Denka Group ESG Management Denka Group ESG Management

Important Management Issues (Materiality) of the Denka Group

Updated December 2024

Important Management Issues (Materiality) of the Denka Group

In formulating Management Plan “Mission 2030”, which will begin in fiscal 2023, Denka Group analyzed and evaluated ESG issues over the medium to long term (eight years) leading up to 2030, and reviewed its materiality.

1. ESG Management Promotion System

The Sustainability Committee (chaired by the President) has been established within the Executive Division to supervise the proactive and active efforts of the Executive Division to address issues related to sustainability (medium- to long-term sustainability). The committee meets five times a year with the President serving as chairperson, the Executive Officer in charge of the Corporate Planning Department as vice chairperson, and the Executive Officer in charge of the Management Department as a committee member, with Directors, excluding committee members, present as observers.

The Committee deliberates and makes recommendations on sustainability initiatives implemented by the Executive Division and the achievement of non-financial target KPIs (Key Performance Indicators). In implementing these deliberations and recommendations, from the perspective of ensuring transparency and fairness in corporate decision-making and the realization of effective corporate governance, the Committee will consider the impact of risks and profit opportunities on our business activities, taking into account the level of consistency between our efforts to address sustainability issues and our management strategies and issues. The results of these deliberations will be reported to the Board of Directors.

In addition, The Portfolio Transformation Committee (chaired by the President) was established to promote a change to our business portfolio based on three elements: specialty, megatrends, and sustainability. By incorporating such indicators as CO 2 emissions and labor productivity, we aim to achieve our target of 100% three-star businesses by 2030.

The 1st The Sustainability Committee (July 10, 2023) The 1st The Sustainability Committee (July 10, 2023)

ESG Management Promotion System

2. Review Process

  • The Denka Group analyzed and evaluated ESG issues over the medium-to-long term up to 2030 and reviewed materiality in formulating its management plan Mission 2030.
  • The newly identified materiality items clarify important management issues for fulfilling our social responsibilities in the "expected world" and "megatrends" analyzed when formulating our management plan, Mission 2030, and serve to connect these issues to individual targets for our business activities. With the support of external experts, we evaluated and analyzed a population ※ list of social issue items, selected items using a materiality map (materiality matrix) approach, and identified 14 items as materiality through a management plan formulation process, which were then approved by the Board of Directors in November 2022.
  • ※Population of social issues: World Economic Forum (WEF) Global Risk Report (2022), Sustainable Development Goals (SDGs), SASB Standards, CDP, and other ESG evaluation institutions were analyzed and categorized into 23 categories and 333 items.)

Materiality Analysis Map of the Denka Group

Materiality Analysis Map of the Denka Group

3. New Materiality

Classifying 14 items into two categories

  • The Company has classified its sustainability initiatives into two categories: "Responsibility and Contribution to a Sustainable Society," which addresses the Company's contribution to society through its business activities, and "Strengthening the Business Foundation," which is a prerequisite for the Company's continued existence and sustainable growth.
  • The five items of "Responsibility and Contribution to a Sustainable Society" are aimed at solving social issues through our business activities and are comprised of the following items that the Denka Group should address: global warming countermeasures, healthcare, and sustainable cities and lifestyles.
  • The Denka Group ESG Basic Policy states that the Denka Group will strengthen its business foundation in nine areas. In addition to complying with the Denka Group ESG Basic Policy, this initiative addresses human resource issues, which are the source of sustainable growth, and the fulfillment of social responsibilities through supply chain interactions.

