SustainabilityMateriality

Background and Approach to Identifying Our Materiality
Process of Identifying Materiality
Monitoring Materiality

The Daicel Group identified its materiality in FY2021/3 as key sustainability issues toward achieving the Accelerate 2025 Mid-Term Management Strategy. We will carry out the CAPD cycle* according to this materiality and contribute to realizing a sustainable society in the Daicel way.

*Instead of a Plan, Do, Check, and Act (PDCA) cycle, the most widely known approach to continuous improvement, Daicel Group has adopted a CAPD improvement cycle to avoid the risk of overlooking crucial facts and realities that often lie hidden in the initial planning stage.

Background and Approach to Identifying Our Materiality

The Daicel Group’s materiality consists of two main categories.
For "materiality aimed at achieving growth of the Daicel Group and value co-creation," our aim is to leverage the strengths of the Group to address the SDGs and other social issues and actively create value in line with the "Product, Process, and People" concept in our Sustainable Management Policy.
For "materiality related to the foundation for the Daicel Group’s continuity and governance," we established respective considerations of prime importance for value creation, including safety, quality, and compliance, for E (environment), S (society), and G (governance).

Process of Identifying Materiality

STEP1Extract social issues

We referenced international guidelines, SDGs, the principles of the United Nations Global Compact and guidelines published by industry organizations to extract social issues that the Daicel Group should address.

STEP2Prioritize

We assessed items extracted in Step 1 by giving consideration to the following aspects to identify key themes with high priority by plotting them on the materiality map according to “Importance to stakeholders” and “Importance to the Daicel Group.” We then sorted them into the two categories of “Growth of the Daicel Group and value co-creation” and “Foundation for the Daicel Group’s continuity and governance.”

Consistency with the Long-Term Vision and Mid-Term Management Strategy
Consistency with related policies such as the Sustainable Management Policy, the Daicel Group Code of Conduct, and the Ethical Standards of Daicel Group
Consolidation of opinions from relevant departments

Materiality Map

STEP3Confirm validity

The Corporate Sustainability and other relevant divisions discussed the validity of important themes identified through Steps 1 and 2. The results were reported and approved at the Management Meetings and subsequently endorsed by the Board of Directors.

STEP4Formulate materiality and KPIs

By going through Steps 1 to 3, we identified 15 material issues. We designate a key performance indicator (KPI) and target for each. We will review our materiality, KPIs and targets in response to future changes in society and our business.

Monitoring Materiality

The progress toward identified materiality is regularly monitored by the Sustainable Management Committee via evaluation of the KPIs and targets set as well as with supervision from the Board of Directors.

Materiality and KPIs

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List of Materiality KPIs and Results (Daicel Report 2023) [PDF:855KB]

Materiality aimed at achieving growth of the Daicel Group and value co-creation

Classification	Materiality	Content	KPIs	Target	FY2023/3 Results
Sustainable Product	Contribute to beautyandhealth	Providing solutions for the pharmaceutical and medical markets	Our chiral columns used in pharmaceutical analysis methods*¹	FY2026/3: 95 cases (cumulative)	88 cases (cumulative)
	Contribute to beautyandhealth	Providing sustainable cosmetic raw materials and health food	Total number of people provided with functional food ingredients per year	FY2026/3: 2.23 million (twice the FY2021/3 figure)	1.42 million
	Contribute to the smart society	Providing solvents for semiconductor processing and polymers for resists Providing functional films that contribute to higher functionality of displays	New product rate of safe, high-boiling point solvents essential for advanced semiconductor manufacturing processes*²	FY2026/3: 23.9%	3.2%
	Provide safety and security for society	Providing products that ensure safety and security of mobility	Average number of our safety devices installed per vehicle³ Diversified small mobility devices⁴ and new safety devices to prevent home accidents*⁵ put on the market	FY2026/3: 3 units/vehicle FY2026/3: New stable device proposals FY2031/3: 2 cases	2 units/vehicle New business plans under consideration 2
	Provide environment-friendly materials and technology	Providing materials and technology that reduce environmental impact such as environment-friendly plastics	Rate of recyclable raw materials*⁶ used in products Production of environment-friendly (highly biodegradable, etc.) cellulose acetate	FY2031/3: 30% or more	15.9%
	Provide environment-friendly materials and technology			FY2026/3: 10,000-20,000 tonnes/year	7,993 tonnes/year
Sustainable Process	Contribute to the development of a circular society (Only in Japanese)	Building Biomass Value Chain Reuse of waste and CO₂	External proposals for resource recycling systems using natural materials	FY2026/3: 3 cases	Under research and development
Sustainable Process	Respond to climate change	Reduction of GHG emissions through production innovation, energy innovation, and process innovation	GHG emission reduction rate of our Group*⁷	Scope 1 and 2 FY2031/3: 50% reduction (compared to FY2019/3)	1% increase
Sustainable People	Promote diversity and inclusion	Work environment where everyone can work with vigor regardless of gender, age, nationality or disability	Ratio of women in management position*⁸	FY2026/3: 10% or more	4.9%
	Promote diversity and inclusion		Ratio of persons with disabilities that have been with the company more than three years*⁸ (1 - persons with disabilities that left the company in three years after joining / total number of employed persons with disabilities) × 100	Sustain 95% or more	96.0%
	Support personal growth	Personnel development for honing expertise Framework to support employees who take on challenges Building highly fair evaluation system	Status of initiatives for personnel development, review of personnel system, introduction and review of career seminars or management training for division heads*⁸	Disclose results	Strengthened system to support employee’s career autonomy Expanded age-specific career training by adding career training for 40s in addition to career training for 50s Established a Career Support Center in the Human Resources Division to support employee’s career development Added a business management course (a course to practice planning from data utilization issue setting and investment proposals to business application) to digital literacy education

