Materiality (Key Issues)

December 20, 2023

Introduction

To realize a sustainable society and sustainable corporate growth, we have selectedpriority issues to be addressed from the viewpoint of their importance to ourcompany’s management and the company itself and identified materiality(key issues) based on their importance and impact.

The materiality that our company should address is described later. Our company
will proceed with our activities, including the review of each materiality and theformulation of countermeasures and plans, centered around the Sustainability
Committee.

1. Identification ProcessIn identifying materiality, we extracted social issues based on our corporate philosophy, medium-to-long-term
vision, as well as various guidelines and policies, and then extracted target materiality from the perspective of
their importance to both stakeholders and our company.

STEP 1
Extract issues
to consider

STEP 2
Select andevaluate issues

Identify issues that could becandidates for key issues
from both internal andexternal perspectives

Assess importance, conduct
mapping, and executerefinement of extractedissues

 Internal perspective

 Importance to ourcompany Interviews with internal
departments

 Importance tostakeholders andsociety Discussions withmanagement

・ Management philosophy
・ Company motto and slogan
・ Medium-term management
plan・ Various guidelines andpolicies
etc.

 External perspective･ SDGs･ SASB・ ESG information disclosure
based on GRI・ Materiality from othercompanies in the industry
etc.

STEP 3

Assess validity
Identify issues of highimportance Discussion andsummarization among
the Sustainability
Committee
 Determining the methodof representation

STEP 4
Identify
materiality
Gain consensus frommanagement

 Approval of the Board ofDirectors2. Materiality Map
Importance to stakeholders
Improving customer
satisfaction by ensuring
product quality and safety

High

Employee well-being
Adaptation to and mitigationof climate change

Strengthening corporate governanceMediumConservation of air, water,and soil environments
Water risk

Creating and providing
products that contribute to
Occupational safety and health, solving social issues
security and disaster prevention

Compliance and anti-corruption

Respect for human rights in businessAppropriate disclosure of corporate information

Low

Human resources development

Low

MediumHigh Importance to our company

Importantissues

3. Details on Materiality (Key Issues) I
Materiality

Themes/Related SDGs
Creating and providing productsthat contribute to solving social
issuesDesired StateA state where we engage in creative
approaches to next-generation researchand development themes to contribute tosolving social issues and can provide new
products utilizing our cultivatedproprietary technologies

Contribute throughbusiness

Target Level

Investment amount:
1.2 billion yen Establishment and improvement ofenriched boric acid production facilities
 Increased tin fluoride production

 Promotion of nextgeneration materialsdevelopment

 Chemicals that lead to improvements inthe semiconductor manufacturing
process
 Materials that contribute to the higher
performance of Li-ion batteries
 Inorganic fluorine compounds orproducts using fluorine technology

 Release of newly
developed products

A state where customer satisfaction isimproved by the stable supply of highquality, safe products that capture
customer needs

 Customer satisfaction(quality) Holding safety training
sessions withcustomers

 2024: Customer satisfaction rate of atleast 50% as the annual average forthe top 20 largest customers 100% compliance with holding safety
training sessions based on customer
requests

Adaptation to and mitigation ofclimate change

A state where we have achieved carbon
neutrality by 2050

 Reduction of Scopes 1and 2 emissions

 46% reduction in emissions fromFY2013 levels by FY2030

Conservation of air, water, and soil
environments

A state where we have managed andreduced the emission of chemical
substances from our business activities
and have reduced our impact on thenatural environment

 Strict observance oflegal standards for theprevention of air, water,and soil pollution

 Continuation of zero exceedances oflegal standards

Responding to water risk

A state where the efficient use of water isbeing conducted to improve the quality ofwater we discharge and reduce water risk

 Reduction of waterintake 10% water intake reduction fromFY2017 levels at 3 major factories

Improving customer satisfaction byensuring product quality and safety

Respond to climatechange and conserve
the environment

KPI

3. Details on Materiality (Key Issues) II
Materiality

Themes/Related SDGs

KPI

Target Level Annual paid leave
utilization rate Maintain an annual paid leave
utilization rate of at least 80%

 Childcare leave utilizationrate

 A male childcare leave utilization
rate of at least 50%

 Reemployment rate

 Maintain the current high rate ofreemployment after retirement (atleast 80%)

A state where employees’
work awareness, knowledge,
and skills are being improved
through training andcertification

 Training Planned participation in external
training and courses, qualification
training, and internal training

Occupational safety and health,security and disasterprevention

A state where employees canwork safely and healthily Work accident rate

 [Accident rate: 1.25]

 Severity rate [Severity rate: 0.08]

Respect for human rights inbusiness

A state where we respecthuman rights in the operationof our business and do not
engage in unjust
discrimination based on race,
gender, ethnicity, nationality,
or any other grounds,
including among our suppliers Implementation ofmeasures to prevent
discrimination andharassment

 We will advance qualitative
initiatives related to theprevention of discrimination andharassment and on human rights.

 Development of humanrights policies Development and disclosure ofhuman rights policies

Employee well-being

Strengthen human capital

Create a safe andrewarding
environment

Respect for humanrights

Desired StateA state where employees
have achieved work-lifebalance and feel rewarded bytheir work

 Average annual salary(men and women)

 Maintain a gender gap for total
base pay and bonuses of no lessthan 90%(with regular employment for men
set at 100%)

3. Details on Materiality (Key Issues) III
Materiality

Themes/Related SDGs

Desired State

KPI

Target Level

Compliance and anticorruption

A state where employees canrecognize and observecompliance and related laws
and regulations

 Number of complianceviolations

 Number of major complianceviolations: 0

Strengthen corporate
governanceA state where the soundnessof management is ensured
through the prompt
implementation ofmanagement decisions

 Qualitative initiatives forstrengthening corporate
governance Evaluation of the effectiveness of
the Board of Directors (third-partyevaluation)

Strengthen
governance toenhance corporatevalue Clarification of criteria for selecting
outside directors
 Number of major information
security accidents: 0

Appropriate disclosure ofcorporate information

A state where expected
information is promptly andaccurately disclosed tostakeholders

 Appropriate disclosure ofinformation

 Same-day disclosure in Japaneseand English simultaneously Disclosure of sustainability
information