Management important issues (materiality) for the practice of The Denka Group ESG Basic Policy and KPIs and targets of M30 aimed at solving those issues

Denka Group
ESG Basic Policy		 Materiality
(Important Management Issues)		 Mission 2030
KPI (Key Performance Indicator)		 2030 Targets
  1. Promotion of measures for climate change
  1. Achievement of carbon neutrality
  1. Reduction of group-wide greenhouse gas emissions
 60% reduction from FY2013 (1,000,000t)
  1. Maximum output of renewable energy generation
 150MW
  1. Renewable energy + electricity mix with non-fossil fuel certificates
 76%
  1. Promotion of group-wide energy conservation
 Continue 1% reduction in energy intensity from previous year
  1. Reduction of environmental impact and conservation and protection of biodiversity
  1. Conservation of the environment and minimization of environmental footprint
  1. Continue zero waste emissions
 Continue zero waste emissions
  1. Addressing nature-related risks such as biodiversity and water in accordance with TNFD
 Implementation of biodiversity conservation plan in accordance with TNFD and continuation of group-wide awareness-raising activities
  1. Sustainable economic growth and solving social issues
  1. Sustainable growth through the creation of new businesses
  2. Increasing healthy life expectancy and correcting health disparity
  3. Sustainable cities and fulfilling daily lives
  1. Contributing to decarbonization and recycling-oriented society through the chemical recycling of styrene resins
 Social implementation of PS chemical recycling
Consortium Establishment
  1. Establishment of CO 2 concrete fixation technology
 Sales expansion of LEAF
  1. Concentration on three-star businesses
 100%
  1. Respect for Human Rights
  1. Respect for Human Rights
  1. Establishment of human rights policy and thorough respect for human rights based on the UN Guiding Principles on Business and Human Rights and the UN Global Compact
 Human Rights in the Group Supply Chain
Establishing risk identification and response processes
  1. Promotion of DE&I, human resource development, and work style reform
  1. Strengthening of HR development systems
  2. Promotion of DE&I
  3. Health and productivity management and work style reform
  1. Average training costs (per person)
 Double compared to fiscal 2021
  1. Percentage of female/foreign/experiential hires in management positions
 50%
  1. Percentage of female managers
 15%
  1. Paternity leave uptake rate
 85%
  1. Percentage of hiring of experienced workers
 50%
  1. Improving employee engagement
 Visualizing engagement and making ongoing improvements
  1. Reducing overtime hours
 30 hours or less/person/year
  1. Improving the taking of annual paid leave
 100%
  1. Introduction of shift breakers
 ―
  1. Working-from-home rate
 Twice a week
  1. Employees within appropriate weight limits
 80%
  1. Employees with high stress levels
 10% or less
  1. Establishing good exercise habits
 40%
  1. Reduction of smoking rate
 12% or less
  1. Creating a safe and easy-to-work workplace
  1. Process reforms
  2. Safety First
  1. Number of personnel reduced
 720 people (cumulative total for FY2023-2030)
  1. Occupational injury frequency rate
 Main unit and subsidiaries 0.2 or less
  1. Online training for occupational safety and security
 All group employees
  1. Participation in and contribution to the formation of better local communities and fostering of trust
  1. Supply chain management
  1. BCP measures based on raw material risk assessment
 Number of high-risk suppliers: 0
  1. Procurement questionnaire implementation rate
 Conduct questionnaire for all business partners
  1. Acquisition of high ESG rating
 Ecovadis Gold
  1. Building trust with customers
  1. Improving product safety and quality
  1. Integration of quality control systems, raising of management levels
 Zero cases of serious quality accidents
  1. Fair corporate activities
  2. Constructive dialogue with stakeholders and information disclosure
  3. Risk Management
  4. Protecting, managing, and utilizing tangible and intangible assets
  5. Role of the President and CEO and thorough implementation of this Basic Policy
  1. Enhancement of corporate governance
  1. Thorough compliance risk management
 The number of significant compliance violations: 0
  1. Promotion of group policies and internal regulations
 Planned maintenance based on priority
  1. Implementation of compliance training
 All group employees
  1. Appropriate operation of the whistle-blowing system and disclosure of responses to whistle-blowing
 Disclosure on ESG information sites
  1. Dissemination of vision and management plan
 Dissemination of Vision and Management Plan
  1. Group-wide establishment of internal control framework
 Establishment of internal control framework for all Group companies
  1. Promotion of integrated risk management (ERM)
 Strengthening of management foundations and controls

