management resource is our people, the greatest
risk is an inability to develop human resources. Starting
this fiscal year, we launched a system to broaden career
path options by introducing an internal open recruitment
system and an FA system. We have also changed ourapproach to training younger employees newly graduatedto a method in which employees are given experience inboth sales and administrative offices each year after joining
the company in order to cultivate their overall capabilities.
We also plan to introduce an overseas trainee system foryoung employees, although its introduction has been
delayed due to the COVID-19 pandemic.
Diversity promotion is also an indispensable element formaking the most of our human resources. We have set
numerical targets for the ratio of women in management
positions and the ratio of women in staff positions(career-track positions) as indicators for the promotion of
the active advancement of women, but unfortunately, thenumerical targets themselves are not high, nor is achieving

In addition, in order for employees to remain active andenergetic, it is essential for them to be in good physical andmental health, and to have a work environment that allows
them to work flexibly according to their individual
circumstances. We announced our Health and Productivity
Management Declaration in July 2022 and also madetelecommuting—which was initiated to prevent the
spread of COVID-19—a standard system. In this way, we
will continue to focus on creating a pleasantworking environment.
We will continue to aspire toward sustainable growth inorder to be a trading company that is needed by society ina timeless way, and we ask for the continued support of all
our stakeholders.

Sustainability initiatives
October 2021
• Established the Sustainability Committee

November 2021
• Established the Inabata Group Sustainability
Basic Policy and Sustainability Code of Conduct

March 2022
• Established the Inabata Group Human
Rights Policy

April 2022
• Participated in the United Nations Global Compact

June 2022• Announced the Carbon Neutrality
Declaration 2050
• Identified our materiality

July 2022• Established the Health and Productivity
Management Declaration

Inabata Integrated Report 2022

26

Strategies CFO Interview

Policy on reducing strategic shareholdings• Reduce the balance of strategic shareholdings by
50% relative to the balance at the end of March 2021
over the three-year period of the NC2023(Continuation of our existing policy)

Kenichi Yokota
Director and Senior Managing Executive Officer
in charge of Administrative Affairs• Further reduce strategic shareholdings over the
medium to long term, and reduce the balance ofstrategic shareholdings over the next five years (bythe end of March 2027) by approximately 80%
relative to the balance at the end of March, 2021
(Addition of a new policy)• In general, we plan to allocate the capital obtained
from the sale of strategic shareholdings forshareholder returns and investment for future
growth, rather than for internal reserves

We will make proactive investments for future growth,and develop businesses with high added value thatcan demonstrate the significance of ourexistence as a specialized trading company.

Strategic shareholdings** Strategic shareholdings:
Stocks listed in Japan(Millions of yen)
60,00040,00050% reduction
80% reduction

20,000

Revised the final targets of the medium-termbusiness plan upward after achieving
our financial targets in the first year
In FY2021, the first fiscal year of our medium-termbusiness plan, the NC2023, our consolidated financial
results made a significant recovery from the previous fiscal
year, which suffered a decline due to the impact of
COVID-19. Not only did net sales and each profit category
reach record highs, but we also greatly exceeded ourfinancial targets for FY2023, the final fiscal year of the plan.
In response to these circumstances, we have revised ourfinancial targets and indicators upward for FY2023, taking
into account current business conditions, changes in theenvironment since the plan was formulated, and future
prospects, as well as the changes to our shareholder
return policy, which were announced in February 2022.
In addition to setting higher targets for net sales and eachprofit category, we have also set an ROE target of 10% ormore for capital efficiency. In order to meet the
expectations of our stakeholders and achieve sustainablegrowth as an excellent company, we have wanted toachieve an ROE of 10% or higher as a normal state of affairs
for a long time. We believe this is a feasible enough target,
given that our performance for FY2021 far exceeded our
initial forecast, and we plan to continue to sell strategic

27 Inabata Integrated Report 2022

shareholdings. We have changed our net D/E ratio target
from below 0.3 times to below 0.5 times, which is inconsideration of accelerating growth investments, but eventhe revised target of 0.5 times is quite low for a trading
company. From the perspective of maintaining our credit
rating, we believe it is a reasonable figure.
Furthermore, we have put forth a plan to reduce ourbalance of strategic shareholdings as of March 2024, when
the NC2023 will conclude, by 50% relative to the balance

Revisions of target figures and indicators forthe final fiscal year of the NC2023
InitialFY2023After revision

Net Sales¥670.0 billion¥800.0 billion

Operating Profit¥16.5 billion¥20.5 billion

Ordinary Profit¥17.0 billion¥21.5 billion

Net Profit¥16.0 billion¥22.5 billion

ROE

8% or more

10% or more

Net D/E Ratio

0.3 times or less

0.5 times or less

Equity Ratio

50% or more

Approx. 40–50%

Exchange Rate

US$1 = ¥105

US$1 = ¥120

0March 31, March 31,
2021
2022

March 31,2024

March 31,2027

NC2023as of March 31, 2021, and this plan has been well received
by our investors. This reduction has progressed as plannedin the first year, and we will aim to achieve this goal by
March 2024, but it is also a fact that 50% of our shares still
remain. For that reason, in order to further improve capitalefficiency over the medium to long term, we have added a
new policy to reduce our strategic shareholdings byapproximately 80% by March 2027, relative to the balance
as of March 31, 2021, in order to further improve theefficiency of our capital over the medium to long term.

Promoting the intensification of investment
targeting future growth, backed by our ten-year
investment track record and a robust financial baseWe have reflected on our past inability to achieve sufficientresults despite aggressive business investment, and soover the past ten years, we have had a stronger awarenessof the cost of capital and made solid business
investments, focusing on projects that are closely related
to our existing businesses and which can easily

demonstrate synergy with them. As a result, many of our
projects have generated steady returns and achieved
organic growth, while generating synergies with existing
businesses. During this period, we have also madeprogress in strengthening our financial base and achieved ameasure of legitimacy in terms of credit rating.
Furthermore, based on these ten years of achievements
and our current financial situation, we have determined that
we have entered a new stage—a stage in which we will
accelerate investment for growth—which is why one of theNC2023’s key initiatives is “the intensification of investment
targeting future growth.” We have decided to take thecourse of action of maintaining the organic business growth
we have achieved to date, while making more aggressive
growth investments going forward, including global M&A.
Given the rapidly changing environment of today, we cannot
get a full grasp of promising investment opportunities with
only the information obtained from the activities of eachsales department. We therefore established the newBusiness Planning Office in July 2021 to serve as a head
office organization responsible for screening M&A and otherinvestment opportunities. At the same time, we appointed
staff members in each sales department to serve as the
Office’s counterparts working with sales representatives in
the field, and they work together to identify new investment
opportunities and promote business planning by leveraging
each department’s expertise and network.
When making proactive investments, risk management
becomes even more important. Following a significant
write-off for doubtful accounts in FY2017, we took theopportunity to further enhance our risk management
system. For future investments, we will continue to makeinvestment decisions based on criteria for hurdle rates
and the cost of capital, in addition to closely monitoring
the progress and profitability of businesses afterinvesting in them.

Pursuing organic growth of core businesses
and the establishment of new pillars
for the next generation
In terms of our course of action for making investments,
we plan to focus on value-added business development
where we can demonstrate our strength as a specialized
trading company. For example, in the plastics business, ourentry into the plastic compounding business in Asian
countries in the 1970s is a typical example of ourcompany’s success. In addition to the functions of a
trading company—doing logistics, providing information,

Inabata Integrated Report 2022

28

Strategies CFO Interview

and making proposals—we added value by also
performing processing functions at the local level, andestablished systems which let us respond swiftly tocustomer needs in our capacity as a specialized trading
company. We then supported organic business growth in
the plastics business by responding to brisk overseas
expansions by Japanese manufacturers and implementing
phased investments. We intend to continue making
investments in these core businesses to further add value
and enhance profitability. Of course, another major theme
is to establish “next-generation pillars” following the two
major segments of Information & Electronics and Plastics.
We will therefore actively work on businesses with highadded value which capture the zeitgeist, such as a graying
society and environmental and energy issues becoming
increasingly critical, with an eye toward areas where we
can generate synergy with our existing businesses.
For example, in the Life Industry Segment, we arefocusing on the food business, which includes agriculture.
We are boosting profitability by working on businesses
that are vertically integrated from production andprocessing to sales, such as large-scale cultivation of
blueberries and garlic on our own farms.
In the environmental and energy field, we will not only
supply solar cell components and fuel for biomass power
generation, but also provide solutions to solve ourcustomers’ various issues by utilizing our advanced expertise
and wide-ranging network. Furthermore, the life science andmedical field is a niche and highly specialized business area
which is relatively safe from price competition.
In this way, we aim to achieve organic business growth inboth our core and new businesses by making proactive
investments in businesses with high added value where
we can demonstrate our unique strengths and significanceas a specialized trading company, while simultaneously
building a new growth platform for the future of the Group.
Equity ratio, net D/E ratio, ROE
FY2019FY2020

FY2021Equity Ratio

45.2%

49.2%

45.0%

Net D/E Ratio

0.16 times

0.06 times

0.17 times

7.4%

8.6%

12.8%

FY2019FY2020

FY2021

Growth Investment

1.85

0.86

1.20

Fixed Investment

2.01

2.40

2.01

Total

3.86

3.26

3.21

ROE

Investments and lending(Billions of yen)

29 Inabata Integrated Report 2022

Continuing to pay progressive dividends andrevising the total return ratio upwards, with theaim of further enhancing shareholder returns

Basic Policy on Shareholder Returns• Continuation of progressive dividends
Fundamentally, we will ensure that dividend pershare does not decline year on year by continually
increasing our dividends.

In March 2021, in conjunction with the launch of theNC2023, we revised part of our shareholder return policy
to introduce progressive dividends. In fact, we have beeneffectively paying progressive dividends up to this point,
such as maintaining the dividend amount even when net
profit was halved due to a significant write-off for doubtful
accounts, as in FY2017. However, now that we haveofficially included progressive dividends in our policy, we
have received many positive comments from investors,
who have said things such as “Progressive dividends giveme a different sense of security.”
Furthermore, we announced in February 2022 that wewould raise the total return ratio from 30–35% toapproximately 50%. This was also very well received byinvestors, and our share price has gone up, compared towhere it was prior to the announcement.

• The target for total return ratio will be set atroughly 50%.
However, in a fiscal year where a substantial amountof cash inflow has been generated by the sale ofstrategic shareholdings, we will consider future
capital needs, the company’s financial condition,
stock price, market conditions, and other factors in acomprehensive manner, and implement shareholder
returns without necessarily being bound by theabove target for total return ratio.

Dividends per share
(Yen)
150

110

115

100

Under this new policy, we will continue to focus on further
improving profitability and increasing the efficiency of ourcapital, and pursue increased corporate value with the aimof further enhancing shareholder returns.

50

0

40

48

53

63

Progressive
dividends

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023(planned)

Note: As of August 2022

Transitioning to a company with an audit andsupervisory committee and implementing further
improvements to its supervisory function
As of June 2022, we have transitioned from a company
with an audit & supervisory board to a company with anaudit and supervisory committee. This is to further
strengthen its supervisory function and to create astructure for governance that enables more rapid
management decision-making. Compared to the previous
system of a company with an audit & supervisory board, acompany with an audit and supervisory committee is agovernance structure which is more easily understood byforeign institutional investors.
All four Directors who are members of the Audit andSupervisory Committee are now outside directors, and thepost-transition Board of Directors is composed of a majority
of independent outside directors (see p. 60). By
incorporating diverse perspectives and external knowledge,
and having the Board operate in a monitoring capacity as asupervisor of business execution we aim to ensure fairness
and transparency in management and enhance corporate
value to an even greater extent. In addition, at a company

with an audit and supervisory committee, the internal
control system is used to conduct audits in a systematicway. In order to ensure that audits can be conductedreliably and smoothly, we have clarified the chain ofcommand between the Audit and Supervisory Committee
and the Internal Audit Office within the company.

Aiming for sustainable growth by contributing
to climate change solutions, while responding
appropriately to climate change risks

the company as a whole does not have major fixed assets,
which we believe enables us to respond flexibly to risks.
On the other hand, in terms of opportunities, we expect
business opportunities to increase significantly due tofactors such as the growing demand for renewableenergy and the widespread use of EVs. Whileappropriately responding to climate change risks, we willproactively work to provide materials and solutions which
contribute to solving environmental issues, such asenergy and electricity-related businesses, expanding ourlineup of products that reduce environmental negative
impact, and plastic recycling businesses.
Of course, training and strengthening our human capitaland promoting diversity and inclusion—which form thefoundation of our business continuity—are of paramountimportance to us as a specialized trading company. We
conduct employee engagement surveys because it isessential for our company’s growth that our greatest asset,
our employees, have a sense of understanding and trust in
the company and a high level of motivation. We are using
the results from last year’s survey to improve employee
engagement through continual surveys and improvements,
such as the introduction of new training programs. To
promote diversity, we are moving forward with initiatives topromote career advancement for women, such as holding
workshops for women employees in Staff positions andexplanatory meetings regarding the transition fromassistant positions (general positions) to staff positions(career-track positions). We will continue working to train
and strengthen our human capital and to create anenvironment in which diverse personnel can play an activerole, and strive to appropriately disclose non-financial
information, which includes this human capital.
Going forward, we will continue to pursue an optimalbalance between improving our financial position,
investing in growth, and returning profits to shareholders inorder to earn the support of our shareholders, investors,
and other stakeholders.

In order to accelerate sustainability management, includingthese governance reforms, we established theSustainability Basic Policy in 2021 and identified materiality(key issues) in 2022. Among these issues, contributing to a
decarbonized and circular society is an important issue thatis unavoidable if we are to survive. The Sustainability
Committee has begun to analyze and assess the risks thatclimate change poses to our company, as well as theopportunities it offers, but we recognize that there areconsiderable risks due to our involvement in agricultural
production in the food sector, to cite one example. However,Inabata Integrated Report 2022

30

Feature

Challenges

for the Future
Inabata has adopted six key initiatives
in the NC2023, our medium-termbusiness plan. We will introduce ourchallenges for what we envision for
our future, from the perspectives ofkey persons.

Challenge

1

Promoting M&A
Inabata, which adopted “intensification of
investment targeting future growth” in theNC2023, established the Business Planning
Office to be the unit which would carry out theactual work of M&A. We will introduce thepurpose for which it was established, specificinitiatives, and its prospects going forward.

Hiroyuki Hatamoto (on right)

General Manager, Business Planning Office
After serving in various roles at megabanks in Japan and overseas
branches, the credit, audit, and other divisions, he joined Inabata
in 2009. He was assigned to the Risk Management Office, where
he served as Senior Manager, General Manager, and Executive
Officer, and in July 2021, he became the General Manager of theBusiness Planning Office.

Tongtong Onuma (on left)
Business Planning Office

After graduating from a university in Dalian, China, she joined an
accounting firm. During her involvement in various M&A
activities, she encountered Inabata, which is expanding globallywith a focus on Asia. She joined the company in 2021, believingthat she could utilize her experience at Inabata for long-term
career development.

31 Inabata Integrated Report 2022

Establishing the Business Planning Office
to effectively utilize M&A investments
To achieve what we envision for our future as written in our
long-term Vision, the IK Vision 2030, we formulated the
medium-term business plan, the NC2023, in which weadopted “intensification of investment targeting future
growth” as a key initiative.
As Hiroyuki Hatamoto, General Manager of the Business
Planning Office, explains, “Until now, our basic strategy
has been one of organic growth, utilizing our existing
management resources. However, in order to achieve
what we envision for our future, it is also very effective tosecure external human resources and technology
through the use of M&A, in addition to a growth strategy
utilizing existing resources.

Our goal is to build an operational foundation for making
that growth investment a reality. Although this endeavor
will take some time, due to the highly specialized nature of
the field, we have decided to use our practical experience
as learning materials to accumulate M&A-related
knowledge and expertise across the entire company.”

Utilizing our ability to perceive business
opportunities for M&A investments
The Business Planning Office is working to create anorganizational culture that will allow sales divisions toaccumulate practical skills related to investment
operations and deploy them internally, in alignment with
General Manager Hatamoto’s statement that “Ourmedium-term goal is for sales divisions to utilize the M&A
network themselves in order to gain a foothold in finding
deals for each division, and to laterally deploy information
related to other divisions, so that the entire organization
will be able to discover new themes.”“The general M&A process consists of three phases:
sourcing, execution, and post-merger integration (PMI),”says Tongtong Onuma of the Business Planning Office,who joined Inabata in 2021 as a mid-career hire. “We
began by sourcing, that is, searching for target companies
that fit our business strategy, evaluating and analyzing
them, and then approaching the selected companies.”
With regard to sourcing, nine people, mainly young
managers, were selected from each sales division to serveas points of contact for the Business Planning Office, andtraining sessions on sourcing operations were held withthe support of outside consultants.
“In the first place, sales divisions are capable of identifying
business opportunities in the value chain,” says Hatamoto.
“The goal of this training was to have participants acquire
the knowledge and expertise they need to apply thiscapability to M&A investments.”

Devising an M&A approachthat fits Inabata’s business strategy
At present, we are repeatedly exchanging information withboth members of the sales divisions and specialist externalvendors to select specific targets to approach.
“The Business Planning Office seeks to be in communication
with both sales divisions and specialist external vendors, andfunctions as an intermediary for cross-organizational
coordination. We are currently exchanging information withinvestment banks and M&A brokerage firms to increase thenumber of deals we bring in, and sharing this information withsales divisions,” says Onuma.
Going forward, if the number of approached companies
increases steadily, we intend to finally increase thenumber of business executions—which means concluding
basic agreements, conducting due diligence, and closing
on deals—and PMI, which refers to the process of
integrating management after a deal has been closed.
Hatamoto says, “I believe that in the future, the sales
division members who participated in the project will serve
as leaders in the field, becoming hunters and growing moreexperienced with the entire process, from sourcing
operations and executions to PMI. I believe that we must
increase the number of such personnel as much as we can.”However, he states that M&A is just one method for
implementing our business strategy.
“It is important for us to determine what we truly want,whether that is human resources, technology, or businessareas, and to devise an M&A approach that fits ourbusiness strategy,” he says.
Onuma also says that M&A is just a process and what isextremely vital is monitoring after M&A.
The key point is whether the expected synergy isimplemented or not. I would like to support the M&A
activities of each sales division from this perspective, as
well,” she says.

General M&A process

Sourcing (Pre-M&A)

Execution

PMI

Making initial searches, conducting
evaluations and analyses, andapproaching target companies in a way
consistent with our business strategy

Carrying out and managing the M&A
process (approaching companies,
concluding basic agreements,
conducting due diligence, closing deals)

Integrating management after
closing deals

Inabata Integrated Report 2022

32

Feature Challenges for the Futureso, we aim to create a new market, where recycled plastic
means added value, by being able to offer stable quality,
stable supply, and safe products.

Challenge

We are currently enhancing our manufacturing facilities in
Okayama and considering further expansion to more
locations. We are also looking at overseas sales, and we
expect our sales scale in FY2025 to be more than 10 times
what it was in FY2021.

2

Contributing to
the Circular Economy

With regard to environmental issues, as a company whose
core business is plastics, we in the Industrial Materials
Dept. must not merely reduce the use of plastics, but also
propose new ways to use them. As a first step in thatendeavor, we would like to promote our business ofrecycled plastic, which is an eco-friendly product.

Resource recycling business model

Virgin plastics—Recycling Materials Business
The business of further promoting the recycling of plastic
resources has become increasingly important in response toissues such as the marine plastic waste problem, climatechange issues, and tightening regulations from othercountries on waste imports.

Large quantity of plastic
waste created byplastics manufacturers

Manufacturing
Inabata Group
manufacturing subsidiaries

2

Processing into
recycled plastic
materials at partners’
recycling plants

2

1

Recycling
Inabata andpartner companies

Shin Yoshida

3

1

Recovering product wastes

3

from other companies’ production lines

Commercialization ofrecycled plastic materials
in Japan and overseas

Deputy Senior Manager, Industrial Materials Dept., Plastics Division II
Since 1994, has been involved in the plastics industry at specialized chemical trading
companies. Worked in China from 2004 to 2011 before joining Inabata in 2013.
Currently works in the Industrial Materials Dept., Plastics Division II.

Collection of waste
products after use

44Consumption
Disposal

Attempting to create a new market whererecycled plastic means added value
With environmental awareness growing around the worldin recent years, including initiatives to accomplish theSDGs, the negative environmental impact of plastics suchas marine waste has come to be viewed as a problem.
In this context, I was toying with ideas about what I could
do as a person involved in the plastics industry, when I
noticed plastic waste that had been discarded at a client’s
factory. I wondered if it would be possible to recycle them,and this is what sparked the business.
We believe that the recycling materials business we are

33 Inabata Integrated Report 2022

working on is one of the ways for us to make a breakthroughin the current situation surrounding plastics. Over the past
few years, we have seen a growing number of owners forbrands, who value their brand image and make products
such as food, cosmetics, toiletries, and daily necessities,
say that they would like to use recycled plastic.
Our recycling materials business handles materials in a way
distinctly different from other conventional companies.
While there are variations in the type of plastics andfluctuations in quality and supply because they are typicallymeant for mass production, we are able to reduce
production losses and fluctuations in the quality of ourpelletized plastics by carefully selecting and managing theplastic waste we collect. We also test the physicalproperties and elution of the produced pellets, and in doing

Production of diverse
products and collectionof waste products

Consumers andbrand owners

Pursuing businesses that will be supported by society,in light of the global trend toward a circular economy
In September 2021, Inabata joined the Alliance to End
Plastic Waste (AEPW), an international alliance dedicatedto building a circular economy for plastics, which includes
solving the plastic waste problem. AEPW, a non-profit
organization, has established a worldwide network ofleading companies in the global plastics value chain andworks together with national government agencies,
environmental and economic development NGOs, andcivil society.

containment of plastic waste from around the world, we
will seek out businesses that will be supported by society.
Though the negative impact of plastics on the environment
tends to attract attention, we do not believe that all plastics
are necessarily bad, but rather that they are usefulmaterials. We would like to advocate for activities topromote a circular economy, from the standpoint that weare well-versed in the good and bad qualities of plastics
through our long years of business.

By utilizing AEPW as a place to obtain the latest
information on trends and technologies related to the

Inabata Integrated Report 2022

34

Feature Challenges for the Future

going forward and restart them in the future.

Challenge

3

Fostering
Global-Minded People
Inabata has established developing “global
staff ” as one of its key initiatives, and has
established an organization to promote thatendeavor. These are some of our strategies
to further enhance our greatest asset, ourhuman resources.

Hiroyuki Furubayashi

General Manager, Human Resources Office
Joined the company in April 1991 and was assigned to the
Human Resources Section, Human Resources Department,
General Affairs Office; transferred to the Sales Department
in July 1995, and subsequently held positions such aspresident of Group companies in Singapore, Vietnam, and
the Philippines. Took up his current position in June 2019.

We need the ability to tell stories toour customers and attract their interest“In the field, the most important thing is whether or not you
can provide customers and suppliers with things like newperspectives and intriguing business opportunities, and tellstories which excite customers and those around them.”That is the message of Hiroyuki Furubayashi, who is incharge of human resources, with regard to what is neededby Inabata’s human resources, who are our greatest asset
as a trading company.
“Uncertainty in social and economic situations has
increased worldwide, particularly in recent years. It isprecisely in this so-called VUCA (volatility, uncertainty,
complexity, and ambiguity) era, with unclear trends andrapid changes, that personalities who can attract customers
have become necessary.”

35 Inabata Integrated Report 2022

Developing “global staff”
through the introduction of new
systems and visualization
Based on that attitude, Inabata has been proactively
working to develop human resources. Notably, we havebeen focusing on developing “global staff,” which is also a
key initiative in the NC2023.
“Inabata has established offices in 18 countries overseas,
and we are expanding our business operations. However,naturally, each country has different values. That is why weare trying to share our sense of values—the IK
Values—with all countries around the world, in order toserve as a common standard.”
The Human Resources Department has conducted
workshops to spread the IK Values at our overseas
locations since 2018. While they were suspended by the
COVID-19 pandemic, we intend to look at the situation

We will introduce a new overseas trainee system, underwhich employees who work in Japan and are around theage of 30 will be dispatched to overseas subsidiaries forabout six months to gain experience with operations at the
local level.
“I want these employees to gain overseas businessexperience firsthand, and learn about the kinds of gaps thatcan never be filled. As they feel resigned and humbled, I
would like them to obtain the experience of giving up, if I
can say so without worrying about being misunderstood.
I am convinced that by objectifying themselves in this way,
they will bring about positive and meaningful change intheir future career development and the way they work.”
In promoting this initiative, a new Global Human Resources
Management Department was established. As Furubayashi
explains, the purpose of this new department is to provide
a “cross-organizational perspective.”“Up to this point, our human resources strategy, including
human resource development and transfers, has been
mainly led by those in the field. Of course, entrusting thesetasks to frontline personnel was not a mistake. In fact,
I believe it was a good thing. However, doing this had the
detrimental effect of creating biases in personnel allocation
and work distribution. We thought it was necessary tohave a department which would take a step back andmanage the situation from a bird’s eye view. In addition,
we decided on the name ‘Global Human Resources
Management Department,’ which means that we willcollectively manage situations across all the countries of
the world from a global perspective.”
At the Global Human Resources Management
Department, we are also moving forward with visualizing
our human resources by compiling data such as theirbackgrounds, ambitions, and plans for development.
“We would like to use this data as a resource when considering
the optimal personnel allocation for the entire company, basedon the unique traits and abilities of each employee.”

beginning in July 2022, we extended the retirement age to
65 years old, and introduced a re-employment commission
system for those who are 65 and over. “Some of ourexisting customers, with whom we have long business
relationships, ask for the experience and perspectives ofsenior employees. We will entrust such customers to senior
employees, so that younger employees can take on more
new challenges.” In addition, we are focusing on initiatives
to promote women’s participation in the workplace, such asworkshops for that purpose. “For a trading company
business like ours that handles standardized chemical
products, which makes it difficult for us to distinguishourselves, the key is how we can set Inabata apart—in otherwords, how we can add value through the charm of people
and the ideas they have—and I believe that women’s
perspectives are important in this regard.” In order tosupport diverse work styles, a new system has been
introduced that allows employees to balance work andchildcare and work and nursing care. According toFurubayashi, this is because diversity is also necessary forthe development of a trading company business.

Utilizing the employee engagement survey tocontinue enhancing our systems and culture
The employee engagement survey, launched in 2021, wasconducted again in 2022.
“We have improved both our response rate and our scores.
However, our goal is not to increase the engagement rating,but to learn where we are lacking, to construct or improvesystems, and to engage in organizational development.”
The 2021 survey showed that our education and training
has been inadequate, so we are increasing our investment
in human resources, enhancing development for generalemployees and managers, and providing career training.
“I believe that the amount of money we spend on each
employee will increase accordingly. However, we have todevelop our people in order for the company to grow.”
Finally, Furubayashi had this to say in response to thequestion, “What is the goal of Human Resources?”

