Identifying key issues

Sekisui Chemical Group Has Defined the Key Issues to be Addressed in Our ESG Management Efforts

Extracting key issuesIdentifying key issues

Under the Medium-term Management Plan "SHIFT2019 -Fusion-" launched in fiscal 2017, we undertook a review of our CSR initiatives from the viewpoints of the environment, society, and governance (ESG), defined the key issues (materiality), and continued to promote relevant initiatives through fiscal 2019.
In line with its long-term vision to “support life infrastructure and create ‘peace of mind that continues to the future’ in order to realize a sustainable society,” Sekisui Chemical Group is committed to bolstering its ESG management from fiscal 2020. We will review the key issues that need to be addressed in order to achieve this from an outlook centered on our ability to create profit, contribute to the resolution of social issues, and maintain our business, while focusing our ESG management initiatives on governance, digital transformation (DX), the environment, and fusion.

Identification Process for Key ESG Issues

Key ESG issues were identified based on the following processes.

Step 1. Discussing issues from the global guidelines, etc.

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(1) Identify candidate issues from the UN global compact (GC) and ISO26000
While adhering to the 10 principles in the GC, we examine the involvement status within the Group for "relevant activities and aspirations" concerning each of the seven main core issues in ISO26000, and identify the points where involvement was insufficient.

(2) We identify candidate issues by considering the boundaries both inside and outside the Group while considering the relationship between Sekisui Chemical Group and business regarding the economics, environmental, and social items described in the GRI standard.

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(3) We analyze the social issues described in SDGs, and select the issues that provide business opportunities for Sekisui Chemical Group. In contributing to these solutions, we identify initiatives required for their success.

Step 2. Identifying issues from ESG/CSR surveys and other companies' trends

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(1) Identifying candidate issues from ESG/CSR surveys
We analyze the issues based on the details of the replies and evaluation results to each ESG and CSR survey, and identify candidate key ESG issues where future involvement can be considered important.

(2) Analysis of other companies' ESG/CSR involvement and information disclosure trends We examine involvement by other advanced ESG/CSR companies and trends in their disclosure using ESG/CSR reports, etc., and identify issues where improvements to Sekisui Chemical Group's future involvement and information disclosure are to be desired.

Step 3. Analysis of stakeholder opinions and expectations

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(1) Sorting the major stakeholder opinions
We collect and sort the main opinions regarding ESG/ CSR from the results of talking to various stakeholders such as customers, shareholders, investors, employees, trading partners, and local communities, etc.

(2) Analysis of major expectations by stakeholder
We factor in the main opinions from the various stakeholders described in (1) above, and analyze the main stakeholder expectations from their relationship to Sekisui Chemical Group business and ESG/CSR involvement.

Step 4. Identifying key ESG issues

(1) Sorting key ESG candidate issues
We add the CSR issues in which we have been strategically involved from before to candidate ESG issues identified in steps 1 to 3 above, and sort the future key ESG candidate issues.

(2) Evaluating the importance of key ESG candidate issues
We evaluate the key ESG candidate issues sorted in (1) along 2 axes: "A. Importance to stakeholders" and "B. Importance to Sekisui Chemical Group management," and identify the key ESG issues. We then rank the key ESG issues that had been identified by priority. "A. Importance to stakeholders" is evaluated based on the viewpoints of "stakeholder expectations," "global trends," and "positive and negative impact on the planet and society," and "B. Importance to Sekisui Chemical Group management" is based on the viewpoints of "Conformance to management policy and management strategy," "extent of compliance with ESG issue," "risk and reputation," and "priority considered on the time axis." From fiscal 2020 and based on the newly formulated vision*, the Sekisui Environmental Sustainability Index will be newly used as an indicator for "A. Importance to stakeholders" while our approach toward the SEKISUI Sustainable Spread based on ROIC and capital costs has been added as an indicator for "B. Importance to Sekisui Chemical Group management."

(3) Identifying key ESG issues
The key ESG issues are discussed at company management meetings, with items for implementation and management targets reviewed by the main departments before final internal approval is granted. Key management targets and items for implementation that have been approved are given suitable management through the PDCA cycle. As a rule, the key ESG issues will be reviewed and items for implementation and management targets will be set every three years when the medium-term management plan are created, though revisions will be discussed each year based on business conditions as well as social expectations and requirements.

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Key ESG issues (2020-2022)

  1. Issues where the importance for stakeholders is extremely high, and is also extremely high for management of Sekisui Chemical Group

    • Governance
      • Reducing serious incidents (safety, quality, accounting, legal/ethical, information management)
      • Risk management, crisis management, BCP
    • DX
      • Visualization and standardization (standardize operations, introduce ERP, renew infrastructure and network)
      • Increase productivity (automation / unmanned shifts, improve operational efficiency through the use of digital technology, ICT and AI)
      • Sophistication (increase the sophistication of operational control, governance and the supply chain)
    • Environment
      • Contribute to the resolution of environmental issues (adapt to and mitigate climate change, promote a circular economy, reduce water risks)
    • Human Resources
      • A challenging corporate culture and evolution toward active employee participation (culture and human resource development, system design)
      • Promote work style reform
      • Enhance ESG human resource capabilities
    • Fusion
      • Promote open innovation
      • Create and expand the market for products to enhance sustainability
  1. Issues where the importance for stakeholders is high, and is also high for management of Sekisui Chemical Group

    • Strengthening intellectual property strategies
    • Promotion of activities that contribute to the resolution of issues through cooperation with local communities
    • Implementation of human rights due diligence
    • Reduced environmental degradation
    • Promotion of globalization
    • Diversity Management
    • Health management
    • Strengthening the equipment maintenance system
    • Reducing supply chain risk