4. Incorporating sustainability issues into management

4.1 Setting Growth Strategies and Non-financial KPIs

  • Materiality is an essential element for addressing the risks and opportunities of sustainability issues in our management foundation from a medium- to long-term perspective and achieving our vision. It should serve as the basis for our business activities.
  • The Management Plan "Mission 2030" sets forth growth strategies linked to materiality, and the Denka Group will address global issues including climate change and contribute to the realization of a sustainable society.
  • We have reflected the newly identified materiality in the individual items of "Policies" and "Measures" in our growth strategy, and established non-financial KPIs with a view to visualizing progress management. By achieving a balance between solving ESG issues and improving profitability, and accelerating this virtuous cycle, we aim to achieve sustainable growth.

4.2 Materiality and Non-financial KPIs

  • The non-financial KPIs linked to materiality identified in Mission 2030 and targets for fiscal year 2030 are as follows.
Policy Non-financial KPIs 2023 Fiscal Year Results 2030 Targets
Achievement of carbon neutrality (1) Reduction of group-wide CO 2 emissions 28% reduction compared to FY2013 (1.78 million t-CO 2​ 60% reduction from FY2013 (1,000,000t)
②Maximizing renewable energy generation 146MW 150MW
③Renewable energy + electricity mix with non-fossil fuel certificates 40% 76%
④Promoting Group-wide energy conservation 102% compared to previous fiscal year Continue 1% reduction from previous year
Increasing healthy life expectancy and correcting health disparity Concentration on three-star businesses ー 100%
Sustainable cities and fulfilling daily lives ①Contribution to decarbonization and recycling-oriented society through the chemical recycling of styrene resins
  1. Completion and start-up of PS chemical recycling plant
  2. Establishment of a collection scheme for used PS products with Ichihara City
 Establishment of social implementation consortium for PS chemical recycling
②Establishment of CO 2 concrete fixation technology 32t Sales expansion of LEAF
Sustainable growth through the creation of new businesses (Financial KPIs)
Conservation of the environment and minimization of environmental footprint ①Continue zero waste emissions Continue zero waste emissions
Standalone: 0.05%
Including domestic affiliates: 0.06%		 Continue zero waste emissions
②Addressing nature-related risks such as biodiversity and water based on TNFD
  1. Establishment of biodiversity assessment plans for main business sites
  2. Conducted local investigations in Omuta, Shibukawa, Gosen, and Bibai, and additional investigations in Aomi
 Implementation of biodiversity conservation plan in accordance with TNFD and continuation of group-wide awareness-raising activities
Strengthening of HR development systems Average training costs (per person) 69,000 yen / person・year Double compared to fiscal 2021
Diversity, equity & inclusion Percentage of female/foreign/experiential hires in management positions 20% 50%
Paternity leave uptake rate 53% 85%
Percentage of mid-career hires 31% 50%
Health and productivity management and work style reform Improving employee engagement Create action plans for issues extracted from the analysis results of the 3rd employee awareness survey Visualizing engagement and making ongoing improvements
Overtime hours 147 hours 30 hours or less/person/year
Taking annual paid leave 81% 100%
Introduction of shift breakers Number of shift breakers adopted15 ー
Working-from-home rate 39% Twice a week
Employees within appropriate weight limits 65% 80%
Employees with high stress levels 15% 10% or less
Establishing good exercise habits 34% 40%
Smokers 25% 12% or less
Process reforms Reduction of 1,000 workers (investment of 50 billion yen over 8 years) Investment in process reforms: ¥2.3 billion
Respect for Human Rights Establishment of human rights policy and thorough respect for human rights based on the United Nations Guiding Principles on Business and Human Rights and the United Nations Global Compact
  1. The Denka Group established the Denka Group Human Rights Policy and launched a human rights working team.
  2. Holding online briefing sessions for the Human Rights Action Plan (2 times).
  3. Conducted hearings (target: head office business divisions, management divisions, labor union) to identify priority risk items (11 items) for the identification of important human rights risks.
 Establishment of process for identifying and addressing human rights risks in group supply chain
Safety First Occupational injury frequency rate 0.4 Main unit and subsidiaries 0.2 or less
Online training for occupational safety and security 82% (Conducted for Denka employees around 5 years after joining) All group employees
Supply chain management BCP measures based on raw material risk assessment The Company has summarized the BCP raw material risk assessment. The percentage of items with high risk assessment has decreased from 31% in the first round (April 2020) to 15%. Number of high-risk suppliers: 0
Procurement questionnaire implementation rate A total of 732 suppliers of raw materials and fuels were surveyed using the UNGC ESG survey questionnaire, and responses were received from 572 suppliers, or 78%. Conduct questionnaire for suppliers covering 90% of total procurement cost
Acquisition of high ESG rating Implementation of EcoVadis score improvement plan Ecovadis Gold
Improving product safety and quality Integration of quality control systems, raising of management levels Inappropriate acts such as UL certification found Zero cases of serious quality accidents
Enhancement of corporate governance Ongoing improvement of effectiveness of Board of Directors
  1. To enhance independence and objectivity, an outside director has been appointed as the chairperson of the Nomination and Remuneration Advisory Committee.
  2. Establishment of The Sustainability Committee, which requires attendance of all Directors
 ー
Thorough risk management across the global Group Inappropriate acts such as UL certification found The number of significant compliance violations: 0
Attendance at compliance training Implementation of E-learning for Code of Conduct for all group employees: Attendance rate of approximately 90% All group employees
Appropriate operation of the whistle-blowing system and disclosure of responses to whistle-blowing Disclose 2023 results on ESG information site Disclosure on ESG information sites
Dissemination of vision and management plan
  1. Holding of business contest (Denka Innovation Day)
  2. Establishment of employee suggestion system (Immprovement Committee)
 Dissemination of Vision and Management Plan
Group-wide establishment of internal control framework
  1. Companies with completed maintenance: 11
  2. Companies in the process of establishing: 3
  • ※Combined from FY2021
 Establishment of internal control framework
for all Group companies