Promoting diversity adds value
to the trading company business
Diversity is one more thing that our company has been
actively promoting in recent years. In order to make working
easier for all employees, regardless of age and gender,“I believe that there is no set time goal for people to grow.
I believe that it is our role as the Human Resources team tocontinue maintaining and enhancing the systems andculture which enable each of our employees to work happily
and energetically with an autonomous and independent
viewpoint, and to really feel that they are growing.”

Inabata Integrated Report 2022

36

Business Overview Reports by Segment

Information & Electronics
With display components, digital printing materials,
materials for semiconductors and other products as our
income-generating pillars, we are also venturing into
new fields such as agriculture, automobiles, and life
sciences. We are also focusing on IoT and renewableenergy-related products, which are expected to grow in
the near future.

Initial plan for the first year of the NC2023

226.0 billion Operating profit ¥5.05 billion

Sales ¥In the area of components for flat panel displays, a profit
driver for our business, we are focusing our businessresources on the Chinese market to expand sales of
LCD-related materials such as polarizing plates andalignment films, as well as light-emitting materials andother OLED-related materials, as each display manufacturer
shifts their production bases to China. Alongside this effort,
we are also responding to new materials fornext-generation displays, such as micro-LED materials.
Regarding to digital printing-related products, anotherprofit driver, we will continue to focus on industrial inkjetmaterials, which are expanding. For toner materials, wewill also work on new materials to comply with theincreasingly strict environmental regulations in Europe andother regions and expand sales of products with reduced
environmental negative impact. At the same time, we will
steadily increase our profits from materials for consumer
inkjet printers and office-use multifunction peripherals(MFPs) and printers, which have been the main stay of ourbusiness, while monitoring demand conditions.

Operating profit(Billions of yen)(Billions of yen)

224.5

247.7

8

6.32

Toyohiro Akao

Masahiro Sugiyama

Director,
Senior Managing Executive Officer

Director,
Managing Executive Officer• In the solar cell and rechargeable battery-related business, sales ofrelated materials increased.

100

FY2020

FY20210• In the LED-related business, sales of related materials increased.

• In the photocopier-related business, sales of related materials increased.

6.42

4

0

• In the LCD-related business, sales increased due to strong production ofpanels for TVs and notebook PCs.
• In the inkjet printer business, sales in the consumer field were strong,
due to continued demand for home printing.

200

FY2020• In the semiconductor and electronic components business, sales ofrelated materials and semiconductor equipment were strong.

FY2021Business environment and strategies

market—as sales of certain components are growing
dramatically. We will also continue to promote initiatives forhydrogen production equipment and fuel cells for mobility,with an eye toward expanding the market going forward.
Renewable energies, which are attracting increasing
attention worldwide, are situated as a business that willplay a key role in our future growth. Notably, sales of solar
cell-related materials and components to overseas panel
manufacturers in China and other countries are growing.
We are also focusing on biomass power generation, whichis expected to generate stable profits over the long term as
a business that contributes to the reduction of CO2
emissions. In the future, we will supply wood chips andother materials, and aim to establish a supply chain forbiomass power generation with electric power companies
and partner companies.

Displays

Profit drivers• Materials related to flat panel displays• Digital printing-related products

Digital printing

Semiconductors and 5G

Business environment (Continued growth of theChinese market
Expansion of display partsfor automobiles
Addressing intensifying
competition and changes in trends

Expansion of the industrial
inkjet market
Advancement of paperlessenvironments

Opportunities

Environment and energy

Risks )

Expansion of IoT- and
MaaS-related markets
Intensifying global competition

Increase in global interest in
renewable energy
Addressing variations in related
laws and regulations in different
countries and regions

Strengths• Collaboration with major Japanesematerials manufacturers• Top-level information network ineach industry as a trading company• Specialized skills in mask blanks,
which is one of our key products• A wide array of renewableenergy materials• A global network to maintain closeness with customers and the capability ofproviding processing and distribution services

Activities and strategies• Fully utilize business resources
focused on the growing Chinese
market• Expand product line-up centeredon components related to displays• Set up at the earliest possible
opportunity a supply system fornew materials with rising demand• Start new transactions withmaterial makers and expand
product line-up• Expand product line-up forautomobiles and strengthen supply
system• Expand our handling of 5G-relatedmaterials• Start multidimensional new
businesses catering to different
regions and needs• Develop employees withspecialized knowledge

Growth drivers• Materials related to lithium-ion batteries• Renewable energy

From the frontline of business in NC2023 focus areas

In the area of materials related to semiconductors and5G—where mask blanks are our main products—we arefocusing on sales of advanced electronics products andother products, as well as initiatives in new fields, such as
materials for power semiconductors. We will aim toestablish new businesses in the IoT and MaaS-related
markets, which are expected to grow.

NC2023 targets (after revision)200

6

We will continue to expand sales of lithium-ion
battery-related products—one of the growth drivers for the
future of this business, amidst the rapid growth of the EV

100

3

2

0

0

0

37 Inabata Integrated Report 2022

Sales
300

Goals and strategies for the NC2023 medium-term business plan
Focusing on developing and expanding sales of
new products such as products and materials
with reduced environmental negative impact• Sales and operating profit both exceeded the figures in the initial planand the targets for the final year.

Segment performance overview

Sales

Operating profit andprofit ratio
Operating Profit(Billions of yen)
300

247.7

273.0 284.0

FY2021 FY2022 FY2023
Actual Planned Target

Profit Ratio(Billions of yen)
9

Environment and energy sector: Lithium-ion batteries

6.42

(%)
6

6.20 6.30
4
2.6
2.3
2.2

FY2021 FY2022 FY2023
Actual Planned Target

At present, the world is in the process of shifting from gasoline and diesel vehicles toelectric vehicles. The accompanying demand for lithium-ion batteries has grownsignificantly as a result, and we are selling battery materials used in lithium-ion
batteries to major battery manufacturers. Since we must deal with strict quality,
cost, and delivery requirements for automotive batteries, we are providing logistics
support and building a supply system accompanying factory localization ofJapanese manufacturers.
We will continue to aggressively expand our customer base for existing lithium-ion
battery-related products and develop new products to handle.

Hiroaki Kawase
Sales Section I,
Sales Department III
Information & Electronics
Division III

Inabata Integrated Report 2022

38

Business Overview Reports by Segment

Chemicals

Initial plan for the first year of the NC2023

With firm roots in our founding business of dyes, we deal in chemicals that serve as aplatform for all kinds of industries. We have a track record of separating businesses
that show growth and pursuing new potential. We paved our way into global markets
when the domestic market matured. In April 2019, we integrated the Housing & Eco
Materials Division, which was dealing with materials that are close to final products, toprovide optimum products and services to the entire value chain.

68.0 billion

Sales ¥

Masahiro Sugiyama

In the area of functional chemicals, the profit driver for thisbusiness, which centers around raw materials for resin andadditives, there are increasing opportunities for proposals to
help customers secure alternative products against a
backdrop of global logistics disruptions, such as container
shortages. In addition, environmental regulations are
becoming stricter, and there is a trend of customers searchingfor alternative suppliers to their existing suppliers, who areunable to meet these regulations. In this environment, we will
make proposals that take advantage of our global
procurement capabilities, network of bases, and ability tocoordinate information with other businesses. In conjunction,
we will enhance our manufacturer functions and expand ourbusiness by promoting initiatives to strengthen our structurewith an eye toward acquiring suppliers. In addition, we will aim
to expand our business by supporting the overseas anddomestic sales of major manufacturers with whom we haveconcluded exclusive distributorship agreements.
In the area of business related to coating (paints and inks),
which is another one of our profit drivers, raw materials forurethane coatings for automobiles are continuing to growglobally. We will build a global structure forcooperation—mainly through our own processing plants in
China—and increase the number of contract processing
companies in other countries in order to accelerate growth.

39 Inabata Integrated Report 2022

(Billions of yen)(Billions of yen)

66.6

78.6

3

60

2

30

1

FY2020

FY2021

0• Sales of automobile component materials were strong.
• Sales of paint, ink, and adhesives for construction applications werestrong.
• Sales of chemicals for paper manufacturing were strong for sanitary
paper and corrugated containerboard.

2.20
1.32

FY2020• Sales of raw materials for resins and additives weregenerally strong.

• In construction materials, sales of European timber were strong as thenumber of housing starts recovered.
FY2021Business environment and strategies

sheets coated with functional optical films for antireflection
and other applications. In order to realize a circular economy
in the automotive industry, we will continue our efforts tobuild a circular business model in collaboration with the
manufacturers to whom we supply products.

Functional chemicals

Automobile component
materials

Coating materials
Business environment (We have positioned new products, including eco-friendly
resin materials, as a long-term growth business to meet
recycling needs. In addition to switching to biodegradable
resins for packaging materials, we will continue to expand ourbusiness in a variety of areas including coating and adhesivematerials, as well as materials for packaging paper itself basedon the demand for companies to switch to paper packaging.
With regard to construction materials, we are working to
expand direct transactions with major house makers andconstruction materials manufacturers, and also providing
support for the establishment of export sales systems. In
addition, we are enhancing our proposals for eco-friendly
materials by leveraging our domestic and overseas networks.

Increase in demand centered on
Increase in need for materials anddeveloping countries
new formulations in light ofenvironmental regulations
Response to global industrial
Unstable supply of materials andrestructuring
price fluctuations
Sales demand from foreign makers

Opportunities

Construction materials

Risks )

Expansion in demand for new
materials along with the structural
revolution of automobiles
Supply instability and price hikes
due to logistical dysfunction
Industry-specific quality control
standards and responsibility of supply

Need for construction anddistribution innovations in light oflabor shortage
Sluggishness of the domestic
marketEnhancing awareness of the circular economy

Strengths• Knowledge of chemicals and a customer base nurtured over 130 years• Organize a global supply chain suitable for our customers• A wide range of products and materials spreading from upstream to downstream• Local handling through overseas manufacturing and processing bases of the Group

Activities and strategies• Develop and offer new materials
and new formulation solutions• Accelerate overseas expansion
using the Group’s strengths• Strengthen BCP structure• Collaborate with Japanesecompanies expanding overseas• Expand business by leveraging
consigned production andprocessing companies• Expand EV-related products andmulti-display-related products
and materials• Build a circular business model• Collaborate with major housemakers and building materials
manufacturers for domestic andinternational expansion• Propose a supply chain leveraging our strengths

Profit drivers• Raw materials for resins and additives• Business related to coatings (paints and inks)

From the frontline of business in NC2023 focus areas

Growth drivers• Business related to automobile component materials• Eco-friendly raw materials for resin

Mobility sector: EV-related products

NC2023 targets (after revision)
Sales

In our business related to automobile component materials,
which is a growth driver, we will expand our lineup ofcomponents and our sales of materials for lithium-ion batteries
and related products to a wider range of customers, including
materials for battery thermal interfaces, in the EV market,
which continues to be healthy. In addition, demand forin-vehicle multi-displays, for which screens are becoming
larger and more irregularly shaped, is growing, particularly inEurope. We are expanding sales of curved glass and resin

Operating profit

0

Goals and strategies for the NC2023 medium-term business plan

1.20 billion

Operating profit ¥

Sales
90

Director,
Managing Executive Officer

Making proposals that leverage our global
procurement capabilities and network of bases,
and promoting sales expansions for eco-friendly
products• Sales and operating profit both exceeded the figures in the initial plan andthe targets for the final year.

Segment performance overview

Operating profit andprofit ratio
Profit Ratio

Operating Profit

119.0(Billions of yen)
120

78.6

83.0

(Billions of yen)
3

80

2

40

1

0

FY2021 FY2022 FY2023
Actual Planned Target

0

2.20

2.60

2.00
2.8
2.4

(%)

2.2

6
4

The shift to EVs in automobiles has been accelerating in recent years. Moreover, withthe abundant use of electronic devices in in-vehicle components, an unprecedented
variety of needs and issues have become apparent. Amidst such circumstances, I am
creating businesses by proposing new items and technologies to users, such asmeasures to deal with the heat generated by electronic devices such as batteries,
larger and curved automotive displays, and sustainable materials for the future of the
global environment. In the automobile industry, which is undergoing a
once-in-a-century transformation, we are taking on daily challenges in collaboration
with members of our overseas bases in order to propose solutions that only a company
such as Inabata, which specializes in chemicals, can provide.

Keita Endo
Mobility Chemicals
Department
Chemicals Division2

FY2021 FY2022 FY2023
Actual Planned Target

0

Inabata Integrated Report 2022

40

Business Overview Reports by Segment

Life Industry

Initial plan for the first year of the NC2023

After handing over the pharmaceuticals business to Sumitomo Pharmaceuticals Co.,
Ltd. (now Sumitomo Pharma Co., Ltd.) in 1984, we began selling pharmaceuticalsubstances as our main business in this field. The origin of the food business goesback to the sale of cornstarch to the food industry. In 2012, we launched the life
industry segment because we believe that medical products as well as food products
contribute to creating a healthier and more comfortable life for consumers.

Another profit driver for this business is the food productbusiness. In the frozen agricultural products business, we willcontinue to expand our initiatives with mass merchandisersand home delivery as the main focus, based on the growing
sales of frozen vegetables and fruit—such as domestically
produced spinach and blueberries from overseas—which are
driven by stay-at-home demand. In the area of processedmarine products, sales of Japanese and Southeast Asian
products to major U.S. supermarkets have been growing at
DNI Group, LLC, a U.S. company that became our subsidiaryin 2020. In the North American market, the Inabata Group’s
trading functions will be linked with its U.S. subsidiary to
promote the expansion of products we handle and theintroduction of new products, in order to further increase
profits. In addition, the construction of new business models
in the food processing and agriculture areas is essential forthe further growth of our food product business. In the
upstream area, we will get blueberry and garlic production
and a direct sales business off the ground in Hokkaido. We arealso working to further add value and differentiate ourselvesfrom others through measures such as ensuring traceability
from production to sales in wakame seaweed cultivation andwhitebait processing, which are also contributing to therevitalization of the Awaji Island region. Going forward, we willcontinue to strengthen our manufacturing and processing
functions through business alliances with other companies,

41 Inabata Integrated Report 2022

• In the life science business, sales of cosmetic substances and materials
for daily goods were strong.

Sales

Operating profit(Billions of yen)(Billions of yen)

• Domestic sales of pharmaceutical substances were weak, partly due tothe impact of COVID-19.

60
40

Toyohiro Akao

Goals and strategies for the NC2023 medium-term business plan

Sales of materials for medicines, the profit driver for thisbusiness, have been weak, as the frequency of hospital
visits by patients with minor illnesses has been declining due
to the impact of COVID-19. There are also negative factors
with regard to materials for home products, such as thesoaring prices of materials from China and unstable supply,
but we will implement new initiatives, which includes
introducing multiple suppliers, promoting alternative material
proposals, and starting to deal with new products, such as
testing equipment for infertility treatment patients.

Operating profit ¥38.8 billion

Sales ¥

Director,
Senior Managing Executive Officer

Pursuing a wide range of profit-making
possibilities, with food products andadvanced pharmaceuticals as growth drivers• Operating profit exceeded the figure in the initial plan and the target for
the final year, due in part to strong sales of seafood products in the UnitedStates.

Segment performance overview

37.3

38.2

20
0

1.90 billion
2.61

3
2

1.56

1

FY2020

FY20210

FY2020

FY2021• In the food product business, sales of processed marine products recovered.
Sales of processed products intended for conveyor-belt sushi were strong. In
the U.S., sales of seafood products increased due to a rapid recovery in therestaurant industry.
• In the agricultural products business, sales of frozen vegetables and fruit
for mass merchandisers and home delivery were strong.

Business environment and strategies

investments, and other measures. Alongside these efforts,
we will add depth to our profits by being widely involved insales channels from upstream to downstream throughinitiatives such as expanding private brand productconsignment, developing our own branded products, andconsidering the launch of an e-commerce (EC) business.

Pharmaceuticals

Home products
Business environment (Expansion of advanced medicine andregenerative medicine markets
Unstable supply of materials and soaring prices

In the area of advanced medicine, which is expected to
grow in the future, we will continue sales promotion
activities for peripheral materials and components forregenerative medicine targeted at universities and research
institutes, both in Japan and overseas. In addition, we arepromoting a new nucleic acid medicine business centeredon the provision of materials for liposome* formulations,and exploring a wide range of profit-making possibilities in
the future, such as collaborating with logistics companies
to implement rapid cell transport to the United States.
* Capsules made of an artificial membrane which mimics the lipid bilayerthat forms the basic structure of cell membranes. They are used in
products such as drug delivery systems, in which drugs and othersubstances are sealed inside capsules to transport them within the body.

Food products
Opportunities

Risks )

Expansion in demand for Japanese products indrugstores in the Asia region
Speed of change in market trends

Increase in interest in safety of food products
Boom of Japanese food overseas
Easing of agriculture and fishery regulationsin JapanSluggish domestic demand
Quality risks specific to food products

Strengths• Collaboration with superior suppliers and information network on latest research and development• Processing and distribution services using Group bases in each field• Years of knowhow on a broad business range
from production to distribution• Teams and individuals with expertise

Activities and strategies• Expand peripheral solutions in advanced andregenerative medicine• Catch up with and provide information on
PMD Act and cellular medicine• Propose alternative sources and introduce
multiple suppliers• Support expansion and development ofJapanese products for Asian markets• Maintain hygiene management-related products
business, which is a stable profit base
• Catch up with latest development trends• Accelerate expansion to overseas markets• Strengthen upstream businesses such as
blueberry production• Develop products in conjunction with upstream
businesses and expand collaboration withprocessing manufacturers

Profit drivers• Pharmaceutical substances (new medicines)• Materials for home products• Agricultural products• Processed marine products (manufacturing and sales)

From the frontline of business in NC2023 focus areas

Growth drivers• Advanced medicine, such as regenerative medicine and nucleic
acid medicine• Building new business models (agriculture, processed food businesses)

Life science sector: Substances for pharmaceuticals and cosmetics,
regenerative medicine

NC2023 targets (after revision)
Sales

Operating profit andprofit ratio(Billions of yen)(Billions of yen)

Operating Profit
60
40

38.2

47.0

52.0

20
0

3
2

Profit Ratio

2.61

0

9
6
3

1

FY2021 FY2022 FY2023
Actual Planned Target(%)

2.30 2.50
4.9
4.8
6.9

FY2021 FY2022 FY2023
Actual Planned Target

0

With the Japanese customer base expanding overseas, the Life Science Department
exports hundreds of materials that can only be procured in Japan. These are primarily
materials for cosmetics and pharmaceutical substances, as well as packaging materials.
In recent years, we have taken on the challenge of not only selling materials, but alsoplanning and proposing high-quality cosmetics and health food products with high added
value, in order to meet the needs of our overseas customers in Southeast Asia and otherregions for end products.
Our division is also focusing on business development in the field of regenerative
medicine, and we are working to develop regenerative medicine-related products in
China in collaboration with our Chinese locations. We aim to further expand our life
science business by expanding into rapidly growing Asian countries.

Reiri Mikami
Osaka Sales Section,
Life Science Osaka Sales
Department
Life Industry Division

Inabata Integrated Report 2022

42

Business Overview Reports by Segment

Plastics

Initial plan for the first year of the NC2023

We started dealing in imported vinyl chloride resin in 1949, and in 1959 we became thefirst in Japan to import and sell polypropylene. Currently, we sell everything from
commodity resins and high-performance resins. We operate seven compound plants
abroad, as well as five plants in Japan and overseas for manufacturing films. As theplastic waste problem intensifies, we are also striving to develop products focused onmaterials with reduced environmental negative impact such as biodegradable plastics
as well as composites of CNF and plastic.

267.0 billion Operating profit ¥6.25 billion

Sales ¥

Resins for automobiles, OA equipment, and home
appliances are the profit driver for this business. In
particular we will continue enhancing ourcustomer-oriented business style for the automobile
industry, especially in China and Southeast Asia, while also
digging deeper to make proposals for products other thanresins and EV-related products. In addition, we will
strengthen our sales and production systems with the aimof acquiring new business deals in markets with growthpotential, such as South America and India, as well as in
the European market, where we have lagged behind indeveloping new markets. Through these efforts, we will
increase sales to a wide range of global users, both
Japanese and non-Japanese, and drive further businessgrowth. At the same time, in the area of resins for officeautomation (OA) and home appliances, we are focusing
our efforts on the growing need for products and materials
with reduced environmental negative impact, such as
recycled resins and biomass resins. We will continue tomeet the demands of our customers around the world,
centered on our global production base network for plastic
compounds, which is having a positive impact on ouroverall business. (Business model for the plastic
compound business: p. 18)

43 Inabata Integrated Report 2022

Operating profit(Billions of yen)(Billions of yen)

248.8

316.2

9
6

8.67

5.63

Koji Nakano

3Managing Executive Officer
0

FY2020

FY2021

0• Sales of resins were generally strong, including those related to daily
goods, food packaging, and game consoles.
• Sales of resins for automobile products recovered, both in Japan andoverseas, although they were affected by production cutbacks.
• Sales of OA-related products increased.
• Sales of polyolefin resins were strong.
• In the plastic films business, sales for convenience stores and for leisureactivities recovered.

200

FY2020

FY2021• For plastic sheet products, sales of grip tape for sports use recovered,mainly overseas.

Business environment and strategies
Materials forautomobiles

our Group’s integrated system for collecting andpelletizing plastic waste, as well as manufacturing andselling recycled products.

Molding materials

OA, electrical andelectronic products

Business environment (Need for environmental
considerations with weight
reduction and the shift to EV
Expansion in demand formaterials due to compositionalchanges in automobile industry
Industry-specific quality standards
and the supplier responsibility

For sports materials, where our mainstay product is grip
tape for tennis rackets, we will expand our sales channels
and applications to overseas manufacturers to further
boost our global market share and expand sales of new
products such as sportswear.
In this business—one of the most globalized in ourcompany—further overseas business expansion isessential for our future growth. We will continue
promoting new initiatives in each business area byutilizing the strength of our global network throughcooperation with trading companies and manufacturing
and processing companies.

Potential for expansion ofoverseas business
Withdrawal of a major
general trading company
that was a rival
Fluctuations in domestic
demandOpportunities

Stable demand among
Japanese OA devices
manufacturers
Reduction in supply
volume due to reduction
in component size

Sporting materials

Films and sheets
Risks )
Potential for developing
new markets for sheet
products
Intensifying competition
for film products indomestic market

Expansion of global
marketShrinking domestic
market due to diminishing
population

Increase in need for a circular society

Strengths• A customer base built over the company’s long history• Detailed local response capability using network of bases around the world• Ability to provide added value including plastic compounding in own factories and VMIs

• Ability to propose mono
• High share in niche markets
materials and eco materials
from outside of Japan• Ability to develop and propose new products using own
manufacturing bases in Japan and abroad

Activities and strategies• Strengthen and expand overseas business structure• Strengthen and expand plastic compounding and distribution function

Profit drivers• Resins for automobiles, OA equipment, and home appliances• Film-related business, including manufacturing and processing• Expand biodegradable
biomass plastic business• Demonstrate leadership with theaim of restructuring the industry• Offer products foroverseas markets as wellas other sporting fields• Respond to a circular society

Growth drivers• Sales to global users in automobile-related industries• Greater expansion into foreign business (areas and sectors)

From the frontline of business in NC2023 focus areas
NC2023 targets (after revision)
Sales

In the area of plastic films, another profit driver, we willtake on a leadership role as a top-tier trading company interms of Japanese market share to expand the scale ofour business and reorganize the industry throughalliances and M&A. In response to the growing need for
eco-friendly products, we have also launched a recycling
business for plastic waste. Taking advantage of ourdomestic and overseas networks, we aim to develop newmarkets and create new business models by leveraging

Sales
400

Goals and strategies for the NC2023 medium-term business plan
Leveraging the power of our global network topromote new initiatives in each business area

• Sales and operating profit both exceeded the figures in the initial plan andthe targets for the final year.

Segment performance overview

Operating profit andprofit ratio(Billions of yen)(Billions of yen)

400

10

344.8
316.2 326.8

8.67

8.90

2.7

Mobility sector: Region-focused sales

Profit Ratio

Operating Profit

9.00

2.7

(%)
6

2.6

200

5

3

0

0

0

FY2021 FY2022 FY2023
Actual Planned Target

FY2021 FY2022 FY2023
Actual Planned Target

In order to develop an automotive userbase and strengthen sales in the central andeastern area of Shizuoka Prefecture, the Automotive Products Department II opened
the Shizuoka Sales Office in April 2022. This has made it easier for representatives tovisit customers in the Shizuoka area, compared to making business trips from Tokyo.
Going forward, we want to form deeper relationships of trust with our customers byvisiting them more frequently and engaging in region-focused sales. Since manycustomers in the Shizuoka area are expected to grow significantly in the future, wewould like to contribute to the department as a whole making full use of our robust
product lineup to expand sales.

Yusuke Morii
Sales Section I,
Automotive Products
Department II
Plastics Division I

Inabata Integrated Report 2022

44

Business Overview Global Network

Inabata’s network extending acrossabout 60 bases in 18 countries worldwide
Trading company

EuropeManufacturing & processing base

The Americas
Northeast Asia

Japan

Southeast Asia

EuropeSoutheast Asia / India / Australia

Germany

Dusseldorf

Singapore

FranceWissous(suburb of Paris)
Normandy

Malaysia

Kuala Lumpur
Penang, Johor

Indonesia

U.K.

Shrewsbury(suburb of Birmingham)

Jakarta, Surabaya
Bekasi (suburb of Jakarta)

Philippines

Binan (suburb of Manila)

TurkeyIstanbul

VietnamHanoi, Ho Chi Minh City
Haiphong, Da Nang

Hong Kong, Shanghai
Wuxi, Ningbo, Chengdu
Nanjing, Hefei, Chongqing
Beijing, Dalian, Tianjin
Guangzhou, Dongguan
Wuhan, Shenzhen

BangkokSamut Prakan(suburb of Bangkok)
Ayutthaya
Sriracha(suburb of Laem Chabang)

China

Myanmar

YangonTaiwanIndia

Gurugram (suburb of Delhi)
Chennai, Pune, Ahmedabad

Hsinchu, Tainan
Taichung, Taipei

South Korea

Seoul

ThailandAustralia

45 Inabata Integrated Report 2022

Northeast AsiaJapan

The Americas

Tokyo, Osaka, Nagoya
Shiojiri, Shizuoka
Hamamatsu, Kirishima

United States

New York
Los Angeles
Detroit
Novato (California)

MexicoQueretaro
Tijuana
Silao

Brazil

Sao Paulo

BrisbaneInabata Integrated Report 2022

46

Business Overview Reports by Region

Southeast Asia and India

Note: Figures for sales and operating profit are based on FY2021, and the consolidated number of employees is as of March 31, 2022.

161.7 billion

Sales

Operating profit¥

6.2 billion

¥

2,451

Consolidated number of employees

We have 10 manufacturing and processing bases in the region and are focusedon expanding business in each segment.

