SEKISUI CHEMICAL Group is aiming for the realization of its Group Vision, “contributing to people’s lives and the global environment” by “resolving social issues through business activities” and “social responsibility in business processes.” For the Group, contributing to society and creating value that is useful to society through our business activities is a form of CSR, and it puts the Corporate Philosophy of “3S spirit” into practice. By positioning CSR at the center of our management strategy, we remain convinced that we will raise the quality of corporate management.
With this understanding, we recognize the important need to engage seriously in CSR activities that are grounded in ESG management and to continuously change and evolve in order to achieve sustainable growth and innovation.
In our long-term vision, “Vision 2030,” established in May 2020, the Group set its vision statement as “Innovation for the Earth.” In order to realize a sustainable society, we support the basis of LIFE and will continue to create “peace of mind for the future.” In addition, as a strategy for this, we aim to expand existing businesses through product and business reform and create new businesses through the development and acquisition of a new business base at a higher level, with ESG management at the center of these efforts. For our ESG management initiatives, we identified “materiality” as a major issue for SEKISUI CHEMICAL Group in the Medium-term Management Plan launched in fiscal 2017, “SHIFT 2019 -Fusion-,” and have promoted initiatives up until now. From fiscal 2020, due to believing that strengthening ESG management is essential in preparation for the achievement of our long-term vision, we will review our important issues from the perspectives of ability to create profit, contribute to solving social problems, and achieve sustainable management, and we continue to promote ESG management from the pivot points of internal control, digital transformation, environment, human resource, and fusion.
In addition, regarding the internal system for the promotion of ESG management, we established the “CSR Committee” which served as a space for discussion of CSR up until now. However, from fiscal 2020 we have renamed this group the “Sustainability Committee” and it is now using ESG management as a basis for drawing out risks and opportunities the Group may face in the future, serving as a space for discussion of policies and implementation measures based on the priority assigned to these possibilities, and accelerating their related initiatives. A new subcommittee has also been added on to the existing 5 subcommittees (“Environment,” “CS Quality,” “Human Resorce,” “Safety,” and “Compliance”), making a total of 6 subcommittees. The goal of this new “Cybersecurity” subcommittee is the promotion of advanced countermeasures for cyber-attacks.
Issues where the importance for stakeholders is extremely high, and is also extremely high for management of SEKISUI CHEMICAL Group
In order to support the basis of LIFE and continuously create “peace of mind for the future” in a bid to realize a sustainable society, SEKISUI CHEMICAL Group will work to address environmental issues that need to be resolved from a long-term perspective.
To date, SEKISUI CHEMICAL Group has considered its approach and illustrated a direction to environmental problems with an eye toward 2030. In 2019, we undertook a review of the various events and social demands that have reemerged and formulated the Sekisui Long-term Environmental Vision 2050 in regard to the direction of our environmental initiatives for 2050. Backcasting from this Vision, we have re-defined the milestones that must be reached within our management strategies in regard to specific environmental problems.
At SEKISUI CHEMICAL Group, we recognize that we carry out business activities utilizing valuable natural capital from the Earth and beneficial social capital from society and consider our problem-solving activities for issues such as climate change related to the natural and social environments to be connected both directly and indirectly to the preservation of biodiversity. To achieve maintained biodiversity on the Earth, we will coordinate with stakeholders and accelerate our contribution to returns through our corporate activities and the products they generate.
Since fiscal 2006, we have internally certified products that demonstrated a high level of environmental contribution when used by customers as “Environment-Contributing Products” and promoted their expansion. From fiscal 2017, we expanded the targets of this category beyond the natural environment, including products which contribute to solving problems in the social environment as well, reconfirmed that their objectives matched the SDGs (Sustainable Development Goals) established by the United Nation for 2030, and worked to create and spread this product line.
Starting from fiscal 2020, we launched promotion of “Environment-Contributing Products” as “Products to Enhance Sustainability” due to the belief that sustainability of both corporations and products themselves is essential for expanded contribution to sustainability for the Earth and society. In addition to conventional certification processes, we are establishing a new perspective for the assessment and confirmation of business and product sustainability.
Regarding the evaluation system standards, registration, and future perspectives, we have received feedback from outside experts* and will continue to hold discussions related to the formulation and operation of the system. In addition, within the 3-year Medium-term Plan which started in fiscal 2020, we will select products that will lead these “Products to Enhance Sustainability” and strategically drive growth as a premium framework, promoting policies for sustainability improvement.