5. Review of Materiality

In response to changes in sustainability issues, social needs, and stakeholder expectations, we will review materiality 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.

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Denka Group ESG Management
The Denka Group ESG Basic Policy

The Denka Group ESG Basic Policy

The Denka Group's ESG Promotion System ...

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Important Management Issues (Materiality) of the Denka Group

Important Management Issues (Materiality) of the Denka Group

1. ESG Management Promotion System 2. Review Process ...

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Contributions to the SDGs

Contributions to the SDGs

Product and technology development for global warming countermeasures Resource recycling system for cement plants

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SDGs/List of products that contribute to society and the environment

SDGs/List of socially and environmentally conscious products

Electronics and Innovative Products Life Innovation E...

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Participation in initiatives

Participation in initiatives

Signing of the United Nations Global Compact Support for TCFD (Task Force on Climate-related Financial Disclosures) W...

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Support for TCFD (Task Force on Climate-related Financial Disclosures)

Support for TCFD (Task Force on Climate-related Financial Disclosures)

Governance and risk management Indicators and targets Environmental management through CDP...

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Participation as a partner of WIPO GREEN

Approach through WIPO GREEN for environmental issues

DENKA was selected in July 2022 as a finalist in the Global Environment Facility (GEF) International Patent System (IPS) for Environmentally Sound Technologies (EST) organized by the World Intellectual Property Organization (WIPO).

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Participation in GX League

Participation in GX League

Our company has expressed its support for the "GX League Basic Concept" announced by the Ministry of Economy, Trade and Industry in fiscal 2022, and is actively participating in the GX League.

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Partnership Building Declaration

Partnership Building Declaration

May 13, 2022 announcement, January 17, 2023 updateOur company has been participating in the "Future Opening" initiative promoted by the Cabinet Office, the Small and Medium Enterprise Agency, and relevant economic organizations since 2021.

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Participation in CLOMA (Clean Ocean Material Alliance)

Participation in CLOMA (Clean Ocean Material Alliance)

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