Koji Nakano
Managing
Exective Officer,
General Manager,
Southeast Asia

ActionTrading company

General Manager,
The Americas

Gurugram
Hanoi

Myanmar

Pune

Initiatives for a decarbonized society

Haiphong

Vietnam
YangonAyutthaya Da Nang
Bangkok
Binan
Samutprakan
Sriracha
Ho Chi Minh City Philippines

Chennai

We began handling biomass raw materials to be used for power generationfuel for Japanese electric power companies as part of our “expansion of
products with reduced environmental impact,” a key initiative in our
medium-term business plan, NC2023. In addition, we linked the
manufacturing and processing functions of group companies in Japan andoverseas, including those in Thailand, to develop garbage bags composed of
biomass raw materials. As a shosha that handles resin products, we willcontinue developing environmentally friendly products, while also helping tobring about a sustainable society by launching sales activities in India in thesolar power generation business.

Northeast Asia

Manufacturing & Processing base

Max Inoue

Ahmedabad

India

ThailandPenangKuala Lumpur

Malaysia

Indonesia

JakartaBekasi191.2 billion

SurabayaOperating profit¥

Consolidated number of employees

3.7 billion¥

466

We are expanding Inabata’s core businesses by harnessing our network spreadover 20 cities in China, Taiwan, and South Korea.

General Manager,
Northeast Asia

ActionMajor businesses• Plastics for automobiles, OA equipment,
and the E&E field• Components for flat panel displays• Functional chemicals compliant withenvironmental regulations

Improve DX solution offerings by deepening our partnerships
with partner companies
Amidst the acceleration of DX in each field in accordance with the rapid
spread of IoT technology, we will deepen our partnerships with Texar Inc.
and ZIFI Sense Info Tech Co., Ltd. to provide products, technologies andsolutions related to the ZETA* standard, a LPWA technology. In theautomobile field, we will work to expand sales of new EV-related products.
* ZETA is a standard for the latest IoT-suitable Low Power Wide Area (LPWA)
network developed by ZifiSense Info Tech Co., Ltd.

47 Inabata Integrated Report 2022

Trading company

Beijing

TianjinChengduChongqing

Hefei
Wuhan

Taipei
Guangzhou

DongguanHong Kong
ShenzhenSouth Korea

Nanjing
Wuxi
ShanghaiNingboTainanHsinchuTaichung

264

We are involved in businesses in the automotive, environmental and energy, food products and life
science fields, which are our key areas. We mainly deal in electronics materials, plastics and digitalprinting materials. In addition, we are developing food-related businesses at a subsidiary, DNI. Our
theme is to expand the plastics business throughout the region of North America, as we have
expanded into home appliance and aviation businesses, among others, in addition to selling plastics
for the automotive industry in Mexico. In Brazil, we are focused on selling plastics for automobiles
and motorcycles, and functional chemicals.
Major businesses• Electronics materials (including semiconductors)• Digital printing material (inkjet, toner)• Functional chemicals • Plastics• Processed products in agriculture andmarine industries• Components related to the environment
and energy industry• Raw materials for medical products

Trading company

Manufacturing & Processing baseDetroit
NovatoLos Angeles United States
Tijuana

New York

MexicoSilaoQueretaro

In Mexico, which is continuing to grow as a major production base for
automotive parts in the Americas, we will move forward with investments
to improve the production facilities at our company’s plastic compoundfactory (IK Plastic Compound Mexico, S.A. de C.V.), and aim to expand oursales base for plastics products by integrating manufacturing and sales.

Brazil
Sao Paulo

Sales

Europe12.6 billion

Operating profit¥

Consolidated number of employees

0.5 billion¥

75

In Europe, we deal in a wide range of products in various segments, such as inkjet ingredients,
energy-related products, automobile components and functional chemicals. Our Group companies
manufacture and sell medical products, materials for cosmetics and other products in France. In the
future, we also seek to focus on businesses in the environmental sector, such as selling thermalinterface materials for the EV battery field and developing plant-based materials for the cosmetics field.

Kenichi Oba
President,
Inabata Europe GmbH

DalianChina

Consolidated number of employees

1.4 billion¥

We operate businesses centered on chemicals, energy, automobiles,
life sciences and other fields, taking advantage of our unique mobility.

Manufacturing & Processing base

Seoul

Operating profit

ActionIn this core region that accounts for 28% of our consolidated sales, we offer businesses leveraging our
network spread over 20 cities in China, Taiwan, and South Korea. Starting mainly with flat panel display
components, we are focused on plastics for automotive, OA, and electrical and electronic products. We
expect further increase in profits in our China business, where we seek to proactively invest ourmanagement resources in growth sectors, such as semiconductors, energy, automobiles, medical
products and medicine, agriculture food products, high-tech materials, and environment-related products.

Takaharu Ookura

34.7 billion¥

Improving facilities at our plastics compounding plantin Mexico

Johor

Singapore

Sales

Sales

In addition to developing our businesses in the United States and Mexico,
we are working toward expansion in South America with a focus on Brazil.

Southeast Asia is an important region where our processing bases for plastic compound, our key
business, are concentrated. We produce plastic compound products, mainly for the three major fields
of electric and electronic products, office automation (OA), and automobiles and motorcycles, at 28
bases across 9 countries. In the future, we seek to expand our business in the automotive field, whichis rapidly growing in Southeast Asia, while also focusing on developing new products and materials forthe fields of energy, agriculture, and food products. Within the energy field, we particularly wish towork on products and materials to reduce environmental impact and generate solar power.
Major businesses• Plastics for automobiles, home appliances,
OA equipment• Raw materials for printers• Rubber materials and additives for the
automotive industry• Raw materials and products for packaging

The Americas

Japan

Trading company

Major businesses• Inkjet products and materials• Various materials for secondary cells• Medical products, materials for cosmetics• Functional chemicals

Manufacturing & Processing base

U.K.

ActionDeveloping products for the medical and cosmetics fields
Our Group company Pharmasynthese S.A.S manufactures materials for
medical products and cosmetics, and is developing allergy drugs in the
medical field. In the cosmetics field, we plan to launch plant-basedmaterials effective in moisturizing, anti-oxidizing, and alleviating atopy.

Normandy

Shrewsbury Germany
Dusseldorf
WissousFranceIstanbul

TurkeyTaiwanInabata Integrated Report 2022

48

Business Overview Financial and Non-financial Highlights

Net profit per share

Dividends per share and shareholder return indicators

(Yen)
400

(Yen)
120

(%)
80

300

90

60

200

60

40

100

30

20

Dividends per share

Financial Highlights

Net sales

Operating profit(Billions of yen)
800

(Billions of yen)
20

600

15
0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22

0Payout ratio

Total return ratio

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22

400

10

200

5

0

(Fiscal year)(Fiscal year)

Note: Since FY2014, we have used the total return ratio as an indicator ofshareholder returns.

Balance of strategic shareholdings
0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22

0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22

(Fiscal year)(Fiscal year)(Billions of yen)
80

60

Ordinary profit

Net profit and ROE

40

Net profit

ROE(Billions of yen)
25

(Billions of yen)
25

(%)
30

20

20
20

15

15

10

10

20

0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22
(Fiscal year)

10
5

5

0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22

0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22

(Fiscal year)0

Non-financial Highlights(Fiscal year)

Society
Total assets and net assets
Total assets

Number of employees(consolidated and unconsolidated)

Equity capital and net D/E ratio

Net assets

Equity capital

Net D/E ratio(Times)2.0(Billions of yen)
400

(Billions of yen)
200

300

150

1.5

200

100

1.0

100

0

0.5

50

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22
(Fiscal year)

49 Inabata Integrated Report 2022

0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22

0

(Fiscal year)

Consolidated

Local employees engaging in trading businessoutside Japan and expat employees from Japan

Unconsolidated

Local employees(People)5,000(People)
1,000

4,000

800

3,000

600

2,000

400

1,000

200

0

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22
(Fiscal year)

0

Expat employees from Japan

3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22
(Fiscal year)

Inabata Integrated Report 2022

50

Business Overview Financial and Non-financial Highlights

Note: For detailed numbers, please refer to the Sustainability Data starting on p. 95.

Non-financial Highlights

Society

Environment

Number/ratio of womenin managerial positions
Number of womenin managerial
positions

Number/ratio of days annual paid
leave taken

Ratio of womenin managerial
positions(People)
10

(%)
5.0

8

4.0

Number/ratio of mid-career hires*

Ratio ofdays taken

Number ofdays taken(Days)
15

(%)
100

80

Number of
mid-career hires

Ratio ofmid-career hires(%)
60(People)
40

3.0

60

4

2.0

40

5
20

1.0

(t-CO2)40,000(1,000 kWh)
60,00030,00045,00020,00030,00010,00015,000

3/20

3/21

3/22 (Fiscal year) 0

0

3/20

3/21

3/22 (Fiscal year) 0

0

3/20

3/21

3/22 (Fiscal year) 0

Coverage: Inabata & Co., Ltd. (including employees seconded to Group companies)
Note: As of the end of each fiscal year (March 31)* Ratio of mid-career hires to regular employees hired in each fiscal year

Employees engagement survey
April 2021

May 2022

Number of
employees surveyed

Total

1,400
people1,697
peopleResponse rate

Total

49%

73%

Engagement
I am satisfied with the work I am doing at Inabata now

70%

73%

Relationship with superiors
I have the necessary collaboration with my supervisor at work

75%

80%

Organizational culture
When a problem occurs in the course of my duties, my supervisor
and the people around me provide appropriate support

83%

85%

Corporate philosophy
I can relate to Inabata’s philosophy, vision, and management policies,
and I want to participate in achieving them

70%

73%

Human resources system and benefits
Inabata’s salary standards are satisfactory, compared to other companies
in the same industry

59%

55%

Human resources system and training
Inabata supports employee training to improve their skills

41%

48%

WLB (work-life balance)
Overtime is kept to a level that is acceptable for me

64%

Main items*

15

10

5

Trends

3/20

3/21

0

3/22 (Fiscal year)

3/20

3/21

0

3/22 (Fiscal year)

3/20

3/21

3/22 (Fiscal year)*1 Tokyo Head Office, Osaka Head Office, Nagoya Branch*2 Seven overseas subsidiaries engaged in the resin compound business, which is a strength of the Inabata Group*3 Scope 2 only. A unit is calculated using the emission factor provided by the Ministry of the Environment and the Ministry of Economy, Trade and Industry foreach electric power company.
Units for overseas resin compound manufacturers are calculated using the country-specific emission factors in the IGES List of Grid Emission Factors
published by the Institute for Global Environmental Strategies. In accordance with the updated emission factors per unit, the figures reported in FY2021 havebeen retroactively revised from FY2019 forward.
*4 The scope covers Inabata & Co., Ltd. and overseas plastic compound manufacturers. The sales parameter uses the simple net value of sales.

Volume of waste generated*

Waste recycling rate*

Green purchasing ratio of officesupplies, etc.

(Tons)
100

(%)
100

(%)
100

75

75

50

50

80

60

40

20

0

69%

3/20

3/21

3/22 (Fiscal year)

0

3/20

3/21

* From among a five-point evaluation by employees (5. Strongly agree / 4. Agree / 3. Neither agree nor disagree / 2. Disagree / 1. Strongly disagree), the ratio of
positive responses (5. and 4.)

0

3/22 (Fiscal year)

3/20

3/21

3/22 (Fiscal year)

Coverage: Inabata & Co., Ltd. (Tokyo Head Office, Osaka Head Office, Nagoya Office)* Includes tenants of the Osaka Head Office.

Sales of products that reduce environmental load
Environmental
certification

Energy & Power

2%

FY2021
sales

18.7

¥
Materials &Chemicals

65%

51 Inabata Integrated Report 2022

(t-CO2/100 million yen)
20

15

10

0
0

CO2 emissions per sales*4

Inabata & Co., Ltd.*1
Overseas resin compound
manufacturing business bases*2

30

20

2

Energy consumption

Inabata & Co., Ltd.*1
Overseas resin compound
manufacturing business bases*2

45

30

10
6

CO2 emissions*3

billion(Simple sum)

11%

Resources & Environment

22%

Coverage: Inabata Group (domestic and overseas consolidated)
Note: Please refer to p. 86 for details such as descriptionsof fields.

Inabata Integrated Report 2022

52

ESG Information Corporate GovernanceCorporate GovernanceManagement (As of July 1, 2022)
Directors

Directors, Audit and Supervisory Committee Members
Katsutaro Inabata

Toyohiro Akao

Kenji Hamashima

Satoshi Tamai

Director, President

Director, Senior Managing Executive Officer
Information & Electronics, Life Industry,
the Americas, Europe

Director, Chairperson of the Audit andSupervisory Committee

Director, Audit and Supervisory
Committee Member

Apr. 1982 Joined Ushio Inc.
Apr. 1999 President and Chief Executive Officer,
Ushio America, Inc.
Nov. 2000 Chairman and Chief Executive Officer,
Christie Digital Systems USA, Inc.
Oct. 2014 President and Chief Executive Officer,
Ushio Inc.
Jun. 2020 Outside Director, Inabata & Co., Ltd.
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co.,
Ltd.(present)

Apr. 1984 Joined Sumitomo Corp.
Oct. 1991 Joined Century Auditing Corp.
(now Ernst & Young ShinNihon LLC)
Mar. 1995 Registered as certified public accountant
Jul. 2017 Representative of Satoshi Tamai Certified
Public Accountant Office (present)
Oct. 2017 Senior Advisor, accrea Inc. (present)
Mar. 2018 Outside Auditor, Toho Lamac Co., Ltd.
(present)
Jun. 2020 Outside Audit & Supervisory Board
Member, Inabata & Co., Ltd.
Outside Auditor, PC Depot Corp. (present)
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co.,
Ltd.(present)

Minoru Sanari

Tomokazu Fujisawa

Director, Audit and Supervisory
Committee Member

Director, Audit and Supervisory
Committee Member

Apr. 1983 Joined Tokyo Gas Co., Ltd.
Apr. 1995 Bar admission (Daini Tokyo Bar Association)
Apr. 2008 General Counsel, Legal section, General
Administration Department, Tokyo Gas Co., Ltd.
Apr. 2017 Executive Officer, Tokyo Gas Co., Ltd.
Apr. 2019 Senior Advisor, Tokyo Gas Co., Ltd.(present)
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co.,
Ltd.(present)

Jul. 1984 Joined Fujisawa Pharmaceutical Co., Ltd.
(now Astellas Pharma Inc.)
Apr. 1999 Director of Planning, Medical Supply
Business, Fujisawa Pharmaceutical Co., Ltd.
Apr. 2003 Assistant to CEO, Fujisawa Healthcare Inc.
(now Astellas US LLC)
Jun. 2014 Full-Time Corporate Auditor, Astellas
Pharma Inc.
Jun. 2018 Director, Audit & Supervisory Committee
Member, Astellas Pharma Inc.
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co.,
Ltd.(present)

Jan. 1989 Joined Inabata & Co., Ltd.
Dec. 2005 Director, President (present)

Apr. 1982 Joined Inabata & Co., Ltd.
Jun. 2015 Director, Senior Managing Executive
Officer (present)

Kenichi Yokota

Masahiro Sugiyama

Director, Senior Managing Executive Officer
Administrative Affairs

Director, Managing Executive Officer
Chemicals,
Information & Electronics (assisting),
Northeast Asia

Jul. 1996 Joined Inabata & Co., Ltd.
Jun. 2017 Director, Senior Managing Executive
Officer (present)

Jul. 2002 Joined Inabata & Co., Ltd.
Jun. 2018 Director, Managing Executive Officer(present)

Kenji Ohno

Kiyoshi Sato

Director

Director, Chairperson of the Nominating
and Remuneration Committee

Apr. 1987 Joined Sumitomo Chemical Co., Ltd.
Apr. 2006 General Manager, Legal Dept., Sumitomo
Chemical Co., Ltd.
Apr. 2016 Executive Officer, General Manager ofLegal Dept., Sumitomo Chemical Co., Ltd.
Apr. 2020 Managing Executive Officer, Sumitomo
Chemical Co., Ltd. (present)
Jun. 2021 Director, Inabata & Co., Ltd. (present)

Takako Hagiwara

Apr. 1979 Joined Tokyo Electron Ltd.
Jun. 2003 President and CEO, Tokyo Electron Ltd.
Jun. 2011 Chairman of the Board, Tokyo Electron
Europe Ltd.
Nov. 2013 President, TEL Solar AG
Jun. 2017 Outside Director, Toshiba Machine Co., Ltd.
(now Shibaura Machine Co., Ltd.) (present)
Jun. 2019 Outside Director, Inabata & Co., Ltd.
(present)
Outside Director, Mazda Motor Corp.
(present)

Director
Apr. 1984 Joined Sony Corp. (now Sony Group Corp.)
Apr. 2008 General Manager, Diversity Development Div.,
Corporate Human Resources, Sony Corp.
Apr. 2014 Representative Director, Sony Hikari Corp.
and Sony Kibou Corp. (now Sony Kibou/Hikari Corp.)
Jul. 2020 Representative Director, DDD Corp. (present)
May 2021 Outside Director, Twinbird Corp. (present)
Jun. 2021 Outside Director, Inabata & Co., Ltd. (present)
Outside Director, NEC Capital Solutions Ltd. (present)

Note: Directors Kiyoshi Sato, Takako Hagiwara, Kenji Hamashima, Satoshi Tamai, Minoru Sanari, and Tomokazu Fujisawa are independent outside directors.

Executive Officers
Koji Nakano

Kazuhiro Hanaki

Shinya Kawai

Yutaka Takahashi

Managing Executive Officer
Plastics,
Southeast Asia,
General Manager,
Southeast Asia

Executive Officer
General Manager,
Nagoya Branch

Executive Officer
Plastics (assisting),
General Manager,
Plastics Division I

Executive Officer
Life Industry (assisting),
General Manager,
Chemicals Division

Katsutoshi Tanaka

Tsuyoshi Maruta

Koichi Noda

Executive Officer(President,
Inabata Fine Tech Co., Ltd.)*

Executive Officer
General Manager,
Information & Electronics Division I

Executive Officer
General Manager,
Financial Management Office* The title in parentheses is his position at the company to which he has been assigned.

Nobukazu Kuboi
Audit and Supervisory Officer
General Manager, Audit andSupervisory Committee Office

53 Inabata Integrated Report 2022

Inabata Integrated Report 2022

54

ESG Information Corporate GovernanceSato:
I agree. Our representatives have responded in a very
sincere way. We have been able to hold the discussions
themselves in a free and open atmosphere, and theyhonestly answer questions from us outside directors. I
also feel that they have been able to respond adequately todetailed questions and opinions by outside audit andOutside Director Three-Way Talk
Held online in May 2022

Outside directors are expected to monitor andsupervise management from an objective
viewpoint. We asked them to evaluate the current
status of the Inabata Board of Directors and thechallenges it faces.

Part 2

Kiyoshi Sato

Takako Hagiwara

Kenji Hamashima

Director
Time in office: Jun. 2019–present

Director
Time in office: Jun. 2021–present

Director(Audit and Supervisory Committee Member)Time in office: Jun. 2020–present

My roleMy roleMy roleThe last company I worked for developedand sold semiconductor production
equipment used to manufacture products
such as flat panel displays. Inabata deals inmaterials and products forsemiconductors and displays, so I think I
have an affinity for that field. I also feel it is
my duty to support further globalization
using my experience in corporate
management and overseas business.

Over the years, I have been involved withhuman resource development for
manufacturing and service organizations,and I also have experience with new
business creation in the global marketplace.
Notably, since I have a long history withplanning and promoting human resource
development and organizational strategies,
I would like to contribute to developing
human resources and organizations that cancontinue to take on the challenges ofchanging times at Inabata.

I spent many years abroad and haveaccumulated experience with various
negotiations, which I believe carries over tothe shosha business. I also have experiencein M&A, so I hope to offer support in the areaof growth investing. That said, manufacturing
and shosha have different perspectives, so I
hope to use this as a strength in discussions
and help boost the creation of new businessand growth strategies.

Part 1

Note: In June 2022, Inabata transitioned to acompany with an audit and supervisorycommittee, and he was appointed as adirector (member of the Audit andSupervisory Committee).

Reflections on FY2021

Ms. Hagiwara, it has been one year since youwere appointed as an outside director. What are
your thoughts as you look back on FY2021?

Did you receive sufficient information atmeetings of the Board of Directors and othermeetings?

Hagiwara:
I have a long track record of being involved inmanagement, specializing in organizational and humanresource development, so I felt that I was expected toprovide input and stimuli from that perspective. Goingforward, medium- to long-term business strategies, aswell as the human resources and organizational strategies
to execute them, will become increasingly important. I
would like to work on these initiatives to be able to makeeven greater contributions.

Hagiwara:
The preliminary explanations were very detailed andhelpful. We were able to hear directly from
representatives, which made it easier to understand what
was going on. Due to the COVID-19 pandemic, we wereunable to go to the office or meet with people in person,
which was frustrating, but more than that, I was very
encouraged by the support I received, as our staff showed
their inventiveness.

55 Inabata Integrated Report 2022

supervisory board members.
Hamashima:
Yes, we were able to exchange a lot of ideas.
Unfortunately, the discussions were mainly online, but if
we could have face-to-face meetings, I think we would be
able to obtain a more in-depth understanding of the issues.

About the Effectiveness of the Board of Directors

What is your assessment of the effectiveness of
the Board of Directors?

such as the establishment of the Business Planning Office
for strategic investments.

Sato:
Discussions by the Board of Directors, including theopinions of our outside directors, are being properlyreflected in actual management, so I believe that the Boardis effective.

Hamashima:Also, compared to the previous period, there has clearly
been growing interest in a shift from a short-term viewpoint
to a medium-term viewpoint. The concept of investments
for growth has also been well-articulated. Although organic
flow—in which we earn profits through investments inexisting businesses—is less risky for growth, I feel that theBoard of Directors has a common understanding thatunless investments for growth are made in a manner thatexceeds the cost of capital, which includes M&A, thenconversely, business value will be damaged.

Hamashima:
Not every opinion by Outside Directors is necessarily
correct, so it is not necessary to take all of them to heart.
However, management has properly incorporated those
opinions to create business policies. In addition,
management has been able to take measures for externalannouncements through communication with the market,
while also listening to our opinions. Our representatives
also conduct an ongoing assessment of the effectivenessof the Board of Directors by an external organization, which
gives me the impression that the effectiveness of theBoard of Directors has been properly secured.

What is the status of discussions on the need forinvestments for growth, which was raised as an
issue at last year’s roundtable discussion?

Sato:
I am also encouraged by the fact that young people have
many ideas. I strongly felt this when I participated in a
meeting where young employees of Inabata presented
their thoughts on carbon neutrality and sustainability, andwhat kind of businesses they expect from the company.
I am not sure how much of this will translate into thebusiness yet, but I do feel that the company is moving toincorporate the ideas of young people into management to
conduct business for a new era.

Sato:
Although there are still issues to be addressed regarding
strategies and investments for growth over the medium tolong term, our representatives are having the Board of
Directors’ input be properly reflected through measures

Hagiwara:
I feel that Inabata’s strength lies in its willingness tosteadily take action and move forward to take onchallenges, whether they are investments for growth orsustainability. While properly addressing the issues at

I feel that Inabata’s strength lies in its willingness to steadilytake action and move forward to take on challenges— Takako Hagiwara

Inabata Integrated Report 2022

56

ESG Information Corporate Governance

hand, the company is very capable of talking about
strategies from a medium- to long-term perspective andlinking them to the next step.

At last year’s roundtable discussion, the utilizationof diverse human resources was also an issue.
What do you think about this point, Ms. Hagiwara?
Hagiwara:
I was recently interviewed for the company newsletter,and had the opportunity to communicate widely with
employees regarding diversity. I also participated in an
online workshop for women employees in Staff positions
and had a frank exchange of opinions with employees of allages, from young employees to those in the middle oftheir career. I found that there were many more motivatedemployees than I had expected, which is encouraging forthe company’s growth.
Sato:
It is important for us to move forward with appointing local
employees at our overseas subsidiaries to increase
diversity. I believe that eventually having local people takeon top management roles and conducting business inways aligned with the local laws, culture, customs, andbusiness practices will provide Inabata with more of aboost. I believe that there is even a possibility that they
may be asked to become executives at the head office atsome point in the future.
Hamashima:
Inabata has a target of making 70% of its sales overseas
around 2030. Naturally, the efforts of Japanese employees
are necessary, but I believe that it will be difficult to meetthis target without the activities and contributions of local
people. It is more efficient to expand business with local
people at the forefront of management, and it should also
be easier for customers to communicate with them. To an
extent, the management team is on that same course, but
it is not just a matter of appointing the best people; it is aprerequisite that aspects such as the governancestructure, legal compliance training programs, anddiscretionary authority should be clearly defined. They
must also be set up in tandem with establishment ofcareer paths and, most important of all, the instillation of
the IK Values.

It is important for us to move forwardwith appointing local employees at our overseas
subsidiaries to increase diversity— Kiyoshi Sato

The need to assess the results of management execution
by the Board of Directors is what will be important— Kenji Hamashima

Part 3

Sustainability-Oriented Management

In recent years, in addition to the issue of
diversity, there have been many issues thatshould be addressed from a sustainability
perspective. What do you think?
Hagiwara:
I appreciate that Inabata has recognized the importance of
these very issues, established the Sustainability
Committee, and appropriately assigned human resources.
We have participated in these discussions from the
beginning, and have had a frank exchange of opinions.
Hamashima:
At the Ordinary General Meeting of Shareholders, more andmore major institutional investors are making ESG-relatedshareholder proposals. After all, it is important to not simply
view “co-existence with society” as a cost, but also as a new
business opportunity that will lead to profits.
Hagiwara:
In order to achieve such a balance, human capital, which
creates added value, is extremely important. I think it isnecessary for Inabata to create a vision for human capitaldevelopment, based on a medium- to long-term strategy
that addresses what the company wants, how it views
people, what fields it needs people in, and how it will grow.

What are your thoughts on the governancerequired for sustainability-oriented management?
Sato:Starting in June 2022, Inabata became a company with anaudit and supervisory committee. As a result, the Board of
Directors will continue to shift from a management-typerole to a monitoring-type role, and the expectations for us
are gradually changing, as well.

The three-way talk was held online to prevent the spread of COVID-19.

57 Inabata Integrated Report 2022

Hamashima:
An important part of strengthening the monitoring of theBoard of Directors will be the need to assess the results ofmanagement execution by the Board of Directors. I believea major task will be to assess the management team andreflecting this in personnel decisions.
Sato:That is an important point. This is where the Nominating
and Remuneration Committee is expected to play a major
role. The Committee still meets regularly to ensure thatnew Directors and Executive Officers within the company
are properly assessed.

In closing, please leave us messages from yourrespective standpoints.
Hagiwara:
As management and organizational development capable ofaccepting challenges become increasingly important going
forward, I get the impression that Inabata has only justbegun to develop its human resources and promote
diversity. I have high expectations for the company’s growthpotential in this area, and I would like to contribute to making
the company more attractive from the outside as well.
Hamashima:
Many companies around the world must be thinking thatthey cannot grow by maintaining the same businessformat that they have used in the past. For example,
dealing with decarbonization is coming to be an issue forall businesses. This presents not only risks, but business
opportunities, as well. In discussing both sides of theserisks and business opportunities, I believe it is necessary
for people outside the company, such as us, to beproactive in communicating our views.
Sato:
Inabata mainly deals with materials for industrial products,
which are subject to technological innovations thatsuddenly change their raw materials. In addition, there is amovement for companies to change materials and fuels inorder to decarbonize the industry. We would like to help
Inabata make decisions from a medium- to long-term
perspective on how to find business opportunities amidst
these changes, how to reduce risks, and what materials tohandle in the future.