Up until fiscal 2019, the “Sekisui Environmental Sustainability Plan: Accelerate” Environmental Medium-term Plan was implemented as a preparation for the vision of 2030 depicted in the Long-term Environmental Vision, “Sekisui Environmental Sustainability Vision 2030,” and the efforts of each initiative were intensified. From fiscal 2020, a new Environmental Medium-term Plan, “Sekisui Environmental Sustainability Plan: Accelerate II” based on the “Sekisui Environmental Sustainability Vision 2050” is being promoted.
In the “Sekisui Environmental Sustainability Plan: Accelerate,” there was an especially strong focus on reduction of greenhouse gases (GHG) and expansion of Environment-Contributing Products. Regarding the reduction of GHG, Environment-Contributing Investments Framework was established which invested ¥12 billion over a 3-year period (0.3% of total sales), and capital investment was promoted proactively. The ratio of Environment-Contributing Products sales to total sales increased to 58.3% in fiscal 2019, and 47 new Environment-Contributing Products were registered in the 3-year period from fiscal 2017 to fiscal 2019.
Regarding the resolution of environmental issues such as climate change, resource recycling, and water risks, due to the scientific foundation of predictions, risks for 2050 are clearer than in other categories. The Environmental Medium-term Plan beginning in fiscal 2020 identifies important environmental issues for action, such as climate change, water risks, and resource recycling, and we have established specific initiatives with the aim of accelerating the resolution of these issues.
We believe we can further accelerate problem-solving for environmental issues by working as one throughout the supply chain. With this in mind, we are developing initiatives and engaging in activities with a greater focus on supply chain management throughout the life cycles of our products.
For the “Sekisui Environmental Sustainability Index” as well, we are refocusing our attention on natural capital and social capital as the capital from the Earth and society on which our corporate activities have an impact and to which they contribute, evaluating effects and added value (OUTCOME) and further promoting these efforts.
In addition, starting in fiscal 2020, investments and expenses related to the environment are capital costs in our Group-wide management strategy, and we will use environmental accounting to raise awareness that the restraint of these costs and efforts to improve productivity will help boost ROIC.
Regarding the problem of climate change, we have formulated a medium-term greenhouse gas emission reduction plan in line with targets established at COP21 (the Paris Agreement). Our goal is to reduce GHG emissions from our business activities to zero by 2050. Moreover, we are advancing the introduction of solar power equipment to generate electricity for use at the plant or facility in which it was installed, increasing our utilization ratio for renewable energy from electricity purchased from outside and have set a new target value of 100% by 2030. At the same time, we started specific actions to achieve a 26% reduction in GHG emissions by 2030, to which we committed ourselves under the SBT*1 initiative. In order to promote proactive renewable energy use not only by our company but also by society as a whole, we joined RE100*2 in August 2020.
SEKISUI CHEMICAL Group has also already begun implementing emission reductions for its production facilities at a very high level, and in order to achieve large-scale reduction, we established an Environment-Contributing Investments Framework of ¥12 billion over a 3-year period ending in fiscal 2019, developed environment investment promotion policies utilizing the internal carbon pricing framework, and proactively updated our production facilities. Starting from fiscal 2020, we will utilize ¥40 billion in ESG investment funds for projects such as solar power equipment to generate electricity for use at the plant or facility where they are installed, promoting the conversion of electric power used in production activities to renewable energy.
In addition, a large proportion of our GHG emissions occurs at the raw material procurement and product usage stages, and we recognize that this is a distinct characteristic of chemical manufacturing. Meanwhile, product-usage stage emissions include a large volume of GHG emissions resulting from energy consumed in the houses that we have sold. Regarding raw materials, we are aiming for a 20% reduction in GHG emission volume compared with fiscal 2016 in the future. In addition to reconsidering selection standards at the adoption of new materials, we are promoting the reduction of 4 types of resin materials which are recognized as having a large volume of emissions. For this purpose, we have launched engagement with suppliers, and are promoting efforts to reduce GHG emissions under Scope 3 for the future. In terms of emissions at the stage of product usage, we will contribute to energy usage reductions from occupied housing by increasing the proportion of net-zero energy houses (ZEH) among the housing units that we sell, achieving 50% reductions relative to fiscal 2016 by fiscal 2030.
At SEKISUI CHEMICAL Group, we recognize climate change issues as a major management risk, and our Environmental Sub-committee formulates strategies, sets targets, and manages progress under the supervisory system of the Board of Directors. Decisions made at meetings of the Environmental Sub-committee are deliberated and voted on by the Sustainability Committee, and the Board of Directors also deliberates and votes on especially important matters.
