Sustainability

Sustainability Management

Fundamental Concept of Sustainability
Materiality

Fundamental Concept of Sustainability

In accordance with the Basic Philosophy of “Creating a Better Future Through Monozukuri,” the Central Glass Group has made efforts to solve environmental and social issues through the spirit of Monozukuri, and developed various businesses with the aim of contributing to the establishment of a truly prosperous society.
Believing that this is the very essence of what sustainability means, we will continue to tackle global environmental issues and various social issues seriously, and work on the realization of a sustainable society as an R&D-oriented company, aiming to improve our corporate value.

Central Glass Co., Ltd. aims to improve enterprise value from a long-range viewpoint through business activities while taking the global environment, society and economy into consideration.

1. Structure to Address Sustainability

As a means of promoting our Group’s efforts to address sustainability, we have established the Sustainability Committee with the purpose of analyzing and evaluating measures and activities in a cross-sectoral manner, making a report and a recommendation to the Board of Directors as necessary, and further strengthening our efforts.
We will continue to strengthen and accelerate such efforts by proactively making recommendations on a strategy for business activities for the solution of environmental and social issues from the perspective of sustainability.

Time of Establishment	November 2021
Main Purposes	(1) Get overall grasp of activities to promote sustainability by the Group (2) Comprehensively analyze and examine efforts for sustainability (3) Make recommendations to the management toward solving social issues as necessary
Composition	Chairperson: Executive in charge of the Corporate Administration Department Vice-Chairperson: Executive in charge of the Environment and Safety Department Committee Members: Designated responsible persons of each department Secretariat: Corporate Administration Department and Environment and Safety Department
Meetings	Held as necessary(FY2021: twice, FY2022: three times)

Board of Directors(Supervision/Directions)→Sustainability Committee(Report/Recommendations)

2. Promotion of Sustainability Management

Considering the business environment surrounding our Group, based on the concept of sustainability, we will create economic and social value by identifying materiality that reflects our management philosophy, the Medium-Term Management Plan, expectations from our stakeholders, etc. as well as by working on the solution of these issues through business activities. As a means of promoting our efforts to address sustainability, we will set medium- to long-term initiatives and targets (KPIs), go ahead with them while following the PDCA cycle, and ensure their progress under the supervision of the Board of Directors.

Materiality

Materiality-Identifying Process

By taking the following process, we evaluate risks and opportunities in terms of both importance to our Company and importance to our stakeholders to identify Materiality and KPIs.

Step 1	Select candidate issues based on the international guidelines (GRI and ISO26000) and the investigation content from the Sustainability Committee while considering requests from society.
Step 2	Comprehensively evaluate such issues at the Sustainability Committee from the two viewpoints of importance to our Company and importance to our stakeholders, and formulate a tentative plan.
Step 3	Clarify their relationships with the management policies, the Midterm Plan, etc. and discuss them at the Board of Directors to identify priority issues.

Materiality

After taking this identifying process, we have identified on priority issues for eleven items in three areas as well as KPIs for initiatives to tackle them. In particular, considering relationships with the business, “Solution of Social Issues Through Business Activities: Provision and Development of Products that Solve Social Issues” is positioned as a top-priority issue.

[Background of the Top-Priority Issue and Its Concept]

The realization of a decarbonized society is a global challenge that cannot be procrastinated, and there remains much room in which our Group can make contribution in terms of sales and development in important areas, such as the reduction of greenhouse gas (GHG) emissions, the electrification of vehicles, energy saving, etc. We also believe that taking such initiatives will create business opportunities and meet the expectations and needs of our stakeholders.

Materiality Matrix

Fields Materiality

ⅠSolution of Social Issues Through Business Activities	[Environment] A. Provision and Development of Products that Solve Social Issues
Ⅱ Measures for Environmental Protection	B. Measures for Climate Change C. Improvement of Energy Use Efficiency
Ⅲ Enhancement of Business Foundations	[Society] D. Diversity & Inclusion E. Enhancement of Human Resource F. Improvement of Quality Management G. Promotion of Industrial Health and Safety, and Security and Disaster Prevention H. Enhancement of Supply Chain Management I. Respect for Human Rights
Ⅲ Enhancement of Business Foundations	Governance J. Enhancement of Compliance System K. Enhancement of Corporate Governance

KPI

I Solution of Social Issues Through Business Activities

Materiality （ESG）	Initiatives/Key Performance Indicators (KPIs)	FY2022 Results	FY2023 Targets	FY2024 Targets (final fiscal year of medium-term plan)
[Environment]A. Provision and Development of Products that Solve Social Issues	Provision and expansion of environmental contribution products [Chemicals Business Department] (Total sales of low-GWP and energy-saving products)	78.5 billion yen	84 billion yen	100 billion yen
	Provision and expansion of environmental contribution products[Glass Business Department] Sales volume ratio of eco-glass and heat insulation automotive glass compared with FY2021	98%	126%	156%
	Provision and expansion of coated fertilizers contributing to food issues[Fertilizers Business Department] (contributing to the expansion of yield amount and energy saving)	Promote the early launch of environmentally conscious coated fertilizers and the development of new fertilizers using unused resources with low environmental impact (plant residues, livestock waste, etc.).
	Enhancement of R&D capability (Focus areas: Energy saving, lowering of GWP, SiC, capture and utilization of CO2, and PFAS response)	Electronic materials area: Environment-friendly semiconductor materials and next-generation materials (SiC) Battery Materials: Electrolyte (EV and stationary) and Post-Li-ion battery development Promote medical materials development and pharmaceutical research with focus on life science as a next-growth area