Inabata Integrated Report 2022

58

ESG Information Corporate Governance

Basic views

Transitioning to a company with anaudit and supervisory committee

Inabata’s mission statement is, “People come first, basedon the spirit of ‘love (ai)’ and ‘respect (kei),’ and together
we strive towards contributing to the development ofsociety.” With a foundation on this mission, the company
aims to respond to the directive of all stakeholders who
support the company’s activities including shareholders,business partners and employees, and sustainably
improve corporate value. For this, the company believes it
is essential to have a strong corporate governance systemfor ensuring transparency and fairness in business andspeed and resolution in decisions.

We have positioned the enhancement and improvementof corporate governance as an important management
issue, and have been working to improve the effectivenessof the Board of Directors by shifting the focus of meetingsof the Board of Directors from business execution to
management strategy and medium- to long-term issues.
In June 2022, we transitioned to a company with an audit
and supervisory committee in order to further promotethese initiatives, further strengthen the company’s
supervisory function, and establish a system to acceleratemanagement decision-making. The majority of the Boardof Directors is composed of independent outside directors
in order to embody a monitoring-type Board of Directors,
thereby enhancing corporate value.

Corporate governance system (As of July 1, 2022)
General Meeting of Shareholders
Election / Dismissal
Nominating andRemuneration Committee

Election / Dismissal

Proposal / Report

Audit /
ReportAdviceBoard of Directors

ReportSustainability Committee
Compliance Committee
Internal Control Committee

Direction

ReportAccounting
Audit

Internal Audit Office

ReportManagement
Council

Human Rights Affairs Committee
Export Control Committee

Accounting
Auditors

Audit andSupervisory
Committee Office

Audit
Direction

President

ReportAudit and Supervisory
Committee

Business Execution System

Election /Dismissal

Report / Statementof Opinions

Executive Officers

Internal Audit

Collaboration

Corporate governance system

Changes in initiatives tostrengthen governance(As of July 1, 2022)

Organizational design

Company with an audit andsupervisory committee

Directors not on the Audit andSupervisory Committee

7 (including 2 independent outside
directors)

Directors on the Audit andSupervisory Committee

4 (including 4 independent outside
directors)

PeriodJune 2003

Executive officer system introduced

June 2006

Term of appointment of directors reduced fromtwo years to one year

Chairperson of the Board of Directors President

June 2013

Appointment of two outside directors

Term of office for directors not on the
Audit and Supervisory Committee

1 yearJune 2015

Appointment of three outside directors

Term of office for directors on the
Audit and Supervisory Committee

November 2015
2 years

Executive officer system

Yes

Nominating and Remuneration Committee(voluntary) established
Evaluation of the Board of Directors introduced

Advisory committees to theBoard of Directors

Nominating and Remuneration
Committee

Accounting auditor

KPMG Azsa LLC

p. 65

June 2022

https://www.inabata.
co.jp/english/investor/
library/governance/

Corporate Governance Report

Board of Directors

Audit and Supervisory Committee

The Board of Directors makes decisions on importantmatters set out in laws and regulations, Articles ofIncorporation, and Regulations of the Board of Directors.
These matters include formulation of business plans andannual budgeting as well as making basic management
policies and appointing executive officers. The Board of
Directors consists of 11 members, including seven directors
who are not audit and supervisory committee members andfour directors who are audit and supervisory committee
members, among the 11 members, six are independent
outside directors, comprising the majority. By shifting to acompany with an audit and supervisory committee, wehave strengthened our supervisory functions and made it
possible to delegate important business decisions tobusiness executives, establishing a system that enables us
to make management decisions more quickly.

Inabata is a company with an audit and supervisorycommittee, and the Audit and Supervisory Committee
consists of four audit and supervisory committee
members, all of whom are outside directors. The
committee audits the decision-making of the Board of
Directors and the execution of duties by executive officers.
Directors who are members of the Audit and Supervisory
Committee are extremely well-versed in finance,accounting, and law, and are also highly independent.
In addition, the Audit and Supervisory Committee Officehas been established as a dedicated organization to assist
the Audit and Supervisory Committee in its duties, andsuitable persons independent of the Directors (excluding
Directors who are members of the Audit and Supervisory
Committee) have been assigned to this office.

Sales Divisions / Administrative Offices / Group Companies Worldwide

Percentage of independent outside directors
Directors (excluding audit andsupervisory committee members)

7

Outsidedirectors

59 Inabata Integrated Report 2022

Transition to a company with an audit andsupervisory committeewith six outside directors, comprising a majority

Directors (audit and supervisorycommittee members)

455% (6 of 11)

Outsidedirectors

Inabata Integrated Report 2022

60

ESG Information Corporate Governance

Skills that our Board of Directors are expected to have

Nominating and Remuneration Committee
the deliberation results of the Nominating andRemuneration Committee.

We voluntarily set up the Nominating and Remuneration
Committee in 2015. The lead independent outside director,
who serves as chairperson of the Committee, and theCommittee, which comprises a majority of independent
outside directors, engage in deliberations when making
decisions on issues such as the selection and dismissal of
executives, nomination of candidates for positions of
director and executive officer, and the remuneration of
directors. The Board of Directors strives to ensure
objectivity, fairness, and transparency by fully respecting

Members of the Nominating and Remuneration
Committee:
3 outside directors (of these, one director who is anaudit and supervisory committee member)
1 internal director
Chairperson: Lead independent outside director
Number of times held: FY2021 12 times

Director experience and expected roles (skill matrix)
Business strategy

Name

Katsutaro Inabata

Information
Global&management Electronics●

Plastics●●●

Kenichi Yokota

Directors●

Masahiro Sugiyama●●

Internal
controls& audits

ESG

●

●

●

●

●

●

●

●

●

●

●
●
●

Takako Hagiwara*
Kenji Hamashima*IT &digital●Kenji Ohno
Kiyoshi Sato*

HR &
labor

●

●

Toyohiro Akao

Legal &
Chemicals / Finance &riskLife Industry accounting management●

Directors(Audit and Satoshi Tamai*Supervisory
Committee Minoru Sanari*Members)
Tomokazu Fujisawa*

●

●
●

●
●
●

Note: Those marked with * are independent outside directors.

• Skills Matrix Approach
Our mission is that “People come first, based on the spiritof love (ai) and respect (kei), and together we strive
towards contributing to the development of society,” andwe seek to take the approach of “To continually evolve,
serving clients and society, through global operations andmeeting their changing needs.” We have also set forth
our long-term vision, the IK Vision 2030, which is how weenvision ourselves around 2030, and have positioned our
medium-term business plan, the NC2023, as a step
toward fulfilling that long-term Vision.

61 Inabata Integrated Report 2022

In identifying the skills expected of directors, we havedetermined what skills are necessary to build a systemthat can fulfill the decision-making and supervisory
functions related to business execution of the Board of
Directors of our globally operating company, based on ourmanagement philosophy, our Vision, our long-term vision
IK Vision 2030 and the medium-term business plan, theNC2023. From this perspective, we have specifically
identified the skills listed on the right and developed askills matrix.

Global management
We are developing our business globally, and inparticular, our long-term vision IK Vision 2030
envisages increasing the ratio of our businessconducted overseas to 70% or more. From thisperspective, we believe that it is extremely useful toappoint people with knowledge of global corporate
management to the Board of Directors in order topromote our future growth. For this reason, wheninviting outside directors, we take particular care toensure that their experience includes top
management of companies with global operations, or
equivalent experience. The “global management” itemin the skills matrix is based on the presence orabsence of top management or equivalent experience
at companies with global operations.
Business strategy
In managing a specialized trading company such as
ours, first and foremost, executives must havein-depth expertise and experience in each businessfield. In particular, it is extremely important for
executive directors to have broad knowledge,
experience, and personal connections in each of ourbusiness fields—Information & Electronics, Plastics,
Chemicals, and the Life Industry—in order to develop a
trading company business like ours. When appointing
executive directors, we consider the balance of thosewith knowledge in these business fields.
Finance & accounting
The importance of financial strategy (corporate
finance) in corporate management goes without
saying. We believe that it is necessary for some
executive directors to be in charge of financial
strategy, and to spearhead initiatives to enhance
corporate value through various dialogues withinvestors. In addition, in order to strengthen the
supervisory function over business execution, we
believe that it is useful to ensure that directors who
are familiar with finance and accounting are included
on the Audit and Supervisory Committee.
Legal & risk management
As a company with a wide range of global operations,
we are exposed to a variety of risks, including credit
risks of our business partners, risks associated withbusiness investments, country risks associated withoverseas operations, currency exchange risks, andcommodity market fluctuation risks. Therefore, risk
management is extremely important for
management. We are committed to management thatemphasizes compliance above all else, and in order tostrengthen the supervisory function over businessexecution, we believe that it is useful to always havedirectors who are familiar with the law as members of
the Audit and Supervisory Committee.
HR & labor
For a trading company such as Inabata, humanresources are our greatest asset, and human resource
development is an important management issue overthe medium to long term. In our medium-termbusiness plan, the NC2023, we are working to
improve our initiatives for training global humanresources, further enhancing our systems to increase
diversity, boosting employee engagement, andreforming work styles. From this perspective, we
believe that it is desirable to have directors withexperience and skills in human resources and laboraffairs, and we place importance on theseperspectives when inviting outside directors.
IT & digital
Knowledge of IT and digital technology is
indispensable for promoting digital transformation(DX). In addition, threats to information security are
increasing year by year, and we believe that IT anddigital skills are necessary to strengthen ourcountermeasures against such threats.
Internal controls & audits
In June 2022, we transitioned to a company with anaudit and supervisory committee, with the aim of
speeding up management decision-making andstrengthening the supervisory function of businessexecution. A company with an audit and supervisorycommittee must effectively utilize the company’s
internal control system and conduct systematic audits.
From this perspective, we believe it is essential that thedirectors who are members of the Audit andSupervisory Committee include persons with expertiseand experience in internal control and auditing.
ESG
We established the Sustainability Committee in October
2021, and regard the promotion of sustainability as animportant management issue. We also consider the
improvement of external ESG assessments to be an
important issue. From this perspective, we believethat it is necessary to include persons with knowledgeof sustainability and ESG in corporate management on
the Board of Directors, and we take these points into
consideration when inviting outside directors.

Inabata Integrated Report 2022

62

ESG Information Corporate GovernanceAttendance status for FY2021

Management Council and Shinsa Kaigi

Name

Autonomous

Years
in officeMeetings of Nominating and
the Board
Remunerationof Directors
Committee

Reason for appointment

Directors not on the Audit and Supervisory Committee

We set up the Management Council as an institution forbusiness execution. This council deliberates on basic
policies and important matters related to management anddecides their direction. We have also established theShinsa Kaigi as an institution to review important mattersrelated to business execution, investment and loan
projects, and credit. Its participants (including those whojoin online) from across the world hold direct discussions
with the management.
Number of times convened: FY2021
Management Council 12 times, Shinsa Kaigi 19 times

KiyoshiSatoYes

3 years

100%

100%

16/16 times

12/12 times(Leading independent
outside director,
Chairperson of theNominating andRemuneration
Committee)

TakakoHagiwara

Yes

1 year100%

100%

13/13 times

11/11 times(Nominating andRemuneration
Committee Member)

Audit system• Internal audits
We have the Internal Audit Office and are working tostrengthen the Internal Audit Office’s ranks in order toenhance internal audits. The Internal Audit Office complies
with the internal control reporting system related tofinancial reporting based on the Financial Instruments andExchange Act, and also conducts internal audits asnecessary from time to time. The Internal Audit Officereports regularly to the Board of Directors on audit plans
and audit results.
• Accounting auditors
Accounting audits, audits of financial statements, quarterly
reviews, and internal control audits for Inabata are
conducted by KPMG Azsa LLC. Evaluation criteria,
including autonomy, specialized knowledge, andassessment, have been formulated for the appointment
and suspension of accounting auditors, and decisions are
made based on the evaluation results.

• Cooperation among the Audit and Supervisory
Committee, accounting auditors, and the Internal
Audit Office
The Audit and Supervisory Committee, accounting
auditors, and the Internal Audit Office collaborate throughperiodic reporting and discussion of audit results. In
investigating the status of our operations and assets andperforming other auditing duties, the Audit and Supervisory
Committee works closely with the Internal Audit Office toensure that audits are conducted in an organized andefficient manner.
In addition, the Audit and Supervisory Committee,
accounting auditors, and the Internal Audit Office meet
regularly to exchange information.

Kenji
HamashimaYes

2 years

100%

100%

16/16 times

12/12 times(Nominating andRemuneration
Committee Member,
Chairperson of the
Audit and Supervisory
Committee)

Kenji Hamashima has served as director and senior executive vicepresident, and president and chief executive officer of Ushio Inc. He
currently serves as a special adviser of the same company. As he
possesses global and abundant experience and wide-ranging expertise asa member of the management of a manufacturer which produces applied
optics products, such as industrial light sources, and industrial machinery,
Inabata appointed him in expectation of accurate auditing and supervisionof overall management.

Satoshi
Tamai

Yes

Newly
appointed——

Satoshi Tamai serves as a Representative for the Satoshi Tamai Certified
Public Accountant Office, a Senior Advisor for accrea Inc., and an Outside
Auditor for Toho Lamac Co., Ltd. and PC Depot Corp. As he has experience
working for a major trading company, has a CPA qualification, and has served
as a representative partner for a major audit firm in Japan and an outside
auditor for multiple companies, in addition to possessing knowledge as anaccounting expert and wide-ranging expertise, Inabata appointed him in
expectation of accurate auditing and supervision of overall management.

MinoruSanariYes

Newly
appointed——

Minoru Sanari served as General Counsel, Legal Section, General
Administration Department for Tokyo Gas Co., Ltd. before serving as an
Executive Officer (in charge of governance), and is currently a Senior Advisor
for said company. As he has expert knowledge and an abundance ofexperience from his involvement with corporate legal matters and corporate
governance over the course of many years in his capacity as an attorney atthe largest city gas company, Inabata appointed him in expectation of
accurate auditing and supervision of overall management.

Tomokazu
Fujisawa

Yes

Newly
appointed——

Tomokazu Fujisawa has served as a full-time corporate auditor and director
as a member of the audit & supervisory committee of Astellas Pharma Inc.
He has worked as the Director of Planning for a business division in a global
pharmaceutical company that develops pharmaceutical businesses aroundthe world, also has experience in overseas subsidiaries and auditing
operations and has served as a director on the audit & supervisorycommittee, which is why Inabata appointed him in expectation of accurate
auditing and supervision of overall management.

In order to deepen outside directors’ understanding of theGroup’s business activities, we provide opportunities forthem to meet with the heads of each division, as well as
opportunities to visit overseas (including online meetings)
and conduct on-site inspections. Even after directors haveassumed office, we offer and facilitate training
opportunities to help them acquire the necessary
knowledge and promote an understanding of their roles
and responsibilities. The status of directors’ training isreported to the Board of Directors once a year.

Outside directors

6Internal directors

5

Meetings between outside directors and audit &supervisory board members
Number of times held: FY2021 2 times

63 Inabata Integrated Report 2022

Takako Hagiwara served as representative director of Sony Hikari Corp. andSony Kibou Corp., as well as director of Green House Co., Ltd., and currently
serves as representative director of DDD Corp. and outside director of
Twinbird Corp. and NEC Capital Solutions Ltd. For many years she oversaw
human resources in a major global electronics manufacturer with multiple
businesses including audiovisual equipment, movies and music, and has
experience in management. Inabata appointed her in expectation of gaining
advice on human resources strategies and diversity promotion.

Directors on the Audit and Supervisory Committee

Structure for outside directors
In electing outside directors, Inabata aims to appoint
candidates who have abundant experience and knowledgeof corporate management, the ability to oversee thedecision-making and business execution of the Board of
Directors of the company which conducts business on a
global basis, and who provide appropriate advice from an
objective perspective. The proportion of outside directors
stands at 55% (six out of eleven directors).

Kiyoshi Sato served as president and CEO, as well as vice chairman of theboard, at Tokyo Electron Ltd., and currently serves as an outside director of
Shibaura Machine Co., Ltd. and Mazda Motor Corp. As he possesses global
and abundant experience and wide-ranging expertise as a member of the
management of a leading company which makes equipment to manufacture
semiconductors and flat panel displays, Inabata appointed him in
expectation of gaining supervision and advice on business execution with anobjective perspective.

Training for outside directors

Inabata Integrated Report 2022

64

ESG Information Corporate Governance• Further discussions on the succession plan and sustainability issues• Sufficient provision of information from the Nominating and Remuneration Committee to theBoard of Directors• Better communication among outside directors, which has been insufficient due to COVID-19• Further enhancement of information dissemination to the capital market

The effectiveness evaluation of the Board of Directors• Inabata has been conducting the effectiveness evaluation of the Board of Directors since FY2015.
• Each cycle lasts for three years in which self-evaluation is carried out for the first two years and third-party evaluation iscarried out in the third year.
• The overview of the evaluation and issues to be considered are published on the Company’s website.
• Self-evaluation was carried out in FY2021.

Future courseof action

Based on the results of analysis and evaluation, we will strive to further enhance the effectivenessof our Board of Directors by addressing the issues identified.

▶ Questions
FY2019
Self-evaluation

FY2020Third-party evaluation

FY2021
Self-evaluation

FY2022
Self-evaluation (planned)

1. Operational status of the Board of Directors
2. Function and role of the Board of Directors
3. Composition of the Board of Directors
4. Composition and role of the Nominating andRemuneration Committee

5. Operational status of the Nominating andRemuneration Committee
6. Support system for outside directors
7. Role of the audit & supervisory board members andexpectations for them
8. Relationship with investors and shareholders

FY2021 Self-evaluation process (questionnaire format)
Discussion onquestionnaire(in-house staff
and external
experts)

Distribution ofquestionnaire(all directors andaudit &
supervisoryboard members)

Aggregation(external
experts)

Simplified
analysis(in-house staff)

Report to theBoard ofDirectors andverification

Disclosure on
websiteNext:
Self-evaluation

Specific actions taken as a result of the evaluation of the effectivenessof the Board of Directors• Ongoing review of the makeup of the Board of Directors▶ Evaluation results for FY2021
Target ofevaluation
Summary ofanalysis andevaluation

In June 2022, we transitioned from a company with an audit & supervisory board to a company with an audit andsupervisory committee. Of the 11 directors, the majority (six) are independent outside directors, and we now havea sufficient structure to promote the realization of a monitoring-type Board of Directors with an enhanced
supervisory function.

All directors (9) and audit & supervisory board members (4) in office as of the end of March 2022

• Promotion of discussion of important medium- and long-term issues in the management of thecompany (ensuring diversity)

As a result of analysis and evaluation, the operations of the company’s Board of Directors have been
generally appropriate and assessed highly, with open and active discussions. We also confirmed thefollowing: (1) in general, the company provides sufficient support to outside directors, who arethought of as making major contributions to discussions at Board of Directors meetings; (2) the
presence of audit & supervisory board members is considered to contribute to improving theeffectiveness of the Board; (3) the Nominating and Remuneration Committee is thought of as
operating appropriately; (4) the status of dialogues with investors and shareholders is considered tobe adequately provided to the Board of Directors; and (5) improvement efforts are believed to bemade based on the results of Board of Directors evaluations, among other topics. It has been
confirmed that the Board of Directors of the company is generally functioning properly and that its
effectiveness is secured.
In addition, the following improvements and progress have been confirmed with regard toaddressing the issues that were identified in the third-party evaluation of the Board of Directors’
effectiveness in FY2020.

One female director has been added to the Board of Directors since June 2021. We ensure the diversity of theBoard of Directors by having directors with experience in management, sustainability promotion, human resource
strategy, and overseas management, as well as accountants and lawyers.

• Reinforcement of cross-company functions
In July 2021, we newly established the Business Planning Office to serve as a company-wide cross-functional unit
for considering investments, loans, and M&A. Feature p. 31• Addressing sustainability issues
The Sustainability Committee was established in October 2021. The committee is working on the establishment of
Sustainability Basic Policy and Code of Conduct, information disclosure of sustainability data, and TCFD initiatives.
p. 73• Promotion of discussion of important medium- and long-term issues in the management of thecompany
Implemented free discussions outside of Board of Directors meetings on issues related to thepromotion of diversity and sustainability• Reinforcement of cross-company functions
Business Planning Office newly established to serve as a company-wide cross-functional unit withdedicated personnel• Ongoing review of the makeup of the Board of Directors
Resolved to shift from the current company with an audit & supervisory board to a company with
an audit and supervisory committee, subject to approval at the company’s 161st Ordinary General
Meeting of Shareholders to be held in June 2022, for the purpose of further strengthening thesupervisory function and establishing a system to accelerate management decision-making
On the other hand, we recognized the following issues to be considered in the future.

65 Inabata Integrated Report 2022

Inabata Integrated Report 2022

66

ESG Information Corporate Governance

Remuneration of directors and audit and supervisory committee members

2. Remuneration for directors who are audit andsupervisory committee members
Fixedremuneration

Fixed remuneration only

Inabata has transitioned to a company with an audit and supervisory committee by resolution of the 161st Ordinary General
Meeting of Shareholders held on June 22, 2022. A summary of information such as post-transition remuneration is as follows.
1. Remuneration for directors who are not audit and supervisory committee members(1) Fixed
remuneration*1(2) Performancelinked
remuneration(3) Board Benefit
Trust (BBT)*5

Minimum guaranteed amount by position

Actual remuneration of directors in FY2021*6
Total amount of remunerationand other benefits by type (million yen)Calculated by multiplying the fixed remuneration for each position in (1) by a coefficient for:• Profit before income taxes and non-controlling interests (excluding gains on sales of certain
strategically held shares)*2• ROIC (return on invested capital)*3• Each level of ESG scores from multiple external evaluation organizations (FTSE Russell and MSCI)*4

Directors excluding
outside directors*7, 8

A system under which executive directors receive the points granted to them during their term in
the form of shares and cash upon their retirement. The calculation method of points granted todirectors is as follows.
(Method of calculating points awarded to directors)
Points granted for the current year = Service points + Performance points
50% of the base points determined for each position (fixed)
Service points × performance coefficient
Performance coefficient: Coefficient determined by the achievement rate for consolidated sales
targets and consolidated operating profit targets
Target achievement rate: Actual performance compared to the rate externally announced in themedium-term business plan

*1 Remuneration for directors who are not executive directors is fixed remuneration only.
*2 Executive directors are responsible for all business activities of the entire Group, including the operating and financial activities of Group companies, and webelieve that the results of these activities are reflected in consolidated profit before income taxes and non-controlling interests, which is used as one indicator.
*3 We have decided to use ROIC as a new indicator because one of the key initiatives in our medium-term business plan, the NC2023, is “intensification of
investment targeting future growth,” and we believe that capital efficiency and investment yield should also be considered in light of capital market
demands and trends among listed companies.
*4 Since we recognize that addressing sustainability is an important management issue for our company, we have obtained ESG scores from several external
evaluation organizations and added this as a new indicator.
*5 We have introduced the Board Benefit Trust (BBT) as a performance-linked stock compensation plan in order to clarify the linkage between thecompensation of executive directors and our business performance and stock value. Having directors share not just the benefits of higher stock prices, butalso the risk of lower stock prices with shareholders, will increase their awareness, so that they can contribute to improving business performance andincreasing corporate value over the medium to long term.

Of the remuneration for directors who are not members of
the Audit and Supervisory Committee, (1) fixed
remuneration and (2) performance-linked remuneration aredetermined by the Board of Directors within the scope of thetotal amount of remuneration approved by the Ordinary
General Meeting of Shareholders. The maximum amount of
remuneration for directors who are not members of the
Audit and Supervisory Committee as per the resolution of
the Ordinary General Meeting of Shareholders is 430 million
yen per year (of which 50 million yen is for outside directors).
In addition, as a performance-linked stock compensation
plan for executive directors, the company has resolved (3)compensation limits for the Board Benefit Trust (BBT).
The individual remuneration of directors who are not audit
and supervisory committee members is designed to be
calculated automatically using a formula and coefficient

67 Inabata Integrated Report 2022

Remuneration for directors who are audit andsupervisory committee members is decided via
discussions by directors who are audit and supervisorycommittee members, within the scope of total
remuneration approved by the Ordinary General Meetingof Shareholders. The maximum remuneration amount for
directors who are audit and supervisory committee
members, as per the resolution of the Ordinary General
Meeting of Shareholders, is 80 million yen per year.

determined by the regulations, without taking qualitative
factors into consideration, and the Human Resources Officewill calculate this in accordance with regulations. The resultsof the calculations are reviewed by the Nominating andRemuneration Committee, which is chaired by the leadindependent outside director and at which independent
outside directors have a majority. The Board of Directors
determines the compensation of directors who are not audit
and supervisory committee members with full respect for
the results of the deliberations of the Nominating andRemuneration Committee.

Performancecoefficient

Number of
eligible persons

Fixed remuneration

Performance-linked
remuneration

Board Benefit
Trust (BBT)

Total amount(million yen)

1.16

7

163

114*9

41*10

319

Corporate auditors excluding
outside audit & supervisoryboard members*7, 8

2

43

—

—

43

Outside directors
and auditors*8

7

46

—

—

46

*6 The above total amount of remuneration is related to FY2021. Inabata transitioned from a company with an audit & supervisory board to a company with anaudit and supervisory committee by a resolution of the 161st Ordinary General Meeting of Shareholders held on June 22, 2022.
*7 At present, as of the end of FY2021, there are eight directors and four corporate auditors.
*8 This includes one director and one outside director who retired at the conclusion of the 160th Ordinary General Meeting of Shareholders held on June 23,
2021, and one audit & supervisory board member who retired upon his death on January 6, 2022.
*9 Performance-linked remuneration is calculated by multiplying the fixed remuneration for each executive position by a coefficient based on net profits for the
fiscal year before income taxes and non-controlling interests (excluding gains on sales of certain strategically held shares).
*10 Board Benefit Trust (BBT) is the amount of provision for the reserve for directors’ stock benefits included in the fiscal year under review.

Ratio of performance-linked remunerationand fixed remuneration in FY2021
Performance-linked
remuneration

Fixed remuneration

48.9%

51.1%

Reference: Past remuneration of directors*
FY2017223 million yen

FY2018248 million yen

FY2019300 million yen

FY2020318 million yen

FY2021319 million yen* Before FY2019, excludes non-executive directors.
After FY2020, excludes outside directors.

These sorts of procedures ensure objectivity, fairness, andtransparency in the determination of individual compensation
for directors who are not audit and supervisory committee
members, and the determination of individual compensationis never delegated to specific directors or other parties.

Inabata Integrated Report 2022

68

ESG Information Corporate Governance / Risk Management

Risk Management

Strategically held shares• Basic views
Close business and cooperative relations with various
companies are valuable assets to Inabata, and thecompany believes the establishment, maintenance anddevelopment of these relations improve the company’s
corporate value in the medium and long term and lead tothe benefit of shareholders and investors. Also, asInabata believes that strategically holding shares of suchcompanies continues to be an effective way to establish,
maintain and develop good cooperative relations, thecompany owns strategically held shares.

long term, and over the next five years (by March 31,2027), to reduce the balance of strategically held sharesby approximately 80%, relative to the balance as ofMarch 31, 2021. Based on this policy, we will further
reduce our strategically held shares by more rigorously
verifying the significance of our holdings.