In recent years, there has been a need for accelerated measures to mitigate and adapt to climate change issues and strengthened risk assessment with a long-term perspective. In order to accelerate our problem-solving and understanding of risks, as well as related coping measures, SEKISUI CHEMICAL Group announced its approval of the TCFD*3 (Task Force on Climate-related Financial Disclosures) in 2019. For the information disclosure based on this proposal, 4 scenario concepts for our business field were analyzed, covering combinations of temperature increases of 2℃ and 4℃ and high-commonality decentralization and centralization for the business of all companies, and the risks for each were evaluated.
The analysis results showed that SEKISUI CHEMICAL Group housing and infrastructure products all have good durability, disaster-prevention properties, and resilient designs, and we believe that in the 4℃ scenario, we will be able to contribute to problem-solving and expand our business. In addition, in the 2℃ climate change scenario which includes efforts for mitigation as well, our solar-equipped housing and new energy technology, which help to control GHG emissions and assist with the shift to renewable energy, as well as our development of new materials which reduce energy consumption for automobiles and airplanes, will contribute to problem-solving, through which we believe we can earn business opportunities. We were able to confirm the preparations needed to convert risks into opportunities in these scenarios in terms of product development and reinforcement in line with expected risks, as well as technology which will be necessary in the case of decentralization.
For long-term climate change risks, we are considering back-cast business and product development, carrying out management meetings for discussion of plans, and determining whether to implement them as business activities. In 2019, our “SMARTHEIM DENKI” project was launched to promote efficient usage of renewable energy. The decision to purchase excess electricity produced by solar panels installed in customers’ homes and use it at our housing plants or provide it for other customers’ use as an expansion of services led to the launch of this business.
In addition, for business fields which will be strategically grown in preparation for 2030 (residential, advanced lifelines, innovative mobility, life science, and energy as a new frontier), we have extracted and reconfirmed the transfer and physical risks with consideration for factors such as sales, operating income, income ratio, and growth, based on the 2℃ and 4℃ climate change scenarios.
In the future, we will continue to consider initiatives for business in which risks can be converted to opportunities and apply these considerations to business strategy drafting.
Regarding water risk problems, we consider maintaining a sound businss activity environment as essential to our continuous operations and development, and we are continuing to reduce water usage at all companies, promoting recycling, and striving to improve the quality of water discharged into rivers in terms of COD indicators.
In order to ensure a society in which all areas and supply chains we work with have a full and healthy water supply, we have established 2 directives, “minimizing water risks at SEKISUI CHEMICAL Group” and “contributing to the resolution of water-related issues in local communities.” We have set goals for the realization of a society with abundant healthy water by 2050 and will work to achieve them. In order to minimize water risks, we are selecting the base locations and supply destinations where the business impact is substantial or that have especially high water risks and working to minimize the environmental burden of these locations by 2030.
We also develop a range of businesses related to water infrastructure, such as supply, storage, and drainage of water, contributing to the society not only by technologies and products that help to improve the quality of drainage, such as water treatment systems and drain pipes, but also by creating strong water infrastructure made to withstand natural disasters. For example, one of our products being marketed in Japan, India, China, Taiwan, and other ASEAN areas, the “Cross Wave*” rainwater storage system has been used for the prevention of chronic water shortages and the recycling of rainwater to achieve both greening of urban areas and disaster prevention. Since 2010, it has also been continually contributing to the reduction of water-related disaster risks such as flooding through this product. In fiscal 2019, Cross Wave was adopted in large-scale housing construction operations in Indonesia, contributing to the growth of green infrastructure projects in that country. We have also worked to establish a cooperative system with the local water resource departments.
We are also promoting the development of towns through the use of products with the ability to lower water risks. As an example, Asaka Leadtown in Asaka City, Saitama Prefecture solves a number of issues, starting by the lowering of water risks. We believe this to be a first step in the building of a town planning business that makes full use of SEKISUI CHEMICAL Group technologies and products to ensure safe, secure, and comfortable lives. With the goal of not only reducing damage from the ever increasing number of disasters brought on by climate change, but also promoting disaster mitigation in support of recovery efforts after a disaster, we are expanding the peace of mind we can offer to our housing customers by recommending, for example, the installation of a drinking water storage system that makes good use of water system infrastructure piping.
SEKISUI CHEMICAL Group will continue to promote the development of products to enhance sustainability in order to minimize the environmental impact from supply chain operations and help resolve local water issues.