II Measures for Environmental Protection

Materiality （ESG）	Initiatives/Key Performance Indicators (KPIs)	FY2022 Results	FY2023 Targets	FY2024 Targets (final fiscal year of medium-term plan)
Ｂ . Measures for Climate Change Issues	Reduction of GHG Emissions (Scope 1 and 2)	33.2 ten thousand tons CO₂ (370 thousand tons CO₂) *1	36 ten thousand tons CO₂	35 ten thousand tons CO₂
	In FY2022, withdrawal from the automotive glass businesses in United States and Europe and the operational suspension of some of the domestic glass melting furnaces led to significant reduction. Short-term reduction goals for 2023 and 2024 were determined based on the emissions of FY2022 (370 thousand tons CO₂), which excluded special factors such as the large-scale periodic repair work conducted in the same year.
	GHG avoided emissions by providing environmental contribution products *2	530 ten thousand tons CO₂	600 ten thousand tons CO₂	680 ten thousand tons CO₂
	Based on the CO₂ emissions reduced at the use stage of the final products that use our Company’s environmental contribution products, the avoided emissions are estimated by using our Company’s unique formula to calculate emissions to be reduced by a one-year use based on the sales volume of our Company.
C. Resource utilization and the promotion of streamlining	Improvement of GHG emissions intensity (GHG emissions/Net sales)	2.0t CO₂/million yen	2.1t CO₂/million yen	1.8t CO₂/million yen
	Reduction of Water Use (Improvement of water intake intensity per sales: Total water intake/Net sales)	61.1m³/million yen	61.1m³/million yen	55.6m³/million yen
	Reduction of the Final Disposed Amount of Industrial Waste	15.6 thousand tons	10.0 thousand tons	8.8 thousand tons

III Enhancement of Business Foundations

Materiality （ESG）	Initiatives/Key Performance Indicators (KPIs)	FY2022 Results	FY2023 Targets	FY2024 Targets (final fiscal year of medium-term plan)
SocietyD. Diversity & Inclusion	Improvement of female employee ratio in career-track employees	13%	14%	15%
	Improvement of ratio of male employees utilizing parental leave	39.7%	50%	55%
	Improvement of employment rate of persons with disabilities	2.18%	2.5%	2.6%
	Promotion of Diversity & Inclusion management education (encouragement for managers to attend lectures)	15% (cumulative attendance rate)	45%	60%
	Encouragement to take paid leave (including secondees)	67.5%	At least 80%	At least 80%
E. Enhancement of Human Resource Development	Expansion of opportunities for employee education (training time per person)	18 hours	22 hours	25 hours
E. Enhancement of Human Resource Development	Improvement and enhancement of education for employees including those of our Group companies	Aim to improve the value of the Group’s human capital by improving and supporting education for employees of our Group companies (domestic and overseas) to further develop their skills.

F. Improvement of Quality Management	Initiatives/Key Performance Indicators (KPIs)	FY2022 Results	FY2023 Targets	FY2024 Targets	Final Goals
	Reduction of the number of complaints (year-to-year reduction rate)	24% reduction	Reduction of 25% or more	Reduction of 25% or more	Zero complaint
	Maintenance/improvement of quality of audits implemented by contractors (year-round auditing executing rate)	83%	At least 90%	At least 90%	100%
	Improvement of quality education	Improve workers’ proficiency level by providing group-wide quality education, enhancing the content of Monozukuri Education at production sites, and increasing the opportunities.
G. Promotion of Industrial Health and Safety, and Security and Disaster Prevention	Promotion of industrial health and safety (number of accidents that require time off from work)	6	0	0	0
	Promotion of security and disaster prevention (number of serious accidents)	0	0	0	0
H. Enhancement of Supply Chain Management	Promotion of CSR procurement	Conduct investigation and evaluation concerning the CSR of business partners. Follow up the status of their CSR procurement as necessary. Conduct investigation and evaluation on 100% of the new business partners and increase investigation cover ratio.
I. Respect for Human Rights	Enhancement of initiatives for respect for human rights	Actively conduct enlightenment activities in-house while further clarifying and disseminating our human rights policy.
GovernanceJ. Enhancement compliance system	Improvement/enhancement of compliance education	Continue and further improve internal education (frequency and areas to be covered)
K. Enhancement of Corporate Governance	Improvement of evaluation on the effectiveness of the Board of Directors	Further improve its effectiveness through performing a self-assessment questionnaire survey (on a five-point scale). The result of FY2022 survey was 4.1. Disclose the issues identified through the survey and confirm how to respond to them to further enhance the governance of the Board of Directors.