Strategic shareholdings*

50% reduction

40,000• Policy related to holding and reducing strategicallyheld shares
Inabata forms a judgment concerning the pros and consof strategically held shares based on whether holding
them contributes to the establishment of cooperative
relations, enhances the company’s corporate value in themedium and long term, and leads to the benefit ofshareholders and investors. To be specific, the Board of
Directors will make annual comprehensive reviews of theappropriateness of holding each individual stock, taking
into account the financial condition of the investee
company, the liquidity of the stock, trends in the volumeof transactions and profits related to business with thecompany or its group companies and their medium- tolong-term prospects, economic rationales such aswhether the risk and return are commensurate with thecost of capital, and other qualitative information.

* Strategic shareholdings:
Stocks listed in Japan(Millions of yen)
60,00080% reduction

20,0000

We manage risks by establishing and implementing
various regulations related to credit management, export
management, products management and others, with
our Risk Management Office at the core. Additionally, we
prepare ourselves for risks arising from everyday work byorganizing and implementing the work rules for tradingbases and manufacturing bases in multiple languages,
along with executing appropriate risk checking functions
from head offices using regulations for managing Group

Note that we have set “continuous review of assets andfurther improvement of capital and asset efficiency” as a
key initiative in our three-year medium-term businessplan, the NC2023, which ends in FY2023. Specifically, thepolicy is to reduce the balance of strategically held sharesby 50% over the three-year period during the promotionof the NC2023, relative to the balance as of March 31,
2021. In addition, we have added a new policy to further
reduce our strategically held shares over the medium to

69 Inabata Integrated Report 2022

In this section, we will explain risks that are of highimportance to our Group.

Major risks faced by the Inabata Group
March 31, March 31,
2021
2022

March 31,2024

March 31,2027

NC2023

Impact on businessperformance

Credit risk ofbusiness partners
2 Potential risks ofoverseas activities
3 Risk related tobusiness investment
1

Huge

Sales of strategically held shares
Risk related tobusiness restructuring
7 Environment-related
risks
5

FY2017

9,017 million yen

FY20185,298 million yen

FY20193,026 million yen

Medium

FY20202,944 million yen

FY2021

9,367 million yen

Risk of fluctuationsin product markets
6 Risk of natural andother disasters
4

Risk related to laws
and regulations
11 Risk of fluctuations inretirement benefit
obligation
Low• Criteria for exercise of voting rights
In principle, Inabata exercises voting rights for all agendas
in order to exercise its rights as a shareholder. The
company reviews the merits and demerits of eachagenda and exercises voting rights based on the
judgment criteria of whether sustainable growth of theheld company and improvement of its corporate value inthe medium and long term can be expected.

8

Risk of fluctuations inforeign exchange rate

10 Risk of decline in value

9

Small

The company follows a policy of reducing the sharesthat the holding of which is not considered significant,while considering timing and the effect on the market
and the business.

companies in Japan and abroad. We have identified the 11
risks shown in the above matrix as the main risks facedby our Group. Mapping has been done on the matrix
based on the probable impact of each risk on our
performance and the possibility of its occurrence using
the responses on risk awareness of managers in theeffectiveness evaluation of the Board of Directors
conducted in FY2021 and other factors.

Operating globally with 60 bases across 18 countries,
mainly in Asia, our Group faces various kinds of risks.

of securities held

MediumHigh

Possibility ofoccurrence

Risks of high importance and related countermeasures
Credit risk of business partners
Our Group companies grant credit to many business
partners in Japan and abroad. Although we carry out
credit management on a global scale, including ouroverseas business partners as well, we cannot guarantee
full collections. Therefore, there is a risk of adverse
impact on our Group’s performance and financial status
due to the aggregation of bad-debt losses and allowancefor doubtful accounts through bankruptcy and civil
1rehabilitation procedures and so on from contingencies
concerning business partners. In the consolidated fiscal
year, the Group’s notes and accounts receivable were184.6 billion yen and inventories were 79.0 billion yen, thetotal of which accounted for 68% of total assets. Credit
screening is conducted by the Shinsa Kaigi, which iscomposed of members of management and holds
discussions on investments, loans and credit projects.
With regard to inventories, we monitor and manage theInabata Integrated Report 2022

70

ESG Information Risk Managementbalance of each consolidated Group company on amonthly basis.
2 Potential risks of overseas activities
Our Group’s production and sales activities overseas
cover multiple regions, including Southeast Asia andNortheast Asia, North America, and Europe. There are
inherent risks in operating in these foreign markets,
which include unexpected changes in laws or regulations,adverse political or economic factors, difficulty inrecruiting and retaining personnel, underdeveloped
technological infrastructure, potentially adverse tax
consequences, and social disruptions due to otherfactors. For sales in the consolidated fiscal year by region,
Asia accounted for 52% of the total, having the largest
influence on our business. The consolidated fiscal year
was impacted by lockdowns caused by COVID-19 in
China and other countries. We have formulated and are
implementing business continuity plans (BCP) at our
major overseas bases to serve as countermeasures for
emergencies such as infectious disease outbreaks.
3 Risk related to business investment
When developing business at the Inabata Group, in manycases, we actually make investments and acquire equity
in a joint enterprise or joint venture. Notably, with respect
to our investments in consolidated affiliates, there is arisk of adverse impact on our Group’s performance andfinancial status due to trends in the financial status andoperating results of such Group companies. In principle,
our Group invests in minority interests with the main
objective of expanding shosha trading business, andlimits the risks and amounts for investments in majority
interests. Under NC2023, we are aggressively investingunder the priority policy of “intensification of investment
targeting future growth.”
Information on business investment p. 31
4 Risk of fluctuations in product markets
Many of the information electronic materials, chemical
raw materials, food products, and plastics handled by ourGroup are impacted by fluctuations in commodity prices.
Failure to respond flexibly to market fluctuations could
adversely impact the performance and financial positionof our Group. Each sales division gathers market
information, monitors price trends, and thoroughlymanages inventory. In the consolidated fiscal year, wewere affected by the market prices of liquid
crystal-related materials, which are the main materials
sold in the information and electronics business, and bytrends in naphtha prices, which impact the prices ofmaterials in the plastics business. Also, mainly in the foodbusiness, we carry out inventory transactions and may be
impacted by the market price of each product.

71 Inabata Integrated Report 2022

Risk related to business restructuring
In order to promote business selection andconcentration, our Group continues to restructure its
business by withdrawing from unprofitable businesses
and selling or reorganizing subsidiaries and affiliates.
These measures may adversely impact the performanceand financial condition of our Group. We may be unable toexecute our business restructuring plans in a timely
manner due to factors such as government regulations
and employment issues in each country. There is no
guarantee that the Group will be able to achieve all or partof the original objectives by implementing businessrestructuring. We have established criteria for considering
withdrawal from businesses, and hold deliberations on
withdrawal, etc., from the relevant Group companies at
the Shinsa Kaigi, which is composed of members ofmanagement and holds discussions on investments,
loans and credit projects.
5

Risk of natural and other disasters
If a natural disaster such as an earthquake, tsunami, or
typhoon, or a highly contagious infectious disease
occurs in a country or region in which our Group
operates, damage to our Group’s employees, offices, or
facilities may have an adverse impact on the Group’sbusiness. Furthermore, the supply chain disruption
caused by the aforementioned disasters andsupply/demand fluctuations in markets for products
handled by our Group may impact our Group’s operating
results and financial position.
6

In order to respond to adverse impact of such disasters,
we have formulated a Business Continuity Plan (BCP)
based on our Group’s basic policy for crisis response. We
will strive to continue business with the highest priority
on ensuring the safety of our employees. However, it
may not be possible to avoid all damage or adverse
impact, and the future business of our Group may be
adversely impacted.

engaged in the plastics recycling business, as well as the
manufacture and sale of biodegradable biomass plastic.
8 Risk of fluctuations in foreign exchange rate
Our Group engages in the production, sales, and tradingof products and raw materials for overseas businessdevelopment. In principle, we conduct hedging
transactions through measures such as forward
exchange contracts. However, we may be impacted byexchange rate fluctuations associated with foreign
currency denominated transactions. Furthermore, weconvert items (including sales, expenses, and assets ineach region) denominated in local currencies into
Japanese yen for the preparation of consolidated
financial statements. Consequently, the exchange rate at
the time of conversion may impact the value afterconversion into yen.

Risk related to laws and regulations
Our Group is subject to various government regulations in
the countries in which we operate. These regulations
include permits for business and investment, restrictions
on exports for reasons such as national security, customs
duties, and other regulations on imports and exports.
Failure to comply with these regulations may result inincreased costs. Consequently, these regulations may
adversely impact the performance and financial positionof the Group.
9

In the consolidated fiscal year, our overseas sales ratio isat the high level of 65%. It is possible that regulations onimports and exports will have a significant impact on ourGroup. Therefore, we have established the internal Export
Control Committee in order to reduce risks.

For the consolidated fiscal year, foreign exchange gains
were 53 million yen, and foreign currency translation
adjustments were 11.7 billion yen.

Addressing other risks• Tax compliance
All officers and employees of the Group strive to comply
with laws and regulations as well as internal regulations,regardless of the country, to manage Inabata with afocus on compliance. With regard to taxes, we recognizethat one of our social responsibilities is to pay taxes
according to related laws and regulations in each country
or region and maintain transparency. We think thatproper tax payment contributes to economic
development of the country or region and in returnresults in sustainable growth of our Group andimprovement of our medium- to long-term corporate

value. Therefore, we strive to minimize tax risk andmaintain as well as improve tax compliance.
Note: Responses to the following risks are described in the section
entitled “ESG Information.”• Supply chain management (p. 77)• Compliance, internal whistleblowing system,anti-corruption (p. 78)• Information security (p. 79)• Human rights (p. 90)
Note: In regard to climate change risk, we disclose information inaccordance with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD). (p. 82)

In the consolidated fiscal year, we were impacted by
COVID-19, mainly in Asia.
7 Environment-related risks
Our Group handles a wide range of products in fourbusiness fields in Japan and overseas. The manufactureand sale of these products may be impacted by factors
including regional environmental regulations and changes
to eco-friendly products. Although we are working todiversify our suppliers, we were impacted in the
consolidated fiscal year by environmental regulations in
China for businesses such as chemicals. Moreover, salesof plastics may be impacted by the transition toplastic-free products. In our plastics business, we are

Business continuity plan (BCP)
We have been formulating and introducing BCPs at major bases, including domestic and overseas Group
companies since 2018 so that we can promptly restart and continue business activities after a crisis takes place.
We plan to establish the BCPs at 38 bases in 13 countries including Japan.
In 2021, we organized the issues identified through the spread of COVID-19 and reviewed our business continuity
measures. We intend to formulate plans for FY2023 at some bases that had postponed the formulation of plans
due to the spread of COVID-19.

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ESG Information Sustainability Management

Sustainability Management

Sustainability promotion system

For information on sustainability, please also visit our website entitled “Sustainability.”

Inabata Group Sustainability Basic Policy/
Inabata Group Sustainability Code of Conduct
In November 2021, based on our Group’s management
philosophy and in consideration of environmental/social
issues and international trends, we newly established theInabata Group
Sustainability Basic Policy
The Inabata Group’s management philosophy is
to value people and contribute to society with aspirit of love and respect. Under this mission, we
will also make it a management priority toaddress various environmental and social issues.
We will continue to respond to society’s evolving
needs in all the Group’s business activities, as we
aim to enhance our long-term corporate value andcontribute to building a sustainable society.

Sustainability Basic Policy and the Sustainability Code of
Conduct. The latter is composed of nine precepts on topics
such as human rights and the environment.

In October 2021, we established the Sustainability
Committee, which is chaired by the president andvice-chaired by the director in charge of sustainability.
The committee members consist of directors andexecutive officers in charge of the four businesssegments and selected heads of administrative offices.
The committee formulates, authorizes, and monitors theGroup’s sustainability policies and measures, and it
reports to the Board of Directors. In principle, theCommittee meets at least once a year (and holds
extraordinary meetings as necessary).
Outside directors, non-executive directors, and audit andsupervisory officers serve as observers of the

Inabata Group
Sustainability Code of Conduct(items only)
1. Respect for Human Rights
2. Healthy, Safe, and Secure Working Conditions
3. Fostering an Open Culture for Active
Participation by Diverse Staff
4. Environmental Conservation
5. Crisis Management
6. Constructing a Sustainable Supply Chain
7. Compliance8. Collaboration with External Stakeholders
9. Sustainability Information Disclosure
Sustainability Committee
Established in November 2021
Revised in June 2022

Sustainability Committee. The observers monitor thefairness and effectiveness of the discussions at thecommittee and provide recommendations as necessary.
We have established the Sustainability Promotion
Department as a body dedicated to promoting
sustainability throughout the Group in accordance with theresolutions of the Sustainability Committee. We have also
appointed Sustainability Promotion Members made up ofstaff from sales divisions and selected administrative
offices. Members collect information and compile ideas
about sustainability-related matters from their respective
divisions and offices in order to facilitate smooth operationof the Committee.

Reporting, authorization
Board of Directors

President

Sustainability Committee

Observers

Management Council

Executive Officers

Sales Divisions
Administrative Offices
Group Companies Worldwide

Secretariat

Sustainability Promotion Members

Sustainability Promotion Department
Project planning, promotion, execution

FOCUS

Participation in the United Nations Global Compact
In April 2022, Inabata & Co., Ltd. signed the United Nations Global Compact (UNGC) and was
registered as a participating company. In addition, we also joined the Global Compact Network
Japan, which comprises companies and other entities in Japan that have signed the UNGC.

The complete text of the Sustainability Code of Conduct is available on our Group’s website.
https://www.inabata.co.jp/themes/english@inabata/pdf/csr/sustainability_guid_en_2206.pdf

73 Inabata Integrated Report 2022

Our Group will support and observe the 10 principles advocated for by the UNGC—whichpertain to protecting human rights, eliminating unfair labor practices, being environmentallyfriendly, and preventing corruption—and based on our management philosophy, ourSustainability Basic Policy and Sustainability Code of Conduct, we will contribute to realize thesustainable society.

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ESG Information Sustainability Management

Overview

Materiality

Materiality

Materiality identification process
STEP 1

STEP 2

List social issues
Refer to international guidelines (GRI, SASB, SDGs, ISO 26000, UNGC10 principles, etc.)
Refer to external evaluations and requests (various ESG surveys such as FTSE and MSCI, investor requests, etc.)

Creating Sustainable Value

In June 2022, we identified materiality for the sustainable growth of our Group. We intend to formulate indicators, targets,and plans for each materiality in FY2023.

Extract issues and evaluate importance
The Sustainability Committee Secretariat and Sustainability Promotion Members narrow down issues andevaluate their importance
The Sustainability Committee deliberates on tentatively identified materiality
Verify validity from an external perspective
Hold stakeholder dialogues with external experts

STEP 4

Management makes decision
The Sustainability Committee discusses and decides on candidate materiality based on external opinions

Strengthening the Foundationfor Business Continuity

STEP 3Inabata Group Materiality

Contributing to a
decarbonized and circularsociety, sustainable use ofnatural capital

We will focus on environment-related businesses, such as environmental load-reducing products, in areas
including renewable energy, alternative fuels, recycling, and electric vehicles to build a decarbonized andcircular society. We will also promote the sustainable use of natural capital in our businesses related to building
materials and food. We will take steps based on our environmental management system to reduce GHG
emissions, reduce waste and increase the reuse of resources, prevent pollution, and conserve water resources
and biodiversity to conserve the environment.

Contributing to safety,
security, and well-being

We will provide solutions that contribute to safety, security, and well-being through our mobility, food, and life
science businesses. Chemicals are fundamental to a wide range of industries. We will maintain a highawareness of the responsibility associated with chemical substance management, product safety, and quality.

Providing value throughresilience in procurement
and supply functions

Providing flexible and optimal dealings is an important function of Inabata Group as a trading company. In an
uncertain, unpredictable society, the functions of the Inabata Group provide even greater value as a solution
provider for changing customer and social needs. We will deliver value through resilience in procurement andsupply functions by strengthening our supply chain management. To achieve this, we will use our global
network and leverage our multifaceted functions as a trading company, such as product development,
partnerships, and logistics expertise.

Respecting human rights in thespirit of love (ai) and respect(kei) and growing together withlocal communities

We respect the human rights of stakeholders associated with Inabata Group activities based on our core valueof respecting people with the spirit of love (ai) and respect (kei). We will share value with the people and todevelop and grow with the local communities where we do business around the world.

Fostering and strengthening
the human capital driving thevalue creation

People driving the creation of new value are the Group’s greatest asset. People trusted by our clients tobecome their best partners by demonstrating high ethics, passion, and providing solutions from a global
perspective are the source of sustainable value creation. The resourcefulness of our employees is whatenables us to continuously produce value. We believe that an organizational culture that recognizes diversityand values free and open discussions and teamwork will have high employee satisfaction and will support
ongoing sustainable growth for both employees and the Company. We will continue to promote newworkstyles, diversity & inclusion, employee engagement, human resource education and skill development,
and occupational safety and health.

Enhancing governance andrisk management

We maintain a strong corporate governance system as a fundamental element of our continuous efforts toenhance corporate value. The system ensures management transparency and fairness provides a foundation
for swift and decisive decision-making. We are also strengthening group governance in Japan and overseas andare fortifying our risk management, which encompasses compliance, corruption prevention, business
continuity management, and information security.

Contributing to a decarbonized and circular society,sustainable use of natural capital

Creating
Sustainable
Value

Contributing to safety, security, and well-being

Materiality and the business segments

Providing value through resilience in procurement and supply functions

Strengthening
the Foundationfor BusinessContinuity

Fostering and strengthening the human capital driving the value creation
Enhancing governance and risk management

75 Inabata Integrated Report 2022

Contributing to a decarbonized andcircular society

Creating Sustainable Value

Respecting human rights in the spirit of love (ai) and respect (kei) and growing
together with local communities

Key points

Sustainable use of natural capital

Information &Electronics

Chemicals

Renewable energy●●

Alternative fuels●

Recycling●●●

Electric vehicles

●

●

●

Mobility

Plastics●

Building materials●

Food
Contributing to safety, security,
and well-being

Life Industry

●

●

●

Food

●

Life Science●●

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ESG Information Supply Chain Management / GovernanceNote: For information on corporate governance, please refer to pp. 59 to 69.

Supply Chain Management

Governance (Compliance, Anti-corruption, Information security)

Basic concept

Compliance

For the Inabata Group, our supply chain is our lifeline andthe foundation for creating value. We have set “providing
value through resilience in procurement and supply
functions” as a materiality to which we assign priority andfocus. For this reason, our suppliers are important partners
in creating value, and we aim for mutual growth by working
together to solve environmental and social issues.

Supply Chain CSR Action Guidelines
We have established the Inabata Supply Chain CSR Action
Guidelines based on our belief in the importance of sharing
values and aim for the same goals with our suppliers, who

are our partners in creating value together. We aim torealize a sustainable society by cooperating with all
stakeholders in the supply chain.

Supply Chain CSR Action Guidelines

We would like to seek understanding of the following items from our trading partners and other stakeholders, andsolicit cooperation in their implementation.
5. To work to prevent environmental problems throughmeasures on biodiversity and global warming.
6. To observe all domestic and foreign laws, to engage in fairbusiness transactions, and to strive to prevent corruption.
7. To work to ensure and maintain the quality and safety of
products and services.
8. To protect information assets from an information security
perspective.
9. To disclose information regarding the above items in atimely and appropriate manner.

Product/supplier management (food business)
The food business in the Life Industry segment is directly
related to the safety and health of consumers, so a highlevel of product and supplier management is required.
Under the motto of “from visible producers to visible
consumers,” we conduct strict product and suppliermanagement in order to provide safe and secure
agricultural and marine products from all over the world.

77 Inabata Integrated Report 2022

We also believe that carrying on the spirit of our
founder—love (ai) and respect (kei) for people—is essential
to fostering a corporate culture that emphasizes
compliance. Hence, we strive to promulgate our Mission,
Vision, and IK Values within the company.
We have also formulated a policy on tax compliance.

Inabata & Co., Ltd. has formulated these Inabata Supply Chain CSR Action Guidelines in response to the social
expectation for companies to fulfill CSR in their supply chain management.

1. To respect human rights, and avoid inhumane treatment
including discrimination, harassment, cruelty, and child labor.
2. To respect employees’ right to organize and right ofcollective bargaining.
3. To prevent forced labor and unfair low-wage labor.
4. To provide employees with a safe, sanitary, and healthy
work environment, to prepare emergency
countermeasures for dealing with disasters and accidents,
and to publicize these countermeasures so that they are
known by all concerned parties.

• Basic concept
To establish management practices that emphasize
compliance, the Inabata Group advocates thoroughcompliance per the Inabata Group Sustainability Code of
Conduct. We have also adopted the Inabata Declaration ofCompliance and the Compliance Guidelines. Inabataconsiders its corporate activities shall be in full compliancenot only with legal regulations but also with social rules.

When starting transactions with a new supplier, we
conduct fundamental surveys such as interviews andaudits to determine whether they possess international
certifications. When importing food from overseas, we use
a procurement business flow which requires confirmation
as to whether or not the used pesticides and residual
pesticides satisfy Japanese standards.

• Internal whistleblowing system
Inabata Group’s internal whistleblowing system consistsof two separate routes. The “compliance hotline” isprimarily for reporting violations of laws and regulations,such as bribery and other types of corrupt activities, andincidents of serious breaches of compliance, includingorganizational fraud. The “counseling desk” provides

mediation and coordination to help employees resolve
issues related to the work environment and work
relationships. For both reporting routes, contact andconsultation are possible by oral communication,
telephone, email, and postal mail.
Inabata operates its internal whistleblowing system inaccordance with the Internal Whistleblowing Rules. As
regulations common to the above two whistleblowing
routes, the rules clearly stipulate that persons engaged in
responding to whistleblowing are obliged to keep theprovider anonymous, and that any attempts to identify theprovider or any adverse treatment of the provider or those
who cooperate with the investigation are strictly prohibited,ensuring that employees who use the system to provide
information do not suffer consequences for whistleblowing.
When information is received, the rules provide clear
procedures for communicating and verifying theinformation promptly and appropriately. The president of
Inabata, who chairs the Compliance Committee, regularly
reports the operational status of the internal
whistleblowing system to the Board of Directors.

Anti-corruption• Basic concept
The Inabata Group Sustainability Code of Conduct andInabata Declaration of Compliance that we take to prevent
corruption, including bribery and illegal payments toforeign public officials. In addition, the Supply Chain CSR
Action Guidelines for our business partners and otherstakeholders also states our commitment to not engaging
in corrupt business practices.
To raise awareness and assist our employees in preventing

corruption, we have produced and made readily available
on the company intranet portal site our Compliance
Guidelines and manuals on antitrust law, subcontracting
law, unfair competition prevention law, insider trading
regulations, and bribery.
The Compliance Committee, which is chaired by thepresident, oversees and regularly reports to the Board of
Directors on serious cases of compliance violation,
including bribery, law violations, and organizational fraud.

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ESG Information Governance

FOCUS

Information security

Promotion of Digital Transformation (DX)• Basic concept
The Inabata Group recognizes the importance of
information security. With the aim of protecting theGroup’s information assets from information security risks,
we have established principles concerning information
security in our Information Security Policy. We have alsoestablished information management procedures andprepared manuals for all employees. We review ourpolicy continuously to flexibly adapt to emerging risks
and technologies.
• Management system
We have established the Information Security Working
Committee as a subordinate organization of theCompliance Committee, which is chaired by the president.
Information security administrators appointed in eachsales division and administrative offices regularly report to
the Information Security Working Committee on the statusof compliance with policy, rules and manuals.
In addition, we have established a security incident
response team (IK-SIRT*) to respond quickly andaccurately to increasingly sophisticated security incidents,
and are strengthening information sharing both internallyand externally.
* IK-SIRT: A term combining the Group’s symbol “IK” and an acronym for“Security Incident Response Team.”• Information security awareness training
The Information Security Working Committee periodicallyconducts information security awareness training for all of
our officers and employees, including contract employees,
temporary employees, employees seconded to othercompanies, and employees seconded from other companies.

One of the main priority measures in the Inabata Group’s medium-term business plan NC2023 is “enhancement of
global management information infrastructure.” The improvement of information security and the promotion of DX
are two essential parts of our efforts.

Further enhancement of global management information infrastructure• We will strive to adapt to new technological trends, achieve further digitalization, and transform and streamline
operations (DX initiatives).
• We will establish a global management information infrastructure that supports enhancement of security,business continuity planning, and new workstyles.
Promotion of DX

Establishment of management information
infrastructure and enhancement of security• Centralization of information management (master data
management)• Visualization of sales activities (natural language analysis of sales
reports)• Visualization of business processes (process mining/RPA)• Visualization of global management information (foundation
construction)• Establishment of CSIRT* system and initiatives for zero trust security• Strengthening of collaboration with external parties(establishment of infrastructure for secure information sharing)* CSIRT (Computer Security Incident Response Team): An organization that
responds to the occurrence of security incidents

Training material about information security for new employees

IT systems and technology environment supporting DX• Information security in internal infrastructure
Due to the COVID-19 pandemic and the promotion ofworkstyle reforms, work in remote environments has
increased rapidly. In order to tackle these challenges, inaddition to traditional antivirus software, we haveintroduced an endpoint security system that monitors the
behavior of devices. Monitoring is performed 24 hours aday, 7 days a week by an external security operations
center (SOC).

Information security management system

Process mining, RPA (Robotic Process Automation), natural language analysis,
security (system for incident detection/immediate response)

Organizations and human resources for promoting DX strategy:
Renewal of the information system department; promotion of securing anddeveloping digital human resources
In April 2022, in order to further promote DX, we selected business leaders from each sales division for acompany-wide project.
We are developing human resources who can analyze management information. Furthermore, we have renewed
the existing information system department into an organization focused on DX.
Organization for promoting DX strategy

Securing and developing digital human resources

The person in charge of DX periodically reports to the Management
Council and sets up opportunities for exchanging opinions on
overall management, including DX strategy promotion.

Business leaders capable of analyzing business from a global
perspective are selected for the project from each sales division(seven divisions and nine product fields).

Board of Directors
External security groups

Compliance Committee

Japan Foreign Trade Council
ISAC

Related companies
CSIRTs of each company

Information Security
Working Committee

Nippon CSIRT Association

Digital Promotion OfficeBusiness leader

All employees

Data analytics training

RPA training

Person in charge of DX: General
Manager, Digital Promotion Office• Establish DX actions as sustainable company-wide initiative andimprove corporate value.

Security incident
response team (IK-SIRT)

Security Operations Center(SOC)

Management Council

CIO:
Director & Senior Managing
Executive Officer

New enterprise
information systemproject

Enhancement of cooperation with external partners for data utilization
Domestic
subsidiaries

79 Inabata Integrated Report 2022

Foreignsubsidiaries

Divisions/
offices

Business partners/
affiliated companies

Cooperation with external partners• Discuss the key indicators of management information and hold periodic data analysis study meetings.
• Conduct work analysis by process mining and realize further improvements by RPA.
• Perform natural language analysis of sales reports (qualitative information) and leverage customer relationship management (CRM).