Related to resource recylcing, SEKISUI CHEMICAL Group strives to thoroughly implement the “3 Rs” (reduce, reuse, and recycle) throughout its manufacturing life cycles. We also engage in Zero Waste Emissions Activities with the intention of reusing as resources all the waste we generate from our business activities. Along with continuing these Zero Waste Emissions Activities at our production sites, from 2020 we will work to promote recycling, including initiatives for using recycled materials, developing waste recycling technologies, and implementing these in the real-world, with the aims of realizing a circular economy and a recycling-based society in 2050.
Especially as a plastic molding manufacturer, we have a corporate responsibility related to the waste materials emitted from the production businesses of our company. Accordingly, we have exchanged manifests with waste management contractors and are confirming that proper processing is being carried out. While the impact of microplastics on our oceans and marine pollution have emerged as issues of recent concern, SEKISUI CHEMICAL Group does not engage in the manufacture and sale of primary microplastics where use presupposes dissolution. However, it cannot be denied that the possibility of deterioration in the natural environment and micro- reduction does exist in the event of the improper disposal of plastic processed products being discarded or of the plastic materials that go into the manufacture of the Group’s products either during or after use. With the goal of resolving the core of this issue, we are carrying out employee training, participating in the Clean Ocean Materials Alliance (CLOMA) and Japan Initiative for Marine Environment (JaIME), and making efforts for international collaboration and consideration of problem-solving methods.
In addition, we are accelerating efforts for social implementation of carbon recycling technology that circulates carbon derived from petroleum raw materials. More specifically, we developed technology (Bio-Refinery) which converts burnable waste, including maritime plastics, into gas and uses microorganisms to create ethanol, a raw material used in plastics, from this gas. At the test plant in Yorii Town, Saitama Prefecture, we are working to identify issues with a view to scaling up operations toward social implementation. In addition, proof-of-concept operations are underway at the 1/10 scale pilot plant in Kuji City, Iwate Prefecture, and plastics are being developed from the ethanol raw materials created from waste in cooperation with Sumitomo Chemical Co., Ltd. By establishing and spreading chemical recycling technology for the creation of new plastics from waste materials, we will contribute to the achievement of a recycling-based society and circular economy.
Taking into consideration diversity and the workplace environment, Sekisui Chemical Group will develop human resources who actively take on challenges as a part of efforts to support the basis of LIFE and to continue to create “peace of mind for the future” in order to realize a sustainable society.
Based on the belief that “employees are precious assets bestowed on us by society,” SEKISUI CHEMICAL Group works to create environments in which employees are able to work with enthusiasm and provides a range of opportunities for each and every one of them to hone his or her unique skill and assist in their personal growth.
Recognizing that protecting the human rights of individuals is our social responsibility, we respect each person’s diversity, personality and individuality, while promoting various work-styles compatible with each country and region and the creation of safe and secure working environments.
Not only perceiving diversity by differences understood from outward appearance such as gender, age and, nationality, SEKISUI CHEMICAL Group also focuses on differences that include careers, values and, personality while understanding, recognizing, and utilizing the differences between each and every employee as strengths.
We established the “Diversity Management Policy” in November 2015 based on the recognition that diversity is essential to maintain our strong corporate presence for 100 years and beyond.
As a group that is engaged in a wide range of activities, SEKISUI CHEMICAL is critically aware of the need to make the most of the diverse orientations and strengths of its employees if it is to continue contributing to society. Based on this awareness, top management has declared its commitment to promoting diversity management, which includes the empowerment of women, both within and outside the Group.
The Sustainability Committee deliberates on CSR measures generally. This includes matters relating to diversity management. Chaired by the president, the Sustainability Committee is comprised of such senior executives as the presidents of divisional companies as well as employee representatives including female employees and the head of the Labor Union. Matters that require resolution are also reported to the Board of Directors.
The Human Resources Committee deliberates, decides on, and monitors the securing, training, and utilization of human resources and work-style reforms necessary for the Group's diversity management. Chaired by the managing executive officer and head of the Human Resources Department, the Human Resources Committee is comprised of executive officers and the heads of human resources departments selected from each divisional company. The Human Resources Committee met twice in fiscal 2019, once in September and once in March.
Separate from the Sustainability Committee and the Human Resources Committee, the Group in its goal of creating a system that allows diversity promotion strategies to reach each of its employees has established the Project to Develop a Workplace in Which All Employees Can Excel. SEKISUI CHEMICAL Group has appointed those responsible for and those in charge of the promotion of this project at each of its 81 domestic bases. Each manager is working to ensure the smooth implementation of diversity management measures at each location.