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Materiality related to the foundation for the Daicel Group’s continuity and governance

Classification	Materiality	Content	KPIs	Target	FY2023/3 Results
Environment	Reduce environmental impact	Promotion of waste reduction and recycling	Percentage of industrial waste recycled by our business sites and domestic Group companies	FY2026/3: 99% or more	98.4%
Social	Ensure process safety and disaster prevention, occupational health and safety	Elimination of process incidents Minimization of damages based on crisis assessments	Serious occupational accidents⁸ Serious process safety incidents⁸ Percentage of safety training held based on past incidents (occupational accidents and process safety incidents)*⁸	Continue zero cases Continue zero cases Continue to 100%	Zero cases Zero cases 100%
	Ensure chemical safetyandenhance product quality	Reinforced quality management to prevent recurrence of quality defects Centralized management and sharing of chemical substance information	RC-related regulation audit rate⁸ Rate of initial response to customer complaints within 24 hours^8,9	FY2026/3: 100% FY2026/3: 100%	41% 88%
	Respect human rights	Establishment and implementation of human rights due diligence Development of a framework for corrective and remedial action against human rights abuses, and employee education	Status of efforts to respect human rights for the Daicel Group and the supply chain as a whole (status of conducting due diligence)	Disclose results	Human rights due diligence on our Group companies implementation rate for FY2020/3-FY2023/3: 63.2% Implemented at 18 domestic Group companies out of 19 and 18 overseas Group companies out of 38*^※10 Planned and implemented human rights due diligence on suppliers
	Foster a corporate culture that meets employee needs	Shorter working hours and improvement in the annual paid leave acquisition ratio Employee health promotion Support for flexible work styles	Annual continuous paid leave acquisition rate (a five-day holiday taken once per year)	FY2026/3: 100%	56.3% (Percentage of employees who took 3 consecutive days of annual paid leave. Calculated as 5 consecutive days off, including Saturdays, Sundays, and holidays.) Expanded the babysitter assistance program to support employees raising children to work without worries Distributed “Childcare Leave Guidebook” to eligible employees and their supervisors, which explains childcare leave benefits and other information in an easy-to-understand manner Established the Group Health Support Center as an organization dedicated to health management to promote the physical and mental health of each and every employee at four levels: company-wide, by business unit, by workplace, and by individual Promoted health management aimed at the physical and mental health of each and every employee, as well as their families, business partners, and local residents, by holding sporting events, etc.
	Foster a corporate culture that meets employee needs		Status of efforts to promote employee health*⁸	Disclose results
	Promote sustainable procurement	Improved level of CSR across the supply chain	Sustainable procurement rate (Percentage of raw fuel suppliers that meet our reference points as a result of SAQ)	FY2024/3: 100%	79%
Governance	Strengthen foundation for Group governance and compliance	Reinforce corporate governance Enforce thorough compliance Strengthen risk management	Status of efforts to strengthen the supervisory function by the Board of Directors Rate at which legal checks are made and response measures taken for material matters requiring executive decision Issues reported to the Help Line Percentage of executives and employees who know how to use the Help Line system and can contact the Help Line when they discover compliance violations*¹¹ ( = percentage of employees who have taken Help Line reporting training)	Disclose results Continue to 100% Disclose results FY2026/3: 100%	Conducted an evaluation of the effectiveness of the Board of Directors based on discussions at the Board of Directors meeting, using a method involving a third-party organization Identified multiple issues and improvement areas from an objective perspective by observing board meetings, involving board members in the preparation of questionnaires, and participating in interviews 100% 76 cases 10.1%

*1Targets: Pharmacopoeias in Japan, the U.S., and Europe
*2Highly safe high boiling point solvents: Solvents for electronic materials with high solubility and low toxicity such as MMPGAC
*3Targets: Products for Japanese automakers
*4Bicycles, mobility scooters, electric kick scooters, etc.
*5Drowning while bathing indoors, infant suffocation, falls, etc.
*6Recyclable raw materials: biomass raw material, use of atmospheric CO2, reuse and recycling of waste materials/Recycling targets: Main resin materials of Daicel, Polyplastics, and Daicel Miraizu
*7Realization of carbon neutrality in FY2051/3 (Scopes 1, 2, 3)
*8Scope: Daicel Corporation
*9Scope: Domestic manufacturing sites of Daicel Corporation
*10 The number of target companies fluctuates because of M&A and business restructuring
*11 Daicel and domestic Group companies