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ESG Information Environment

Environmental Management

Climate Change

Basic concept

Environmental management system

Basic concept

As a corporation with global operations, the Inabata Group
recognizes that responding to global environmental issues
such as climate change, resource circulation, and biodiversity
is one of our most important management issues.

We have established anenvironmental
management system
based on ISO 14001. The
results of annual activities
under the environmental
management system arereported to the president
for management review.
We also determine what
results are included in thebusiness execution reportof the director in charge ofCertificate of Approval
the department responsible (Renewed on April 1, 2020)
for managing ISO
certification as stipulated byregulations of the Board of Directors, and the results arethen reported at the Board of Directors.

Climate change is one of the most pressing issues facing
global society. Unprecedented extreme and intense
weather events are already occurring with greater
frequency and they are seriously impacting both thenatural environment and people around the world. The
Paris Agreement is an international treaty on climatechange measures seeking to “hold the increase in the
global average temperature to well below 2°C above
pre-industrial levels and pursuing efforts to limit thetemperature increase to 1.5°C above pre-industrial levels”
with the aim of achieving a balance between
anthropogenic emissions and the absorption ofgreenhouse gases (GHG) in the second half of this century.

In order to pass on a rich earth to the next generation, in
addition to complying with environmental laws andregulations, we will also reduce the environmental load of ourbusiness activities and provide environmental businesses
that contribute to the realization of a sustainable society. With
these goals in mind, we will work to continuously improve ourenvironmental management system.

System (governance)
The Inabata Sustainability Committee formulates,
authorizes, and monitors policies and measures related tosustainability such as climate change. The committee
meets a minimum of once annually (more often as needed)
and reports to the Board of Directors. The company
president chairs the committee, and the officer in charge ofsustainability is the vice chair. The committee comprises
two directors, one executive officer from each businesssegment, and six heads of main administrative offices. In
addition, six outside directors, one non-executive director,
and one audit and supervisory officer participate as
observers to monitor the committee for fairness andeffectiveness and to make recommendations.
The matters resolved by the Sustainability Committee are
implemented and managed by the Sustainability
Promotion Department, which serves as the committee’s
secretariat and promotes the sustainability activities of theGroup. The Sustainability Promotion Department provides
the Sustainability Committee with sustainability-related
information collected from across the Group to support
meaningful discussion by the committee. The department
cooperates with Sustainability Promotion Members fromeach sales division and main administrative offices to carryout its task.

We appoint a person in charge of ISO administration andan ISO leader in each sales division and administrative
office, and work to implement environmental activities
throughout the company.
Domestic consolidated subsidiaries have also acquired
ISO 14001 certification.
FY2021

ISO 14001
certification

Acquired office

15 locations

Acquisition ratio

60%

Coverage: Inabata & Co., Ltd. and domestic consolidated subsidiaries

The Inabata Group fully recognizes the effects of climatechange and the need for countermeasures and has statedin its Sustainability Basic Policy and Action Guidelines andthe Inabata Declaration of Compliance that it will use its
business to conserve the Earth’s environment. We further
proclaimed our intent of “contributing to a decarbonized
and circular society,” announcing it as materiality in June
2022, placing measures to address climate change andenvironmental issues as a management priority. We
consider climate change as presenting both risk andopportunity for the Group and, while taking steps to reduce
GHG emissions, we will seek to provide products andsolutions that contribute to creating a carbon-free society.
We also recognize the importance of climate-related
financial risk disclosure and have begun providing
information in accordance with the recommendations

issued in June 2017 by the Financial Stability Board’s Task
Force on Climate-related Financial Disclosures (TCFD)*.
Although the compliance requirements for some TCFD
recommendations require further study and discussion, we
are increasing disclosure in line with the recommendations.
* The Task Force on Climate-related Financial Disclosures was launched in2015, requested by the G20. Recognizing the significant impact thatclimate change will have on financial markets, the Final Report(Recommendations of the TCFD) released in 2017 called on companies
to disclose information on the risks and opportunities associated withclimate change.

Governance
Please refer to “System (governance)” under“Environmental Management” (page on left).

Main initiatives
We are striving for energy management by raisingawareness of our employees towards saving electricity,
implementing Cool Biz, introducing systems to monitor
electricity consumption, introducing equipment with highenergy-saving performance, and introducing eco-friendly
cars, etc.
We are also focusing on businesses that contribute to a
decarbonized society, such as renewable energy,
alternative fuels, and other low-carbon products.

FOCUS

Announcing the Carbon Neutrality Declaration 2050
In June 2022, the Inabata Group announced the Carbon Neutrality Declaration 2050, which sets the goal of achieving
net zero* greenhouse gas (GHG) emissions from business activities by FY2050.
This declaration is a response to global demands regarding climate change, and declares that we will accelerate
climate change countermeasures more than ever before.
* Targets the amount of internal emissions (GHG Protocol Scope 1 = internal use of fuel, and Scope 2 = use of electricity and heat purchased by
the company)

81 Inabata Integrated Report 2022

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ESG Information Environment

Climate Change
Item

Strategy

Our analysis on the impact of climate change determinedthat the financial risks the Group faces are not to a degree
to significantly impact its business operations. Business
opportunities are more significant than the risk considering
our future growth. Changes could increase customer

We plan to disclose the results of our scenario analysis in
FY2023.
Permanent

Examples of climate change-related risks/opportunities and responses (partial excerpt)
Item

Climatechange risk

Technology

Transition to
low-carbon
technology

Business risk

Large

• Increased investment
into new and alternativetechnologies, investment
failure, and risk ofirrecoverable loss
• Decreased sales volume
and profit for existingproducts due toinnovative low-carbon
technologies

Transition risk

DegreeofimpactMarketIncreasing
marketuncertainty

Large• Reduced business fromrevamped customer
supply chains• Loss of business due toincrease of electric andfuel cell vehicles

Lengthofimpact

Short
to
long
term

Short
to
mediumterm

Business opportunity• Invest in low-carbon
technology to broaden
order opportunities• Increase profits bydeveloping and pursuing
procurement
opportunities for
low-carbon technologies• Increase of opportunities
for new transactions as
customers accelerate
local productions• Increase of demand forbatteries and lightweightresins due to conversion
to electric and fuel cellvehiclesLengthofimpactIntense andfrequent
typhoons,
heavy rains,intense heat,and other
weather events

DegreeofimpactBusiness risk

Large

• Supply chain disruptions
cause business stagnation
or decrease (such as fromdamage to coastal
petrochemical plants)• Risk of operation
shutdowns due to damage
to our own factories or
power plant facilities• Intense weather events
seriously damaging
agriculture, forestry, or
fishery products and poor
harvests causing
procurement and supply
shortages

Large• Supply chain disruptions
cause business stagnation
or decrease (such as fromdamage to coastal
petrochemical plants• Sluggish sales related tosolar and biomass power
generation (due to changes
in the amount of sunshine
and poor tree growth)• Increased procurement
costs from intensifiedcompetition for
agricultural and fisheryproducts, decreased
agricultural businessprofitability

Physical risk

At the same time, we found distinct impacts on specificsegments, particularly on business related to renewableenergy in the Information & Electronics segment and on
the agricultural, marine products, and other foodbusinesses in the Life Industry segment.

Imminent

reliance on trading companies, and our strong foundationof client trust could be a catalyst for growth. We will further
act to ensure we take every advantage of the business
opportunities, such as by proactively gathering information,
developing products, forming partnerships, andintroducing new measures for new conditions.

The Inabata Group strives to comprehend the business risk
and opportunity arising from the transition risk and physicalrisk from climate change and to incorporate them into its
climate change countermeasures and business strategies.
The Sustainability Committee analyzes and monitors thestatus of response to climate change-related risks andopportunities and evaluates the potential long-term impact
on Group business. The Group has also set Contributing toa Decarbonized and Circular Society as a materiality.

Climatechange risk

Averagetemperaturerise
Rain andweatherpatternchanges
Sea level rise

Response• Advance development
and form partnerships for
new low-carbon andalternative technologies
Medium• Gathering information ontonew low-carbon andlongalternative technologies,
term
new materials, and newservices (such as byparticipating ininternational initiatives)• Strengthen overseas
manufacturing
companies•
Developlow-carbon
Mediumtechnologies andtoproducts, form
long
partnerships (including
term
investing in venturecompanies)

LengthofimpactShort tomediumterm• Increasing need forreliable procurement andsupply• Create new business
opportunities by
proposing product andlogistics alternatives for
emergency situations• Increasing demand for
products and services
adapted to climatechange• Increasing need forreliable procurement andsupplyMedium
to
long
term

LengthofimpactResponse• Use financial power toincrease inventory• Strengthen supply chain
resilience by creating a
BCP and diversifying
suppliers• Promote localization
including local consignmentof processing• Extend business
upstream to secure stable
agricultural and fisheryresources (expand
business domain fromagriculture to aquaculture)

Short tomediumterm• Strengthen supply chain
resilience by creating a
BCP and diversifying
suppliers• Develop products andservices adapted toclimate change
Medium• Extend business
to
upstream to securelongstable agricultural andterm
fishery resources(expand business domainfrom agriculture toaquaculture)

Note: The table shown above is an excerpt listing only items with a high degree of impact. Please refer to the following website for the detailed version.
Website: Information disclosure based on TCFD recommendations
https://www.inabata.co.jp/themes/english@inabata/pdf/csr/tcfd.pdf

Risk management
The Inabata Group believes that traditional risk management
methods alone are insufficient to manage the potential
impact from long-term risks, which include considerable
elements of uncertainty.
The Sustainability Committee deliberates risk, opportunities,
and countermeasures related to climate change, analyzes
and evaluates the risk, monitors the Group’s progress, anddelivers reports to the Board of Directors.
Additionally, the Compliance Committee monitors risk to theGroup arising from various sources, including fromenvironmental laws and regulations, with the intention of
preventing risk situations and planning risk countermeasures.
The committee, which is chaired by the president, has four
regularly scheduled meetings each year and convenes at other

83 Inabata Integrated Report 2022

Business opportunity

times when necessary. As deemed necessary, important
meeting content is reported to the Board of Directors.

Indicators and targets
Inabata Group has a long-term target to reach net zero GHG
emissions*1 by 2050. We plan to set specific near- andmedium-term targets related to climate change in FY2023.

The Group has been disclosing its Scope 2 emissions data
since FY2018. In FY2021, CO2 emissions*2 were 28,824(t-CO2). The Group is preparing to disclose Scope 1 and 3
emissions data beginning in FY2022.
Please refer to pp. 52 and 95 for performance data.
*1 Scope 1 and 2*2 Inabata & Co., Ltd. and overseas resin compound manufacturingbusiness bases

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ESG Information Environment

Pollution Prevention and Resource Circulation

Environmental Business (Products that reduce environmental load)

Basic concept

Basic concept

The Inabata Group strives to minimize adverse effects onhuman health and the environment by preventing air,water, and soil pollution, reducing and properly processing
hazardous waste and pollutants, and appropriately
managing chemical substances, etc.
Furthermore, we strive to resource circulation by using

sustainable resources, minimizing the amount of resources
we use, reducing waste, and promoting recycling, etc.
“Contributing to a decarbonized and circular society” and“sustainable use of natural capital” are our materialities,
and we are making efforts to realize a circular economy
through our business.

• Introduction of dry-process in-office paper recycler
PaperLab• Participation in the Clean Ocean
Material Alliance (CLOMA)

In 2019, we introduced the dry-process (waterless)in-office paper recycler PaperLab. Paper can be recycled in
the office with used copier paper from our company as araw material.

We are participating in CLOMA, adomestic alliance that is working to solve
the problem of marine plastic litter.
Through collaboration among different
industries involved in the plastic value
chain, we are promoting the sustainable use of plastic
products, as well as the development and introduction ofalternative materials.

Note: For performance data on the amount of paper purchased, pleaserefer to the Sustainability Data Collection on p. 95.

“Contributing to a decarbonized and circular society” and“sustainable use of natural capital” are our materialities andAs mentioned in the medium-term business plan NC2023,
we are working to expand our lineup of products andmaterials with low environmental loads in all segments.

Note: Please refer to pp. 34 and 102 for information on our participation in
the Alliance to End Plastic Waste (AEPW), an international alliancethat works to solve the problem of plastic waste.

In consideration of recent issues surrounding the global
environment, we have reviewed the fields of products that
reduce environmental load, and have reorganized those

products mainly in the clean-tech field, as shown in thetable below. We will use this framework for calculating andreporting from the FY2021 report.

Fields of products that reduce environmental load

Sales of products that reduce
environmental load in FY2021

Field

Main contents

Energy & Power

Renewable energy, alternative fuels, etc.

Resources & Environment

Sustainable raw materials, recycling, etc.

Materials & Chemicals

Low-carbon materials, EV/battery materials, etc.

Agriculture & Food

Food waste reduction, soil improvement, etc.

Transportation & Logistics EV charging, green logistics, etc.
Environmental certification

Conservation of Water Resources and Biodiversity
ExampleBasic concept

Initiatives

The business activities of the Inabata Group receive
benefits from the ecosystem services that are theblessings of biodiversity, which are created through theconnections of a wide range of organisms in various
relationships. Furthermore, our business activities have avariety of impacts on biodiversity. Based on thisrecognition of these facts, we strive to conserve
biodiversity through our business activities and social
contribution activities; for example, efficient utilization andreduction of water resource usage, and sustainable use ofnatural capital such as forests and fisheries.
“Sustainable use of natural capital” is listed among
our materialities.

• Handling of MSC/ASC certified products
To ensure sustainable use of natural capital, we promote
the handling of MSC-certified marine products caught
using sustainable fishing that considers marine resources
and the environment, as well as
ASC-certified marine productsthat are produced throughsustainable aquaculture. These
products are mainly sold in theEuropean and U.S. markets
where environmental
awareness is high.

85 Inabata Integrated Report 2022

have declared to contribute to resolving environmental
issues through our business.

Fields of products that reduce environmental load

Initiatives

We are working to reduce the amount of paper wepurchase by increasing our paper recycling rate.

The Inabata Group believes that climate change and otherglobal environmental issues pose both risks to business
continuity and new opportunities for growth.

MSC certified scallop

FSC, MSC, ASC, etc.

Environmental
certification

2%

Energy & Power

11%

18.7

¥
Materials &Chemicalsbillion(Simple sum)

Resources &Environment

22%

65%

Coverage: Inabata Group (domestic and overseas consolidated)
Note: There are no results for “Agriculture & Food” or “Transportation& Logistics” in FY2021.

Developed a wood-burning biomass power plant with a power output
of 52,700 kW in Fukuyama City, Hiroshima Prefecture

Together with Chubu Electric Power Co., Inc., Taihei Dengyo Kaisha Ltd., Tokyo Sangyo Co., Ltd., Solariant Capital Co.,
Ltd. (“Solariant”), and Hitachi Zosen Corporation, Inabata & Co., Ltd. concluded an anonymous association agreementwith Fukuyama Biomass Power Generation LLC (“the Project Company”), which was established by Solariant, and the
Project Company concluded a loan agreement through project financing.
The Project Company will construct and operate the wood-burning“Fukuyama Biomass Power Plant” with power output of 52,700 kW in
Fukuyama City, Hiroshima Prefecture, and aims to commence operation in
May 2025. Estimated annual power output is approximately 380 million
kWh (equivalent to electricity usage by about 120,000 ordinary households).
In this power generation project, Inabata will be entrusted with the
management of wood chips (unused thinned wood from Hiroshima
Prefecture, etc.) which is the fuel of the Project Company.

Conceptual image of completed power plant

Related information p. 33 Feature: Challenges for the Future Challenge 2 Contributing to the Circular
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Employee Engagement

Basic concept

Relationship with employees

Basic concept

Employees are the greatest assets of the Inabata Group.
We believe that enabling employees with diverse
backgrounds and strengths to fully demonstrate theirabilities will increase the Group’s competitiveness andlead to sustainable growth. We will therefore strive toprovide flexible and diverse work styles (for example,
providing support for balancing work and childcare/nursingcare), preventing overwork through appropriate
management of working hours, and enhance benefits,
thereby improving working conditions and creating a
comfortable workplace. As set forth in our Sustainability
Code of Conduct and Human Rights Policy, we thoroughly
comply with the laws and regulations of the countries andregions in which we do business. We support and respect
the International Labor Organization (ILO) Declaration on
Fundamental Principles and Rights at Work. Furthermore,
we comply with the statutory minimum wage and apply agender-neutral remuneration system for employees of thesame qualifications and job levels.

The Inabata Group has established a labor union. We also
provide an extensive welfare system and facilities torealize an environment where union members can makethe most of their individual characteristics and concentrateon their work with peace of mind. This also contributes toincreasing the motivation of employees.

The source of value creation at the Inabata Group is ourapproximately 4,200 employees in Japan and overseas.
Employees will be able to work with more energy if there isa high degree of engagement (=understanding, connection,
cooperation, and trust) between management andemployees, between supervisors and subordinates, among

We have set “enhancement of human capital utilization
efforts” as one of the key initiatives of the medium-termbusiness plan NC2023, and have proposed “strengthening
efforts that target new workstyle reforms.”

Telework Systemthat enhances thedegree of freedom
and discretion inworkstyles

Telework is made available to improvethe efficiency and results of work.
Telework is available for all employees.

As measures to prevent the spread of COVID-19, we haveactively promoted staggered commuting times and shift
work from home to prevent infection during commuting.
From FY2022, we introduced the systems shown on theright. These systems utilize the respective characteristics
of office work and telecommuting, and further heighten
the degree of freedom and discretion in how eachindividual works, thereby increasing the efficiency andresults of work.

87 Inabata Integrated Report 2022

Work-at-homesystem that
supports a balance
between work andchildcare, nursing
care, or treatment
for personal injuries
and illnesses[Purpose of Childcare] Available toemployees who are raising a child up to
the sixth grade in elementary school andwho have a childcare environment but
are temporarily unable to leave the child,and employees who are raising a childunder the age of three and who do nothave a childcare environment.
[Purpose of Nursing Care] Available toemployees who live together with a family
member that requires nursing care.
[Purpose of Treatment] Available toemployees who are able to work andwish to continue working while receiving
treatment, and for whom the attending
physician and industrial physician havedetermined that the employees are able
to provide work and that it is preferable
for them to perform said work at home.

(587/813)(708/989)

Total

49%

73%

Engagement
I am satisfied with the work I am doing at Inabata now

70%

73%

Relationship with superiors
I have the necessary collaboration with my supervisor at work

75%

80%

Organizational culture
When a problem occurs in the course of my duties, my supervisor
and the people around me provide appropriate support

83%

85%

Corporate philosophy
I can relate to Inabata’s philosophy, vision, and management policies,
and I want to participate in achieving them

70%

73%

Human resources system and benefits
Inabata’s salary standards are satisfactory, compared to other companies
in the same industry

59%

55%

Human resources system and training
Inabata supports employee training to improve their skills

41%

48%

WLB (work-life balance)
Overtime is kept to a level that is acceptable for me

64%

69%

Main items*→

Response rate→

Total (Inabata & Co., Ltd. / main overseas trading offices)

Trends→

1,697→

Content

May 2022

1,400

Number of
employees surveyed→

SystemApril 2021→

Newly introduced system (Inabata & Co., Ltd.)

motivation and satisfaction with the organization wereturned into figures and given to their supervisors as a hint fora possible behavioral change to revitalize the organization.

→

We started administering an employee engagement survey
from FY2021. The second survey was conducted in May
2022 to confirm changes over time. Findings on employee

Diverse workstyles(new workstyle reform)

We encourage employees to take annual paid leave andwork to shorten long working hours in order to create aneven more comfortable employment environment where
employees can work in harmony with their personal lives.

Employee engagement survey→

Labor and management discuss various issues with theaim of improving working conditions and improving the
economic status of employees.

employees, among departments, and among groupcompanies. Based on this high level of trust, we believe thateach and every employee will personally participate in theorganization and devote themselves to their work, which
will ultimately lead to the growth of the entire Group.

↓

Labor Practices* From among a five-point evaluation by employees (5. Strongly agree / 4. Agree / 3. Neither agree nor disagree / 2. Disagree / 1. Strongly disagree), the ratio of
positive responses (5. and 4.)

In FY2022, the survey was administered to 1,697 group
employees. The response rate was 73%, which was asignificant improvement from the previous survey.
Engagement related to internal human relations andorganizational culture remained high. Some improvements
were observed in regard to the training system, which was
identified as an issue in the previous survey, and we willcontinue to strengthen our efforts. In regard to personnel
systems and welfare programs that scored lower than theprevious survey, we will promote measures particularly inareas where the score has decreased, and will strive tocontinuously improve employee engagement.

• Enhancement of training for managers andintroduction of video learning support
In the FY2021 survey, we identified issues for the item
“supporting employee skill improvement.” In response, we
are working to enhance training in FY2022, mainly for
managers. We also introduced a video learning support
system that employees can freely select and use for
personal development.

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Human Resource Development

Human Rights

Basic concept

Basic concept

Human rights due diligence

The Inabata Group has always engaged in managementthat respects people based on the spirit of love (ai) andrespect (kei) for people as upheld by our founder. One of
the strengths of our Group is a global network. In recent
years, in response to the growing importance of respectfor human rights in international business, we have fulfilled
our responsibility toward human rights by advancing our
spirit of respect for human beings and establishing theInabata Group Human Rights Policy.

In order to respect the human rights of people affected by
the Group’s business activities, we will constructmechanisms for human rights due diligence based on the
United Nations Guiding Principles on Business and Human
Rights. Currently, we are assessing risks related to humanrights with the aim of “identifying, analyzing, andevaluating adverse impacts on human rights.” Whenassessing risks related to human rights, we evaluate thepossibility of negative impacts on human rights and extract
human rights risks from perspectives such as the businessdomain and characteristics of the Group, the region andcountry where we operate, and the value chain. We plan to
identify human rights risks to be prioritized during FY2022.

Our mission awareness activities
at Inabata

People are the most important asset of the Inabata Group,and the development of human resources is one of ourmanagement issues. Our human resource development andskills development are based on the spirit of love (ai) andrespect (kei) for people, and on our Mission. We cultivate
human resources that share the IK Values and who canrealize our Vision. By providing diverse work experiences andgrowth opportunities, and conducting training according torole, we develop human resources who have expertise andcan lead organizations and businesses in Japan and overseas.
For the Group, which does business all over the world, it is an
important issue to develop “global staff” who can coexist with
the international community and create new value from a
global perspective regardless of national borders. As for ourmateriality, we have set the goal of “fostering andstrengthening the human capital driving the value creation.”

The foundation of our Group’s human resource
development is sharing the spirit of love (ai) and respect (kei)for people that has been handed down since our founding.
In order to instill our Mission, Vision, and IK Values to all
employees worldwide, we engage in activities such as
distributing philosophy cards and holding workshops.

Systems for internal recruitment andcareer path self designing
As part of efforts to strengthen our organization, assign
and supplement the right people to the right positions, andsupport the careers of our employees, we started thesystems for internal recruitment and career path self
designing from FY2022. These systems encourage
employees to take on challenges in new jobs in order toadvance their careers.

Related information p. 35 Feature: Challenges for the
Future Challenge 3 Fostering Global-Minded People

Fundamental training system
We also hold lectures to educate employees about theminimum basic knowledge of chemicals necessary forworking at a trading company dealing in chemicals. We
invite external lectures and hold a total of 10 sessions,mainly for young employees.

We hold training so that employees joining the company
can acquire the necessary knowledge as “global staff”
according to their respective levels.
Training structure at Inabata & Co., Ltd.
Technical skills

Human skills

Managerial
positions

Training for new managers

Leadership training(selected members)

Mid-level
positions

Comprehensive workshops
MarketingYoung
employees

Newly graduatedemployees

Credit management training II(corporate analysis,
corporate evaluation)

Critical thinking

Credit management training I(bookkeeping, finance)

Basic training on chemicals

Technical skills training(legal, credit, trade)

Logical thinking(basic)89 Inabata Integrated Report 2022

Mid-level employees’
training

Global Staff Meeting(selected members)

Inabata Group Human Rights Policy(partial excerpt)
The Inabata Group’s management philosophy
reflects our founding spirit of love (ai) and respect(kei) for all people, and the Inabata Group Human
Rights Policy was formulated based on our
Sustainability Basic Policy and Sustainability Codeof Conduct. We fulfill our responsibility topromote human rights in our business activities
by respecting the human rights of stakeholders
affected by our activities and by addressing thenegative impacts on human rights caused by ourbusiness activities.
1. Policy scope
2. Accepting and respecting international
norms and legal compliance
3. Policy application
4. Significant human rights issues
5. Human rights due diligence
6. Remedy and corrective action
7. Education and awareness8. Information disclosure

Human rights training• Training to raise awareness for human rights and toprevent harassment
Every year, we hold training sessions on human rights
awareness at training session for all employees (executives,
employees, unretired senior employees working on a
fixed-term contract, and temporary employees).
In FY2021, we held training to prevent harassment. We
also prepared an e-learning program that enables
employees to understand the knowledge and approach toprevent workplace harassment, and to learn the criteria for
judging what constitutes harassment. We have preparedvideos for all employees and managers on a portal site thatcan be viewed at any time. This enables learning by
repeating the process of watching, understanding,practicing, and reviewing.

March 2022
Inabata Group Human Rights Policy
https://www.inabata.co.jp/themes/english@inabata/
pdf/csr/human_rights_policy.pdf

Communication

Screenshot of training video(Changed to training by video from FY2020 to prevent COVID-19 infection)

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Diversity and Inclusion

Health and Productivity Management/
Occupational Health and Safety

Basic concept
As global competition intensifies, we recognize that diverse
values are important for the sustainable development ofour business. In the Inabata Group, employees with various
backgrounds perform on a global scale. So that eachindividual can fully demonstrate their strengths, we arefocusing on enhancing measures and systems for fair
employment, placement, evaluation, treatment, andpromotion, regardless of race, religion, nationality, age,gender, sexual orientation, or disabilities. We strive to foster
an organizational culture that respects the individuality andabilities of each employee, accepts and utilizes diversity,and enables work with a sense of unity.
We also promote diversity and inclusion as part of themateriality of “fostering and strengthening the humancapital driving the value creation.”

Promoting the active advancement of womenInabata & Co., Ltd. is working hard to promote action plansfor creating an employment environment where women
can actively participate, and for supporting both men andwomen in achieving a work-life balance, such as childcare
and nursing care.

• Main initiatives in FY2021
Dissemination of messages from top management using
the company intranet portals and internal newsletters
Holding workshops for women in Staff positions

FY2021 Evaluation

Target 1
Increase the ratio of women in
managerial positions (manager or higher)
at 5% or higher

3.7%

Good

Target 3
Increase the ratio of women in Staff
positions to 15% or higher

Fair

13.6%

Introduction of a work-at-home system to help employees
balance childcare, nursing care, and treatment for
personal injuries and illnesses

Message from president
posted on the corporate portal

Article on diversity
in internal newsletter

Promoting the active advancement of seniors

91 Inabata Integrated Report 2022

establishing positions for seniors, establishing a system
for re-employment of employees aged 65 and over, andimplementing career training and skill development for
employees in their 40s and 50s.

