１ ESG management promotion framework First Sustainability Committee Meeting (July 10, 2023)

２ Materiality review process

1. In formulating our Management Plan "Mission 2030," the Denka Group analyzed and evaluated ESG issues over the medium-to-long term for the 8 years leading up to 2030, and reviewed materiality.
2. The new materiality serves to clarify management issues that are important in fulfilling our social responsibility in the "envisaged world" and "megatrends" analyzed at the time our "Mission 2030" management plan was formulated, and to connect them to individual business goals. With the support of external experts, we evaluated and analyzed the population

• (Note 2) list of social issues, selected them using the Materiality Map (Materiality Matrix) method, and through the process of formulating a management plan, we identified 14 materiality issues which were finalized by the Board of Directors meeting in November 2022. (Note 2: Population of social issues: Survey items of ESG assessment organizations such as the World Economic Forum (WEF) Global Risk Report (2022 edition), Sustainable Development Goals (SDGs), the SASB Standard, and the CDP were analyzed and classified into 23 categories/333 items.)

Denka Group materiality analysis map

３ New material issues (important management issues)

Materiality (14 items)

1. We have classified materiality issues into two categories, “responsibility and contributing to a sustainable society”, in which we contribute to society through our business activities, and “strengthening our business foundation”, which is a requirement for corporate survival and sustainable growth.
2. Responsibility and contribution to a sustainable society (5 items) consists of items that the Denka Group should address in order to resolve social issues through its business operations, such as global warming countermeasures, healthcare, and sustainable cities and lifestyles.
3. Strengthening our business foundation (9 items) is based on the Denka Group ESG Basic Policy, and issues related to human resources, a source of sustainable growth, and initiatives to fulfill social responsibilities through supply chain interaction.

Relationship between the Denka Group ESG Basic Policy and Materiality Issue resolution for each materiality issue

４ Incorporating sustainability issues into management

Setting management strategies and KPIs

1. Materiality is an essential element to address the risks and opportunities connected to issues of sustainability in our management base from a medium- to long-term perspective and aiming to realize our vision. It should form the cornerstone of our business activities.
2. Under our new management plan, "Mission 2030," the entire Denka Group will work to resolve global issues, such as climate change and contribute to the realization of a sustainable society by establishing management strategies that are linked to materiality.
3. The new materiality was reflected in each of the individual policies and measures in our management strategy, and KPIs were formulated with an awareness of visualizing progress management. We aim to achieve sustainable growth by resolving ESG issues and improving earnings, and accelerating this virtuous cycle.

Materiality and KPIs

1. The non-financial KPIs and fiscal 2030 targets associated with the materiality issues identified in "Mission 2030" are as follows.

Policy	Non-financial KPIs	FY2022 results	2030 Targets
Achievement of carbon neutrality	①Reduction of group-wide CO2 emissions	2.04 million t-CO2	60% reduction compared to FY2013 (1 million tons)
	②Maximizing renewable energy generation	146MW	150MW
	③Renewable energy + electricity mix with non-fossil fuel certificates	33%	76%
	④Group-wide promotion of energy conservation	101% YoY	Continue 1% reduction from previous year
Increasing healthy life expectancy and correcting health disparity	Three-star businesses	ー	100%
Sustainable cities and fulfilling daily lives	①Contributing to decarbonization and recycling-oriented society through the chemical recycling of styrene resins	Began construction of PS resin chemical recycling plant Started building a demonstration project with Ichihara City	Establishment of social implementation consortium for PS chemical recycling
	②Establishment of CO2 concrete fixation technology	ー	Sales expansion of LEAF
Sustainable growth through the creation of new businesses	(Financial KPI)
Environmental conservation and minimization of environmental footprint	①Continue zero waste emissions	Continue zero waste emissions	Continue zero waste emissions
	②Address biodiversity, water and other nature-related risks in accordance with TNFD	Formulated biodiversity assessment plan for main office Conducted preliminary survey using Omi Plant as a model	Implement a response plan for biodiversity conservation in compliance with TNFD
Strengthening of HR development systems	Average training costs (per person)	¥ 66 thousand/person/year	Double amount compared to FY2021
Promotion of diversity, equity & inclusion	Ratio of female/foreign/experoenced hires in management positions	19%	50%
	Percentage of males taking parental leave	44%	85%
	Percentage of mid-career hires	47%	50%
Health and productivity management and work style reform	Improve employee engagement	The third employee awareness survey conducted	Visualizing engagement and making ongoing improvements
	Overtime hours	160 hours/person/year	30 hours or less/person/year
	Taking annual paid leave	80%	100%
	Introduction of shift breakers	7persons recruited as shift breakers	ー
	Working-from-home rate	27%	2 days/week
	Employees within appropriate weight limits	64%	80%
	Employees with high stress levels	15%	10% or less
	Employees with good exercise habits	33%	40%
	Smokers	27%	12% or less
Process reforms	(Financial KPI)
Respect for human rights	Establishment of human rights policy and through respect for human rights based on the United Nations Guiding Pronciples on Business and Human Rights and the Global Compact	Signed the UNGC (June,2023)	On-going
Place the utmost priority on safety	Occupational accident frequency rate ※Denka (including partner companies) and consolidated subsidiaries with domestic or overseas offices	0.7	The Company and affliates 0.2 or less
	Online training for occupational safety and security	77%	All group employees
Supply chain management	BCP measures based on raw material risk assessment	Conducted a risk assessment regarding raw material to secure BCP, and analyzed the result. The number of raw materials categorized in “high risk” group was reduced by 30%(October 2022 vs April 2020)	Zero
	Procurement questionnaire implementation rate	Conducted SAQ for upstream suppliers	Conduct questionnaire for suppliers covering 90% of total procurement cost
	Acquisition of high ESG rating	EcoVadis Bronze	Ecovadis Gold
Improving product safety and quality	Integration of quality control systems, raising of control standards	Zero	Zero
Enhancement of corporate governance	Ongoing improvement of effectiveness of Board of Directors	ー	ー
	Thorough risk management across the global Group	Zero	Zero
	Introduction of compliance training	Implementation E-lerning about standards of conducts for all Group employees Attendance rate : About 80%	All group employees
	Appropriate operation of the whistle-blowing system and disclosure of responses to whistle-blowing	Disclose FY2021 results on ESG information site	Disclosure on ESG information sites
	Dissemination of Denka’s Vision and management plan	Published the video about Vision & the management plan Considerating internal penetration measures	Implemention of measures to ensure dissemination of corporate vision and management plan
	Group-wide establishment of internal control framework	Completed : 5 companies On-going : 8 companies	Establish internal control framework for all Group companies

５ Future materiality reviews

In response to changes in sustainability issues, social needs, and stakeholder expectations, we will review materiality issues and non-financial indicators (KPI) as appropriate to reflect our business activities and their mutual impact on the economy, environment, and society in our management approach.