We will appoint the president as chief health officer and thesenior managing executive officer in charge of humanresources as health and productivity management promotion
officer. The Human Resources Office, medical office, andInabata health insurance association work together topromote employee health and productivity management.
Information is shared as necessary at meetings of theemployee health committee, and health and productivity
management measures are discussed with employees.

Diagram of Health and Productivity
Management Promotion System
Chief Health Officer

Report/supervision
Health and Productivity Management Promotion Officer

Health and Productivity
Management Declaration

Health and Productivity
Management Declaration
As a company, based on the spirit of love (ai) andrespect (kei) for people, we hope that ouremployees are always healthy, both physicallyand mentally.

Note: Targets 1 and 3 show figures as of March 31, 2022. Target 2 iscalculated using unofficial job offers in FY2021 and new graduatesentering the company in April 2022.

In FY2022, we introduced a new system to realize apersonnel system that allows diverse human resources,
including seniors, to actively perform in the workplace. In
addition to extending the mandatory retirement age to 65,
we are supporting performance by senior employees by

Our employees are the greatest asset of the Inabata Group.
We believe that ensuring a safe working environment andmaintaining and improving health are important themes forenabling employees to maximize their potential. In all
countries and regions where our employees work, weestablish an appropriate management system, and comply
with the labor standards and other various laws andregulations of each country and region. With this as a basis,
we implement various measures to prevent overwork, long
working hours, and occupational accidents, to reduce therisk of epidemics among employees, and to maintain andimprove employee health. The Inabata Group is taking
action to create a workplace environment where
employees can continue to work with energy, good health,safety, and peace of mind.

In July 2022, we established the Health and Productivity
Management Declaration.

Fair

Target 2
Ensure that at least 20% of new college
38.5%
graduates hired to Staff positions are women

Health and Productivity Management
Promotion System

Briefings on career changes and interviews withwomen in Assistant positions

In April 2021, we announced our General Employer Action
Plan, which is based on the Act on Promotion of Women’sParticipation and Advancement in the Workplace. The Plan
sets the following three targets as indicators.
Targets (three-year period
from April 1, 2021 to March 31, 2024)

Basic concept

Inabata will promote health and productivity
management by creating a system within ourcompany and implementing initiatives to maintainand improve the health of our employees
throughout the company.
Katsutaro Inabata
President
Inabata & Co., Ltd.

Supervision
Human Resources Office

Medical office(industrial physician,public health nurse, nurse)

Inabatahealth insurance
association

Coordination/
information sharing
Employee health committee(Health and productivity management promotion members)

Issues in employee health andproductivity management
Compared to the average of other companies in the same
industry, our company has more employees diagnosed
with findings related to blood pressure, liver function, lipids,
and blood sugar that can cause lifestyle disease. Therefore,
our goal is to reduce employees diagnosed with findings by
as much as possible. By doing so, we aim to prevent loss oflabor force due to presenteeism and absenteeism*, and tohave employees perform to their full ability.
* Presenteeism is a condition in which mental and physical healthproblems affect performance despite being present at work, and it is notpossible to increase performance. Absenteeism is a condition in which
work itself cannot be performed due to poor physical or mental healthwhich causes an employee to arrive late, leave early, or to miss work,
take leave, or engage in other behavior that makes it difficult to work.

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Local Community (Social contribution activities)
Katsutaro Inabata is actively promoting friendship andexchange between Japan and Portugal, and serves as

Basic concept
The Inabata Group’s IK Values includes “to grow with people
across borders, sharing and respecting diverse values withthe aim of co-prosperity (symbiosis).” Furthermore, as oneof our materialities, we have raised “respect for humanrights and harmony with local communities based on thespirit of love (ai) and respect (kei).”
As a company that conducts business all over the world, we
aim to grow and coexist with local communities through ourbusiness activities and social contribution activities, while atthe same time building trust with local people.
After returning from studying in France, our founder
Katsutaro Inabata devoted himself to cultural exchanges andfriendships with foreign countries. The Inabata Group retains
the spirit of our founder even today, and we conduct social
contribution activities with a focus on international exchange,
cultural support, and support of local communities.

Japan–France exchangeEver since our founder went to study in France in the latter
half of the 19th century to learn about synthetic dyes andother cutting-edge technologies of the time, Inabata has
been committed to cultural exchange between Japan andFrance. In 1926, the then French Ambassador to Japan,
Paul Claudel, and Katsutaro Inabata established the Centre
Culturel Franco-Japonais in Kyoto to promote cultural
exchange between the two countries.
In 1927, the Institut Franco-Japonais du Kansai (KFJI, currently
the Institue Francais Kansai) was built in Kyoto, with theCenter serving as the operating body, thus establishing abase for exchange activities. Afterwards, the Inabata Groupdevoted itself to Japan-France exchange in the Kansai region.
For example, our second president Taro Inabata founded the
Société franco-japonaise d’Osaka, and our fourth president
Katsuo Inabata established the Société de Rapprochement
Intellectuel Franco-Japonais (currently the Villa Kujoyama),
which is used as a base of stay for artists visiting Japan from
France. The spirit established by successive presidents has
been passed down to our current president, Katsutaro
Inabata (sixth president), who continues to contribute to

93 Inabata Integrated Report 2022

Promotion of French music• Awarding the Inabata Prize at the French Music
Competition
At the French Music Competition sponsored by the
Société Musicale Franco-Japonaise du Kansai, we award
the Inabata Prize every year to the best performer in the
vocal or piano category. Since beginning this activity in
1974, we have awarded the prize to a cumulative total of 48
winners as of FY2021.

Cultural support

two weeks. The program provides a valuable opportunity
for young Japanese musicians to receive high-quality
education in French music.
(In FY2020 and FY2021, no musicians were invited toJapan in order to prevent the spread of COVID-19, and themaster classes were held online.)

International exchange• Supporting the Académie de musique française
de Kyotomutual understanding and friendshipbetween the two countries in a wide
range of fields through the Société
franco-japonaise d’Osaka.

Inabata supports the Académie de musique française deKyoto, which is a Japan-France music exchange programthat has operated since 1990. Top-class musicians areinvited from France and master classes are held for about

In 2021, President Katsutaro
Inabata was awarded the Legion of Legion of Honor Medal(5th degree)
Honor for his long-standing efforts
to promote mutual understanding
and friendship between France and Japan. Legion of Honor
medals have also been awarded to successive presidents.
• Katsutaro Inabata (founder)
1914 Received rank of Chevalier (5th degree)
1921 Received rank of Officier (4th degree)
1927 Received rank of Commandeur (3rd degree)1935 Received rank of Grand Officier (2nd degree)• Taro Inabata (second president)
1936 Received rank of Officier (4th degree)1960 Received rank of Commandeur (3rd degree)• Katsuo Inabata (fourth president)
1991 Received rank of Officier (4th degree)
1997 Received rank of Commandeur (3rd degree)• Katsutaro Inabata (sixth president)
2021 Received rank of Chevalier (5th degree)

Japan–Portugal exchange
Our company’s exchange with Portugal began in 1920, when
our founder was appointed as vice-consul for Portugal in Kyoto.
Next, our second president Taro Inabata was appointed ashonorary vice-consul in Osaka. Our fourth president, Katsuo
Inabata, who served as an honorary consul in Osaka, became
the first president of the Portugal-Japan Society of Osaka.

honorary consul in Osaka and as president of thePortugal-Japan Society of Osaka.

International exchangeThis tradition of private
diplomacy, which started
with our founder,
remains part of ourheritage to this day. Ourcurrent president

Support for independence of persons
with disabilities
Contributing to the local community• Official partner of Paralym Art® (Shougaisha Jiritsu
Suishin Kikou Association)
We support the independence of persons with disabilities
as an official partner (Bronze Partner) of Paralym Art, whichaims at “creating a world where persons with disabilities
can fulfill their dreams through art.” The Association
contributes to society by teaming up with artists withdisabilities and continues to support people withdisabilities through the continuous cooperation of privatecompanies and individuals, without relying on social
security expenses. We used a work from Paralym Art, a
program which is managed and operated by theOrganization, as the design for our shareholder rewards(QUO cards).

Master class held remotely

Providing supplies/donations
Contributing to the local community• Provision of disaster food supplies for a local
children’s support network project by Osaka city
council of social welfare
We provided disaster food supplies for a local children’s
support network project. The project utilizes cooperation
with various sectors of the community to support
children’s nutrition and learning, and to promote safe andfamiliar places for children. The donated supplies weresent to organizations working on creating safe places forchildren and supporting single-parent families.
• Donation to the Keidanren Nature Conservation Fund
Inabata donates to the Keidanren Nature Conservation
Fund, a public trust that supports various projects such as
natural resource management related to biodiversity
conservation, protection of rare animals and plants,
afforestation and environmental education.
For performance data on social contribution
activities, please refer to the Sustainability Data
Collection on p. 100.

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ESG Information Sustainability Data

Environment
Energy and climate related data
Inabata & Co., Ltd. and overseas
resin compound manufacturingbusiness bases
CO2 emissions(t-CO2)*3

Inabata & Co., Ltd.*1
Overseas resin compound
manufacturing business bases*2
Inabata & Co., Ltd. and overseas
resin compound manufacturingbusiness bases

Energy consumption(1,000 kWh)

CO2 emissions per sales(t-CO2 / ¥100 million)

Water resources
FY2019FY2020

FY202135,51028,19828,824

433

422

359

35,077

27,77628,46553,674

44,13145,926

900

888

886

Overseas resin compound
manufacturing business bases*2

52,774

43,24345,040Inabata & Co., Ltd. and overseas
resin compound manufacturingbusiness bases*4

10.71

8.95

8.23

Inabata & Co., Ltd.*1*1 Coverage: Tokyo Head Office, Osaka Head Office, Nagoya Branch*2 Seven overseas subsidiaries engaged in the resin compound business, which is a strength of the Inabata Group*3 Scope 2 only. A unit is calculated using the emission factor provided by the Ministry of the Environment and the Ministry of Economy, Trade and Industry foreach electric power company.
Units for overseas resin compound manufacturers are calculated using the country-specific emission factors in the IGES List of Grid Emission Factors
published by the Institute for Global Environmental Strategies. In accordance with the updated emission factors per unit, the figures reported in FY2021 havebeen retroactively revised from FY2019 forward.
*4 The sales parameter uses the simple net value of sales.

FY2019FY2020

FY2021NOx (Nitrogen oxide) (t)

0

0

0

SOx (Sulfur oxide) (t)

0

0

0

VOC (Volatile organic compounds) (kg)

0

0

0

Waste (t)*

89

67

76

Hazardous waste (t)*

0

0

0

Waste recycled (t)*

69

48

57

Final disposal of waste (t)*

20

19

19

Waste recycling rate (%)*

78

72

75

5,304

3,563

2,925

70

64

76

Green purchasing ratio of office supplies, etc. (%)

FY2020

FY2021

8,425

6,186

5,531

Ocean

0

0

0

Surface water

0

0

0

Groundwater

0

0

0

Sewage

8,425

6,186

5,531

Others

0

0

0

8,425

6,186

5,531

Surface water

0

0

0

Groundwater

0

0

0

Water supply

8,425

6,186

5,531

Rainwater000

Sea water0

0

0Others000Water withdrawals/consumption in water stressed regions (m3)

0

0

0

Number of violations related to water quality / water withdrawals(violations of permits, standards, regulations, etc.)

0

0

0

FY2019FY2020

FY2021

Offices that acquired certification(number of offices)

—

15

15

Acquisition ratio (%)

—

60

60

Number of environmental law
violations

Inabata & Co., Ltd.

0

0

0

Environmental fines andpenalties (yen)Inabata & Co., Ltd.

0

0

0

Total

Discharge amount by discharge
destination (m3)*

Total

Water withdrawal amount bywithdrawal source (m3)*Coverage: Inabata & Co., Ltd. (Tokyo Head Office, Osaka Head Office, Nagoya Office)* Excluding Nagoya Office

Pollution prevention / Resource circulation

Paper consumption (1,000 sheets)

FY2019Environmental management

Environmental management
system certification (ISO 14001)** Coverage: Inabata & Co., Ltd. and domestic consolidated subsidiaries

Coverage: Inabata & Co., Ltd. (Tokyo Head Office, Osaka Head Office, Nagoya Office)* Includes tenants of the Osaka Head Office.

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ESG Information Sustainability Data

Society
Employee status (non-consolidated and consolidated)
FY2019FY2020Total
Men
Inabata & Co., Ltd.: Includes
seconded employees

Ratio is listed in ( )

Total

Men

648

FY2019FY2021

Total
Women

Women

Men

Women

656

672

Number of employees / gender ratio (people/%)439 (68%)

209 (32%)442 (67%)214 (33%)448 (67%)

Non-management

251 (55%)

204 (45%)257 (55%)

209 (45%)263 (55%)

217 (45%)

Management

188 (97%)  5 ( 3%)185 (97%)  5 ( 3%)185 (96%)  7 ( 4%)534

224 (33%)

536

552

Total

—

—

—

—

334 (61%)218 (39%)

Non-management

—

—

—

—

219 (51%)

212 (49%)

Management

—

—

—

—

115 (95%)  6 ( 5%)

Domestic consolidated
subsidiaries

—

—

399

Total

—

—

—

—

296 (74%)103 (26%)

Non-management

—

—

—

—

219 (70%)

96 (30%)Management

—

—

—

—

77 (92%)  7 ( 8%)Overseas consolidated
subsidiaries——

Average age
Average years of
employment

Total

Inabata & Co., Ltd.: Does notinclude seconded employees

Labor practices / diversity
Total

40.8

Men/Women

42.2

Total
14.5

60
11

Voluntary turnover rate (%)

—

3.2

3.5

Under 30 years old (total)(men/women)(men/women)
Number of employees byage (people)(men/women)

—

—

—

1,547 (53%)

1,381 (47%)

Monthly average overtime working hours (hours/month)

—

—

—

—

  254 (66%)  130 (34%)

Average annual paid leave

Number of employees / gender ratio (people)

308 (41%)

Management

192 (94%)

Southeast Asia

13 ( 6%)
2,459

Total

1,283 (52%)

1,176 (48%)

Non-management

1,154 (51%)

1,092 (49%)

Management  129 (61%)   84 (39%)

Northeast Asia

475

Total

249 (52%)

226 (48%)

Non-management

172 (47%)

196 (53%)

Management

77 (72%)The Americas

30 (28%)
304

105

156
51

166
62

163

107

149

59

106

57

165

123

26

168

137

30

28

140

34

21

9

28
46

26

8

1,828

1,907

33

13
1,917

—

14.2

11.4

9.2

10.4

Utilization rate (%)

61.6

48.7

56.1

New graduates (total) (people)

27

20

11

16

24

10

10

13

11

Retention rate (3 years) for new graduates (%)

—

89

88

Mid-career (total) (people)

12

15

20

11

1

Number of employees taking childcare leave(total) (people)(men/women) (people)

Rate of employees returning to work (%)
Number of employees taking nursing care leave (people)

3

13

7

43

45

11

14

14

1.65

2.05

2.08

10

8

23

3

7

Utilization rate (total) (%)(men/women) (%)

12

31

Employment of person with Number of employees (people)
disabilities*2
Employment rate (%)

Childcare leave

52

75

158

120

Ratio of regular employees hired mid-career*1
(%)

Total

106

64

11.5

(men/women) (people)

FY202149

139
67

Days taken (days)(men/women) (people)
Number of hires

66

182

over 60 years old (total)(men/women)

63147

50–59 years old (total)(men/women)

133

98

40–49 years old (total)—

321 (34%)140
77

30–39 years old (total)

Management

438 (59%)

11.8

6

Non-management

630 (66%)

16.4

46

Total annual working hours per employee (hours/year)

Non-management

11.1

5

1,511 (46%)

Total

16.1

47

1,801 (54%)

951

12.3

37.1
14.9

Number of temporary staff (people)

—

Japan

14.8

Number of non-Japanese staff (people)

—

Women

43.7

8,609

—

Men

41.4
38.1

8,506

—

Ratio is listed in ( )

43.1

8,571

Total

Employee status (by region)

41.1
38.3

13.7

Men/Women

FY2021

Average annual salary (thousand yen)

3,312

Note: Data for Inabata & Co., Ltd. and domestic consolidated subsidiaries are as of the end of each fiscal year (March 31). Data for overseas consolidated subsidiaries
are as of the end of July 2022. Numbers for domestic and overseas consolidated subsidiaries include employees seconded from Inabata & Co., Ltd.

FY2020

1

7

38.5
15.8

17

6

25.8
100

4.2

46.9
100

34.6

100

100

100

100

1

0

0

Coverage: Inabata & Co., Ltd. (including employees seconded to Group companies)
Note: As of the end of each fiscal year (March 31). The numbers on the left are for men and the numbers on the right are for women.
*1 Ratio of mid-career hires to regular employees hired in each fiscal year.
*2 The figures for each fiscal year are as of June 1 of the following fiscal year.

Human resource development

Total

226 (74%)

78 (26%)Non-management

195 (74%)

68 (26%)

Management

31 (76%)

10 (24%)FY2019FY2020

FY2021

Total time for employee skills development training (hours)

370

473

394

Total number of employees participating in training for skills development(people)

721

906

1,070

Europe73

Total

42 (58%)31 (42%)Non-management

26 (51%)25 (49%)Average training hours per employee per year (hours)

Management

16 (73%)6 (27%)

Average training expenditure per employee per year (yen)Note: As of March 31, 2022 for Japan. As of July 31, 2022 for other regions.

97 Inabata Integrated Report 2022

0.6

0.7

0.6

46,57039,50434,099Coverage: Inabata & Co., Ltd. (including employees seconded to Group companies)

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ESG Information Sustainability Data

Society
Employee engagement

Social contribution activities

Employee engagement survey
Total
Number of
employees
Inabata & Co., Ltd.
surveyed (people)
Main overseas trading offices
Number of respondents (people)
Response status
Response rate (%)
Engagement
I am satisfied with the work I am doing at Inabata now
Relationship withI have the necessary collaboration with my supervisor at work
superiors
Organizational
When a problem occurs in the course of my duties, my supervisor
cultureand the people around me provide appropriate support
I can relate to Inabata’s philosophy, vision, and management
Main items* (%)
Corporate philosophy
policies, and I want to participate in achieving them
Human resources
Inabata’s salary standards are satisfactory, compared to othersystem and benefits
companies in the same industry
Human resources
Inabata supports employee training to improve their skills
system and training
WLB (work-life balance) Overtime is kept to a level that is acceptable for me

April 2021
1,400
587
813
681
49
70

May 2022
1,697
708
989
1,239
73
73

75

80

83

85

70

73

59

55

41

48

64

69

*F
 rom among a five-point evaluation by employees (5. Strongly agree / 4. Agree / 3. Neither agree nor disagree / 2. Disagree / 1. Strongly disagree), the ratio of
positive responses (5. and 4.)

Occupational health and safety

Number of
employees who
received health andsafety training*1(people)Number ofwork-related
employee fatalities

Number ofwork-related
contractor fatalities

Lost-time injury
frequency rate*5

Lost-time injury
severity rate*6

Stress check
Safe driving training (e-learning)
Earthquake/safety confirmation training*2
Firefighting training (on-site training)*3Inabata & Co., Ltd. and overseas resin
compound manufacturing business bases
Inabata & Co., Ltd.*1
Overseas resin compound manufacturingbusiness bases*4
Inabata & Co., Ltd. and overseas resin
compound manufacturing business bases
Inabata & Co., Ltd.*1
Overseas resin compound manufacturingbusiness bases*4
Inabata & Co., Ltd. and overseas resin
compound manufacturing business bases
Inabata & Co., Ltd.*1
Overseas resin compound manufacturingbusiness bases*4
Inabata & Co., Ltd. and overseas resin
compound manufacturing business bases
Inabata & Co., Ltd.*1
Overseas resin compound manufacturingbusiness bases*4

FY2019498
129
May 599
November 574
Tokyo 76
Osaka 59
Nagoya 7

FY2020501
88
Approx. 600
Tokyo 52
Osaka 20

FY2021
568
51
May 603
December 609
77 self-defence firebrigade members inTokyo,
Osaka, and Nagoya

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

2.74

3.82

4.11

0

0

0

4.06

6.34

6.62

0.01

0.01

0.03

0

0

0

0.02

0.02

0.05

FY2019FY2020

FY2021———

Total amount (million yen)

111

8

8

Support for the activities of theSociedade Luso-Nipónica de Osaka*3(10,000 yen)

80

80

0

Académie de musique française
de Kyoto
Number of participants*4 (people)

107

Canceled

67

1

1

1

Cumulative 46

Cumulative 47

Cumulative 48

Canceled

CanceledBronze Partner

Bronze Partner

Number of employees taking
leave for volunteering*1
Donations, activity expenses,
etc., that contribute to society*2

Results of main social
contribution activities

Number of winners of Inabata Awardat the French Music Competition(since 1974)*5 (people)
Acceptance of international students
from the University of Lyon
(since 1994)*6 (people)
Support for the Shougaisha Jiritsu
Suishin Kikou Association*7

1
Cumulative 26
Bronze Partner

Coverage: Inabata & Co., Ltd.
*1 Activities approved for this system after the occurrence of a severe disaster. Four people used this system as volunteers for recovery after the 2016
Kumamoto earthquake.
*2 Main donations include cultural support for the Japan Philharmonic Orchestra, the Osaka Symphony Orchestra, the Osaka Philharmonic Orchestra, etc., andcommunity support for the Keidanren Nature Conservation Fund, etc.
*3 There were no expenditures in FY2021 as a result of regular meetings being canceled due to COVID-19.
*4 A Japan-France music exchange program sponsored by Inabata. Top-class musicians are invited from France and master classes are held for about two weeks.
The program provides a valuable opportunity for young Japanese musicians to receive high-quality education in French music. Canceled in FY2020 due to
COVID-19. Held online in FY2021.
*5 At the French Music Competition sponsored by the Société Musicale Franco-Japonaise du Kansai, the Inabata Award (named after Inabata Co. & Ltd.) isawarded every year to the best performer in the vocal or piano category.
*6 Friendship activities with Lyon, France, where our founder studied abroad. Activities in FY2020 and FY2021 were canceled due to COVID-19.
*7 In addition to providing support as a partner, we used a work from Paralym Art, a program which is managed and operated by the association, as the design forour shareholder incentive (QUO cards).

*1 Coverage: Inabata & Co., Ltd. (including employees seconded to Group companies)*2 Due to factors such as using the earthquake/safety confirmation system to respond to COVID-19, we only ascertained the approximate number in FY2020.
*3 In FY2020, as a result of postponing on-site training due to the spread of COVID-19, there was voluntary training which consisted of viewing videos. In FY2021,
due to concerns about the spread of COVID-19, we postponed on-site training, and conducted first-aid training using videos for all self-defence fire brigade
members at our offices in Tokyo, Osaka, and Nagoya.
*4 All seven overseas subsidiaries that operate the plastics compound business, one of the strengths of the Inabata Group. The total number of employees of theseven companies was 1,232 as of the end of March 2022.
*5 (Number of casualties due to occupational accidents requiring at least one day off work) / (Total actual working hours) × 1,000,000. The industry average(wholesalers and retailers with 100 or more employees) was 2.31 in FY2021. (From the Ministry of Health, Labour and Welfare’s 2021 Survey on Industrial
Accidents) Comparison with Inabata & Co., Ltd.
*6 (Total working days lost) / (Total actual working hours) × 1,000. The industry average (wholesalers and retailers with 100 or more employees) was 0.05 in
FY2021. (From the Ministry of Health, Labour and Welfare’s 2021 Survey on Industrial Accidents) Comparison with Inabata & Co., Ltd.

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ESG Information Sustainability Data

GovernanceParticipation in Initiatives

Corporate governance
Composition of directors and officers
Number of directors (excluding audit
and supervisory committee member)(people)[Number of directors in 2020 and 2021]
Number of directors (audit andsupervisory committee member)(people)[Number of audit & supervisory board
members in 2020 and 2021]
Executive officers (people)

Audit and supervisory officer (people)

Total
Internal
Independent
outside

Men
Women
Men
Women

Total
Internal
Independent
outside

Men
Women
Men
Women

Total
Men
Women
Total
Men
Women

As of July 1,
2020
10
7
0
3
0
5
2
0
3
0
6
6
0
—
—
—

As of July 1,
2021
9
6
0
2
1
5
2
0
3
0
6
6
0
—
—
—

As of July 1,
2022
7
5
0
1
1
4
0
0
4
0
7
7
0
1
1
0

Note: From June 22, 2022, we made the transition from a company with an audit & supervisory board to a company with an audit and supervisory committee.

Attendance at meetings of the Board of Directors, Audit &Supervisory Board, and Nominating and Remuneration Committee
Position
Directors
Audit supervisoryboard members&

Name
Katsutaro Inabata
Toyohiro Akao
Kenichi Yokota
Tomohiko Sato (retired in June 2021)
Masahiro Sugiyama
Noriomi Yasue
Kenji Ohno (appointed in June 2021)
Toshiyuki Kanisawa (retired in June 2021)
Kiyoshi Sato
Kenji Hamashima
Takako Hagiwara (appointed in June 2021)
Takashi Mochizuki (resigned due todeath in January 2022)

Independent
outside〇〇〇〇Nobukazu Kuboi
Yoshitaka Takahashi
Katsuya Yanagihara
Satoshi Tamai〇〇〇(From April 1, 2021 to March 31, 2022)
Attendance rate is listed in ( )Number of Board of
Directors meetings
attendedNumber of Audit &Supervisory Board
meetings attended

16 of 16 meetings (100%)
16 of 16 meetings (100%)
16 of 16 meetings (100%)
3 of 3 meetings (100%)
16 of 16 meetings (100%)
14 of 16 meetings (87.5%)
13 of 13 meetings (100%)
3 of 3 meetings (100%)
16 of 16 meetings (100%)
16 of 16 meetings (100%)
13 of 13 meetings (100%)

—
—
—
—
—
—
—
—
—
—
—

Number of Nominating
and Remuneration
Committee meetings
attended
8 of 8 meetings (100%)
—
—
—
—
—
—
1 of 1 meeting (100%)
12 of 12 meetings (100%)
12 of 12 meetings (100%)
11 of 11 meetings (100%)

9 of 12 meetings (75.0%)

7 of 10 meetings (70.0%)—

16 of 16 meetings (100%) 13 of 13 meetings (100%)—

16 of 16 meetings (100%) 13 of 13 meetings (100%)
16 of 16 meetings (100%) 13 of 13 meetings (100%)
16 of 16 meetings (100%) 13 of 13 meetings (100%)———

United Nations Global Compact (UNGC)

The UNGC is the world’s largest sustainability initiative in which theUnited Nations and the private sector (companies and organizations)work together to build a healthy global society. Through responsible andcreative leadership by each company and organization, participants act
as good members of society and achieve sustainable growth. Based oncommitment by top corporate executives to the 10 Principles related tothe protection of human rights, the elimination of unfair labor practices,
the environment, and the prevention of corruption, companies andorganizations that have signed the UNGC are expected to continue
efforts for realizing those principles.

Alliance to End Plastic Waste (AEPW)

An international alliance which conducts activities aimed at reducing
the outflow of plastics waste into the environment and promoting acircular economy.

Japan Clean Ocean Material Alliance (CLOMA)

A domestic (Japan) alliance working to solve the problem of marine
plastic litter. CLOMA promotes collaboration between different
industries involved in the plastic value chain. It also promotes thesustainable use of plastic products, and the development andintroduction of alternative materials.

Japan Foreign Trade Council (Global Environment
Committee, Sustainability Promotion Committee, etc.)

We are a regular member company of the Japan Foreign Trade Council,
a trade industry organization. As a member of the Global Environment
Committee and the Sustainability Promotion Committee, we conduct
activities to promote sustainability, such as responding to climatechange in the industry.

The Corporate Federation For Dowa And
Human Rights Issue, Osaka

A voluntary organization aiming to create companies which respecthuman rights in order to eliminate various forms of discrimination,
including the Dowa problem in Japan. In addition to participating as amember of the Executive Committee, we also participate in project
teams and committees.

Note: Interviews with each candidate by the Nominating and Remuneration Committee (four times) were conducted only by independent outside directors.

Compliance
FY2019FY2020

FY2021

Number of whistleblower reports/consultations* (cases)

1

2

10

Number of serious compliance violations (including labor standards) (cases)

0

0

0

Political contributions (yen)

0

0

0

Number of dismissals and disciplinary actions due to non-compliance with
anti-corruption policy (cases)

0

0

0

Total amount of significant fines or penalties for corruption (cases)

0

0

0

Coverage: Inabata & Co., Ltd.
* Includes the number of consultations to the “counseling desk” that was newly established from FY2021.

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Financial Information

Summary of 11 Years(Unit: Millions of yen)

Notes: 1. In FY2012, the Life Industry Segment was established by integrating the life science related elements of the Chemicals Segment and the
Food Segment. The performance figures for FY2011 are based on the revised categories.
2. From FY2016, the business of designing, manufacturing, installation, and sales of cranes, which was part of the Others Segment, has been
included in the Information & Electronics Segment. The performance figures for FY2015 are based on the revised categories.
3. In FY2019, the Housing & Eco Materials Segment was integrated into the Chemicals Segment. The performance figures for FY2018 arebased on the revised categories.
4. From FY2013, the conversion rate for income and expenditure by overseas subsidiaries and such was changed from the rate on the last dayof the FY to average rate during the period. This has been applied retroactively to the figures for FY2012.
5. From FY2018, Partial Amendments to Accounting Standard for Tax Effect Accounting was applied. This has been applied retroactively to thefigures for FY2017.
6. From FY2021, we have applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29). Due to the application of thisaccounting standard, net sales decreased by 25,279 million yen.

103 Inabata Integrated Report 2022

7. Net D/E ratio = (interest-bearing debt – cash and deposits) ÷ equity capital
8. ROE (%) = Net profit ÷ Average equity capital at the beginning and end of FY × 100
9. ROA (%) = Net profit ÷ Average total assets at the beginning and end of FY × 100
10. Total market value (including treasury shares) = share price at the end of the FY × number of shares issued and outstanding at the end of the fiscal year (including treasury shares)
11. PER is calculated by dividing share price at the end of the FY (TSE closing price) by net profit per share.
12. PBR is calculated by dividing share price at the end of the FY (TSE closing price) by net assets per share.
13. Cancellation of treasury stock: 1,660,000 shares in FY2014, 2,700,000 shares in FY2021
We retired 3,085,100 shares on April 5, 2022, bringing the total number of issued shares to 57,714,127 as of June 30, 2022.
14. The number of treasury shares at the end of the FY includes shares owned by Board Benefit Trust (BBT) introduced in FY2018 and equity-method affiliates in addition to shares
owned by Inabata.
15. Total return ratio has become the shareholder return index from FY2014. Total return ratio = (dividends + treasury shares acquired) ÷ consolidated net profit × 100

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104

Financial Information

Consolidated Balance Sheets
Previous consolidated fiscal year
(March 31, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable - trade
Notes receivable - trade
Accounts receivable - trade
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Retirement benefit assets
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

105 Inabata Integrated Report 2022

(Unit: Millions of yen)
Current consolidated fiscal year
(March 31, 2022)

31,462
162,736——
49,210
597
4,322
9,266
(613)
256,983

35,403—22,548
162,149
72,145860
6,059
12,728(389)
311,505

16,039(10,636)
5,403
16,871(13,158)
3,712
2,911
294
5,224
(3,151)
2,073
14,395
2,918

17,184(11,765)
5,419
18,648(14,551)
4,097
3,043
205
6,382
(3,834)
2,547
15,312
2,647

71,592
1,212
3,472
990
6,209
(4,545)78,93096,244353,228

48,303
1,448
6,390
1,105
7,380
(5,035)59,59377,553389,059

Previous consolidated fiscal year
(March 31, 2021)
Liabilities
Current liabilities
Notes and accounts payable - trade
Short-term borrowings
Income taxes payable
Accrued expenses
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Long-term loans borrowings
Deferred tax liabilities
Provision for retirement benefits for directors (and other officers)
Provision for share-based remuneration for directors (and other officers)
Provision for loss on guarantees
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets(Unit: Millions of yen)
Current consolidated fiscal year
(March 31, 2022)

104,11333,731
3,155
1,080
1,279
7,229
150,591

115,959
58,657
4,093
1,367
1,608
11,498
193,185

7,475
14,842
29
131
18
2,144
2,190
26,833
177,424

5,880
8,761
33
159
18
1,624
2,481
18,959212,144

9,364
7,184
116,794(4,155)
129,188

9,364
7,044
130,540(7,398)
139,550

39,316
187
4,536
576
44,616
1,999
175,803353,228

22,667398
11,793508
35,367
1,996
176,914389,059

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106

Financial Information

Consolidated Statements of Income

Consolidated Statement of Changes in Equity
Previous consolidated fiscal year
(April 1, 2020–March 31, 2021)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Gain on foreign exchange
Share of profit of entities accounted for using equity method
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Commission for purchase of treasury shares
Miscellaneous losses
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Impairment losses
Total extraordinary losses
Profit before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent(Unit: Millions of yen)
Current consolidated fiscal year
(April 1, 2021–March 31, 2022)

577,583
531,543
46,04031,066
14,973680,962
623,591
57,37037,317
20,052

206
1,334
—
270
967
2,779

244
1,429
53
370
780
2,877

698
151
7
—
380
1,238
16,514

674
—
151
129
326
1,281
21,648

2,984
2,984

8,975
8,975

—
—
19,499
5,337
(43)
5,294
14,204411
13,792168
168
30,455
7,294
685
7,980
22,475
124
22,351

Consolodated Statements of Comprehensive Income
Previous consolidated fiscal year
(April 1, 2020–March 31, 2021)
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income(break down)Comprehensive income attributable to owners of parent
Comprehensive income attributable to non-controlling interests

107 Inabata Integrated Report 2022

(Unit: Millions of yen)
Current consolidated fiscal year
(April 1, 2021–March 31, 2022)

14,20422,475

12,968
55
3,155
1,593
164
17,93532,140(16,560)
206
7,276
(68)
(127)
(9,273)
13,202

31,644496

13,102
99

Previous consolidated fiscal year (April 1, 2020–March 31, 2021)(Unit: Millions of yen)
Shareholders’ equity

Share capital

Balance at beginning of period
Cumulative effects of changes in accounting policies
Restated balance
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Net changes in items other than shareholders’ equity
Total changes during period
Balance at end of period

Capital surplus

9,364
—
9,364

Retained earnings

7,752
—
7,752

Treasury shares

106,197—
106,197

Total shareholders' equity(4,155)—(4,155)(3,195)
13,792

119,159—
119,159(3,195)
13,792
(0)
—
—
(567)
—
10,029129,188

(0)

(567)
—
9,364

(567)
7,184

10,596
116,794(0)(4,155)

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

148
—
148

1,436
—
1,436

26,196
Balance at beginning of period
Cumulative effects of changes in accounting policies—
Restated balance
26,196
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Net changes in items other than shareholders’ equity 13,119
Total changes during period
13,119Balance at end of period
39,31638
38
187

Remeasurements
Totalof defined
accumulated
benefitother comprehensive
plansincome(1,016)—(1,016)

3,100
3,100
4,536

1,593
1,593
576

26,764—
26,764

17,851
17,851
44,616

Noncontrollinginterests

Total net
assets

1,802
—
1,802

147,726—
147,726

196
196
1,999

(3,195)
13,792
(0)
—
—
(567)
18,04828,077
175,803

Current consolidated fiscal year (April 1, 2021–March 31, 2022)(Unit: Millions of yen)
Shareholders’ equity
Share capital

Balance at beginning of period
Cumulative effects of changes in accounting policies
Restated balance
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Net changes in items other than shareholders’ equity
Total changes during period
Balance at end of period

Capital surplus

9,364
—
9,364

Retained earnings

7,184
—
7,184

Treasury shares

116,794—
116,794(4,401)
22,351(43)(4,203)(7,500)4,247
913,745130,540(3,243)(7,398)

(96)
—
9,364

(140)
7,044

Total shareholders' equity(4,155)—(4,155)

129,188—
129,188(4,401)
22,351(7,500)—9(96)
10,362
139,550

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

39,316
Balance at beginning of period
Cumulative effects of changes in accounting policies—
Restated balance
39,316
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Net changes in items other than shareholders’ equity (16,649)
Total changes during period(16,649)
Balance at end of period
22,667

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

187
—
187

4,536
—
4,536

211
211
398

7,257
7,257
11,793Remeasurements
Totalof defined
accumulated
benefitother comprehensive
plansincome

576
—
576

(68)
(68)
508

44,616—44,616(9,248)(9,248)35,367

Noncontrollinginterests

Total net
assets

1,999
—
1,999

175,803—
175,803

(3)
(3)
1,996

(4,401)
22,351(7,500)—9(96)(9,251)
1,110
176,914

Inabata Integrated Report 2022

108

Financial Information

Consolidated Statements of Cash Flows

Sales by Business Segment
Previous consolidated fiscal year
(April 1, 2020–March 31, 2021)

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Interest expense
Share of loss (profit) of entities accounted for using equity method
Increase (decrease) in provision for loss on business liquidation
Loss (gain) on sales of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in other non-current assets
Increase (decrease) in trade payable
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividends, received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries
Decrease (increase) in short-term loans receivable
Long-term loan advances
Collection of long-term loans receivable
Other
Net cash provided by (used in) investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Purchase of shares of subsidiaries that do not result in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of period

109 Inabata Integrated Report 2022

(Unit: Millions of yen)
Current consolidated fiscal year
(April 1, 2021–March 31, 2022)

19,4992,874—(3,646)(1,541)
360
196
698
(270)
(246)
(2,984)(5,924)
3,127
(884)
4,071

30,4553,160
168
22(1,673)(601)(3,035)674(370)—(8,975)(11,227)(20,037)(3,188)
(60)

4,261
491
393
20,476
1,733(705)(3,891)
17,613

4,363
3,864
407
(6,053)
1,793(666)(6,521)(11,448)(5,162)
3,992(1,864)
149
(648)
(95)
3,128
—
101
(219)
91
104
(423)

(6,780)5,742(1,669)
15
(317)
(197)
9,645
(554)
(35)
(151)
347
(597)
5,446

(9,276)729(4,357)(0)(3,205)
(312)
(557)
(602)
(17,582)894
502
25,48025,983

21,488438(3,041)(7,629)(4,415)
(107)
(96)
(636)
5,999
2,270
2,268
25,98328,251

Information & Electronics(Billions of yen)
800.0

ChemicalsLife Industry

Plastics(Housing & Eco Materials)(Food)The Chemicals Segment has a

Lehman Brothers’ collapse

long history and is performing
steadily based on its strong

600.0

foundation of business partners.
400.0

The Plastics Segment has
expanded its business since the

200.0
0

rapid economic growth in the
1950s, ranging from home
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(Fiscal year)

Note: We have applied Accounting Standard for Revenue Recognition (ASBJ Statement No. 29), etc., from FY2021.

ChemicalsLife Industry

Plastics

The Information & Electronics
Segment grew significantly along

Operating Profit by Business Segment
Information & Electronics

appliances, OA to automobiles.

with the rapid growth of the LCD(Housing & Eco Materials)(Food)

market from 2000 onward. The(Billions of yen)
20.0Life Industry Segment has started

16.0

agriculture and advanced

12.0

medicine in recent years and canactivities in the fields of

be expected to grow in the future.

8.0
4.0
0

Impact of including allowance of doubtful accounts at a European subsidiary-4.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(Fiscal year)

Notes: 1. In FY2012, the life science business of the former chemicals business and the former food business were integrated to form the life industry business.
2. In FY2019, housing & eco materials business was integrated with the chemicals business.

Sales by Domestic or Overseas Market
Japan(Billions of yen)
500.0

AbroadLehman Brothers’ collapse

Overseas sales

59%

400.0

intensifying its global business inalignment with production
Overseas
sales

transfer by Japanese companies

25%

to locations outside Japan. Over

100.0
0

post-war overseas subsidiary in
1976 and has been rapidly

300.0
200.0

Inabata established its first

the 40 years since, its overseas
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(Fiscal year)

Note: We have applied Accounting Standard for Revenue Recognition (ASBJ Statement No. 29), etc., from FY2021.

Operating Profit by Domestic or Overseas Market
Japanbusiness has expanded, and thepercentage of overseas sales hasgrown from 25% in FY2001 to
59% in FY2021

Abroad(Billions of yen)
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0
-2.0

Impact of including allowance of doubtful accounts at a European subsidiary2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(Fiscal year)

Inabata Integrated Report 2022110

Consolidated Subsidiaries and Affiliates

Consolidated Subsidiaries
Corporate Name

Trading company

Countries and Regions

Manufacturing and processing baseBusinessJapan▲

I & P Co., Ltd.

Japan

Osaki, Miyagi

Molding and processing of synthetic resins▲

Ikkoen Co., Ltd.

Japan

Sakai, Osaka

Processing and sale of marine products●

Inabata Fine Tech Co., Ltd.

Japan

Osaka

Sale of chemicals▲

N · I · C Co., Ltd.

Japan

Tokyo

Processing and sale of plastic film products

Ordiy Co., Ltd.

Japan

Osaka

Processing of plastic film products andpackaging materials, design and marketingof supplementary equipment and systems▲

Kansai Kobunshi Co., Ltd.

Japan

Yamato-Koriyama, Nara

Manufacturing of plastic films▲

Taiyo Plastics Co., Ltd.

Japan

Hasuda, Saitama

Manufacturing of plastic films●

Southeast Asia / India

Corporate NameCountries and Regions

Business●

Inabata Korea & Co., Ltd.

Korea

Seoul

Import & export and sale of electronicmaterials●

Taiwan Inabata Sangyo Co., Ltd.

TaiwanHsinchu

Import & export and sale of electronicmaterials, semiconductor-related
equipment and chemicals

The Americas▲

IK Plastic Compound Mexico, S.A. de C.V.

MexicoSilao

Compounding of resins●

Inabata Mexico, S.A. de C.V.

MexicoQueretaro

Sale of synthetic resins▲

NH Inabata, S. de R.L. de C.V.

MexicoQueretaro

Design and production, installation, anddistribution of overhead traveling cranes●

DNI Group, LLC

U.S.

Novato (California)

Import & export and sale of food●Inabata America Corp.

U.S.

New York

Import & export and sale of chemicals,
electronic materials, and synthetic resins●

Inabata India Private Ltd.

India

Gurugram(suburb of Delhi)

Import & export and sale of synthetic
resins, electronic materials and chemicals

Europe▲PT. IK Precision Indonesia

Indonesia

Bekasi (suburb of Jakarta)

Molding and processing of synthetic resins●

Inabata France S.A.S.

FranceWissous (suburb of Paris)

Import & export and sale of chemicals▲

PT. Inabata Creation Indonesia

Indonesia

Bekasi (suburb of Jakarta)

Processing of grip tapes for tennis rackets▲

Pharmasynthese S.A.S.

FranceNormandy●

PT. Inabata Indonesia

Indonesia

Jakarta

Import & export and sale of synthetic
resins and chemicals

Manufacturing of pharmaceuticals,
materials for cosmetics, and fine chemicals●

Inabata Europe GmbHGermany

Dusseldorf▲

PT. S-IK Indonesia

Indonesia

Bekasi (suburb of Jakarta)

Compounding of resins

Import & export and sale of electronicmaterials, chemicals, and synthetic resins●

Inabata Malaysia Sdn. Bhd.

Malaysia

Kuala Lumpur

Import & export and sale of synthetic resins●

Inabata UK Ltd.

U.K.

Shrewsbury(suburb of Birmingham)

Property management, warehousing▲

SIK Color (M) Sdn. Bhd.

Malaysia

Johor

Compounding of resins▲

IK Plastic Compound Phils. Inc.

Philippines

Binan (suburb of Manila)

Compounding of resins●

Inabata Philippines, Inc.

Philippines

Binan (suburb of Manila)

Sale of synthetic resins●

Inabata Singapore (Pte.) Ltd.

Singapore

Singapore

Import & export and sale of synthetic
resins, chemicals and electronic materials▲

Apple Film Co., Ltd.

ThailandSamut Prakan(suburb of Bangkok)

Manufacturing of plastic films

Ayutthaya

Molding and processing of rubber
products▲

Hi-Tech Rubber Products Co., Ltd.

Thailand●IKT Consulting Co., Ltd.

Thailand

Bangkok

Sale of machinery and provision ofvarious services●

Inabata Thai Co., Ltd.

Thailand

Bangkok

Import & export and sale of synthetic
resins, chemicals, food, and machinery▲

SIK (Thailand) Ltd.

ThailandSamut Prakan(suburb of Bangkok)

Compounding of resins▲

Apple Film Da Nang Co., Ltd.

Vietnam

Da Nang

Manufacturing of plastic films●

Inabata Vietnam Co., Ltd.

Vietnam

Hanoi

Import & export and sale of synthetic
resins,electronic materials and chemicals▲

SIK Vietnam Co., Ltd.

Vietnam

Haiphong

Compounding of resins

China

Guangzhou

Import & export and sale of synthetic
resins, machinery, electronic materials andchemicals

Equity-Method Affiliates
Corporate NameCountries and Regions

Business▲

Ulvac Coating Corp.

Japan

Chichibu, Saitama

Manufacturing of electronics andoptical industrial materials▲

NI Packs Co., Ltd.

Japan

Inashiki, Ibaraki

Printing and molding of plastic packages●

Clean Assist Co., Ltd.

Japan

Tokyo

Sale of plastic films and plastic sundries●

Maruishi Chemical Trading Co., Ltd.

Japan

Osaka

Sale of chemicals

Other Affiliates
Corporate NameCountries and Regions

BusinessJapan▲

Aikei Farms Shakotan Co., Ltd.

Japan

Shakotan, Hokkaido

Production and sale of agricultural products▲

Aikei Farms Yoichi Co., Ltd.

Japan

Yoichi, Hokkaido

Production and sale of agricultural products▲

Inabata Optech Co., Ltd.

Japan

Kawasaki, Kanagawa

Research and development of encapsulants
for optical semiconductor devices

China

Tianjin

Import & export and sale of synthetic
resins and chemicals

Brazil

Sao Paulo

Sale of chemicals and synthetic resins

Northeast Asia●

Guangzhou Inabata Trading Co., Ltd.

●▲ Inabata Industry & Trade (Dalian F.T.Z.)

Co., Ltd.

●

Inabata Sangyo (H.K.) Ltd.

China

DalianCompounding of resins; Import/export andsale of synthetic resins and chemicals

China

Hong Kong

Import & export and sale of synthetic
resins, machinery, electronic materials andchemicals▲

Shanghai Inabata Fine Chemical Co.,Ltd.

China

ShanghaiProcessing of coating materials●

Shanghai Inabata Trading Co., Ltd.

China

Shanghai

Import & export and sale of synthetic
resins and chemicals

111 Inabata Integrated Report 2022

Northeast Asia●

Tianjin Inabata Trading Co., Ltd.

The Americas●

Inabata Brazil Import & Export Ltd.

Australia▲

IKC Feed Pty. Ltd.

Australia

Brisbane

Manufacture and sale of feed ingredients●

Inabata Australia Pty. Ltd.

Australia

Brisbane

Export of roughage, etc., import and saleof resin products, etc.

Inabata Integrated Report 2022

112

Corporate Information

Company nameInabata & Co., Ltd.

Founded

October 1, 1890

Incorporated

June 10, 1918

Paid-in capital¥9,364 million

Location ofhead offices

Osaka Head Office
1-15-14 Minami-semba, Chuo-ku, Osaka
542-8558
Tokyo Head Office
2-8-2 Nihonbashi-honcho, Chuo-ku, Tokyo
103-8448

Domestic offices

Osaka Head Office, Tokyo Head Office,Nagoya Office, Shiojiri Office, Shizuoka Office,Hamamatsu Office, Kyushu (Kirishima) Office

Overseas offices

About 60 locations in 18 countries including
Singapore, Bangkok, Jakarta, Shanghai,
Hong Kong, Taipei, Los Angeles, New York,
Dusseldorf

Number of employees

Unconsolidated: 672 (including employees

Note: As of March 31, 2022 seconded to group companies)

Consolidated: 4,207

Accounting auditor

KPMG Azsa LLC

Securities code

8098
Prime Market of the Tokyo Stock Exchange

Websitewww.inabata.co.jp/english/
Organization(As of October 1, 2022)

Information &Electronics Div. I
Information &Electronics Div. II
Information &Electronics Div. III
Chemicals Div.

IR Activities

Stock Information (As of March 31, 2022)

We are proactive in holding dialogue with shareholders andinvestors, as we believe it contributes to our sustainable growthand improves corporate value in the medium and long term.
(1) IR system• The president serves as the responsible person, and the director
in charge of IR has also been appointed. In principle, thepresident and the director in charge of IR lead dialogue withshareholders and investors.
• In cooperation with related sections within the company, the IR
Department collects and analyzes various management
information. The information is communicated internally andexternally, timely and appropriately.
(2) IR activities• Inabata handles meetings with investors positively andreasonably. We will also consider responding to applications foroutside directors within a reasonable scope.
• Inabata holds a briefing on financial results twice a year to
explain the progress of the medium-term business plan andprovide an overview of financial results.
• Inabata sets occasions for dialogue with individual shareholders
and investors through participation in IR events, etc.
• Inabata actively works to provide information through its
website, company brochure, shareholder news, and notices ofgeneral meeting of shareholders.
(3) Feedback• The director in charge of IR presents a report to the Board of
Directors regarding shareholder opinions and concerns obtained
through dialogue with shareholders.

Stock Information

Financial results briefings
Individual meetings with institutional investors,
analysts, etc. (including overseas)
Briefings for individual investors

GeneralMeeting of
Shareholders

Board of Directors

Audit and Supervisory
Committee
Audit and Supervisory
Committee Office

Plastics Compound
Business Office
Plastics Div. II
General Affairs
OfficeNumber of shareholders

28,472

Note: 3,085,100 shares were canceled on April 5, 2022, bringing the total
number of shares issued and outstanding to 57,714,127 shares as ofJune 30, 2022.

Treasury stock
5.6% (1)Securities
companies
2.1% (32)

Individuals/others
16.6% (27,892)

60,799(thousand shares)

Domestic
corporations
31.9% (269)

Financial institutions
22.8% (24)Foreign investors
21.0% (254)

Principal Shareholders (Top 10)

13,836

24.1

The Master Trust Bank of Japan, Ltd. (Trust account)

6,163

10.7

Custody Bank of Japan, Ltd. (Trust account)

2,032

3.5

Mizuho Trust and Banking Co., Ltd.)

1,736

3.0

DFA INTL SMALL CAP VALUE PORTFOLIO

1,071

1.9

Maruishi Chemical Trading Co., Ltd.

961

1.7

ASKA Pharmaceutical Co., Ltd.

785

1.4

2 timesMizuho Bank, Ltd.

744

1.3

48 times

NORTHERN TRUST CO. (AVFC) RE U.S. TAX EXEMPTED PENSION FUNDS SEC LENDING

670

1.2

THE BANK OF NEW YORK MELLON 140044

639

1.1

Implemented

1 timeExternal Evaluation
Status of inclusion in ESG Index
We were selected as a constituent stock for the FTSE Blossom
Japan Sector Relative Index of FTSE Russell, which belongs to the
London Stock Exchange Group, and the S&P/JPX Carbon EfficientIndex (environmental stock index), which is presented by the US
S&P Dow Jones Indices and the Japan Exchange Group.

Name of shareholder

Custody Bank of Japan, Ltd.
(Mizuho Bank, Ltd. Retirement Benefit Trust Account re-entrusted by

Note: Inabata owns 3,395,519 shares of treasury stock. This shareholding has not been included in the calculation of the shareholding ratio. However, 94,300
shares of Inabata held by Custody Bank of Japan, Ltd. (Trust account E) as a trust property under the Board Benefit Trust (BBT) system is excluded from thenumber of the treasury shares, and hence, is included in the calculation of the ratio.

Stock Price
Stock price
(Yen)
2,600
2,400
2,200
2,000

Financial
Management Office

1,800

Sustainability Committee

Business Process
Management Office

1,400Compliance Committee

Human Resources
Office

1,000

Internal Control Committee

Risk Management
OfficeHuman Rights
Affairs Committee

Business Planning
OfficeExport Control Committee

Internal Audit Office

113 Inabata Integrated Report 2022

60,799,227

Sumitomo Chemical Co., Ltd.

Digital Promotion
OfficeNotice of Temporary Relocation of Tokyo Head Office
Due to the rebuilding of the Tokyo Head Office Building, from aroundDecember 2022 to around September 2025, we will temporarily
relocate the Tokyo Head Office and conduct business at the
Muromachi Furukawa Mitsui Building (COREDO Muromachi 2),
2-3-1 Nihonbashi Muromachi, Chuo-ku, Tokyo.

200,000,000

Number of shares issued and outstanding

Percentage ofshares held (%)

Life Industry Div.
Plastics Div. I

Total number of authorized shares

Number of shares
held (in thousands)

IR activities in FY2021
Activity

Status of Stock Allocation by Owners

1,600
1,200

Other awards
We were awarded the Best Company (Silver Award) in the Gomez
IR Site Ranking 2021 announced by BroadBand Security, Inc., andthe Excellence Award in the 2021 All Japanese Listed Companies’
Website Ranking announced by Nikko Investor Relations Co., Ltd.

800
600
400
200
0

FY2012FY2013

FY2014FY2015FY2016

Credit Rating
Rating agency
Rating and Investment Information, Inc. (R&I)

Issuer rating
A- (stable)

FY2017FY2018FY2019FY2020

FY2021A cautionary note regarding future estimates
The data and future predictions contained in this report are based on
information available and judgments applicable at the time of thereport’s release. Consequently, the data and future forecasts
contained herein may include elements that are subject to change,
and the reader should be aware that this document and its contents
are no guarantee of future performance.

Inabata Integrated Report 2022

114