Regarding the career orientation of each individual, there are two main paths we are cultivating: business leaders who will drive Group management and on-site personnel who will support our manufacturing. Accordingly, we are promoting the provision of human resource development opportunities to match the career orientation of each individual throughout the Group as a whole. In addition, we support employees in their efforts to take the initiative to challenge themselves while providing the systems and opportunities necessary to promote individual growth.
As an initiative for cultivating next-generation leaders, we are implementing an in-house cram school (Innovation School) in which our executive officers personally take on the role of educators with the goal of directly training candidates for next-generation leadership in SEKISUI CHEMICAL Group. At Innovation School, the goal is to “change the Company and change each individual’s behavior.” To achieve this, with executive officers up to their second year in office acting as headmasters, we aim to train young, highly motivated employees, irrespective of their Group company or business domain, as candidates to become next-generation business leaders across the whole Group.
In addition to learning about leadership aspirations through direct dialogue and extensive discussion with senior management, the Innovation School offers an excellent opportunity for the candidates to broaden their horizons through interaction with parties from both inside and outside the Company.
As a means of assisting young employees in becoming established and active at the Company, we have established an education supervisor system with the goal of enabling new employees to smoothly adapt to their assigned workplaces and quickly hit the ground running. This system provides guidance on topics ranging from work and business to common sense, behavior as a member of society, and mental follow-up. The initiative also promotes the growth of training supervisors themselves through acquiring a higher perspective from the experiences of training junior staff.
In addition, we introduced a re-employment system after retirement from fiscal 1993 to promote activity among elderly staff, and have been expanding it to other Group companies since fiscal 2006. In addition to the implementation of “57-year-old training” for employees considering their careers after retirement age, we also revised and implemented systems related to reemployment of senior citizens (Senior Expert System) in October 2015 in order to create even more rewarding and meaningful work. We have finished putting in place systems for employees to continue working to the age of 65 at all Group companies, ensuring that 100% of the employees who elect to do so can remain employed or be reemployed.
Hiring people with disabilities is about more than simply promoting the hiring of disabled individuals. We consider creating an environment which is easy for the disabled to work in to be important as well. In order to achieve such a work environment, we are carrying out joint brainstorming sessions for all human resources departments Group-wide and holding expert-led study sessions for employees who work alongside disabled people at their posts.
As our ratios of overseas sales and employees increase year after year, we believe that to develop as a Group, we need each and every employee of the Group working in various countries across the globe to develop themselves through their work, and to learn to create and provide products and services matching the needs of each country. To adapt to the different business characteristics, history, management styles, lifestyle habits, as well as the various laws and regulations of each country and region, SEKISUI CHEMICAL Group is focusing on training human resources capable of demonstrating their abilities in their respective countries and regions. In addition to hiring foreign national as employees, we are promoting policies such as our “Global Talent Employee System” for the cultivation of global human resources. Starting in fiscal 2020, we will launch a more strategic global talent training program to accelerate our globalization. In addition, since training overseas personnel is becoming an urgent task, we are implementing a “Global Saijuku” School for the cultivation of future management talent who will be active in the global marketplace. 12 executives of Group companies in the various areas of North America, Europe, Oceania, and Japan, participated in this program to increase management skills expected for personnel active globally through concepts such as “ability to express of Sekisui values,” “management ability,” and “business creativity.”
In order to accelerate the pace of diversity management, we defined 2018 as “the inaugural year of promoting work-style reforms” and established a “Statement of Work-Style Reform” as one step in our efforts to push forward Group-wide endeavors. In order to link these efforts to productivity improvement, which strives to maximize results in limited time, we are carrying out initiatives for 3 types of reform: operating reform, HR system reform, and work environment reform, and are gradually progressing with improvements. For work-style reform initiatives, we have established targets for annual total working hours, number of holidays, and paid leave acquisition rate, and we are currently working toward achieving them.
Substantial capital investment and the introduction of systems are essential to continuously realizing the effects of business and work environment reforms. For this reason, we have committed to an investment of ¥10 billion for the 3-year period from fiscal 2018 to fiscal 2020, and we are supporting the reduction of working hours Group-wide. Over the two-year period of fiscal 2018 and 2019, the cumulative total of investments made came to approximately ¥6.5 billion on a Group-wide basis (including an amount implemented in fiscal 2020). By undertaking investments, we are working to promote the reduction of working hours from which we will not backtrack. Among our many investments, we are rebuilding housing assembly lines while introducing automated production lines, pushing forward sales innovation through the Sekisui Heim Museum, and adopting production management systems as well as video conferencing and other systems.
To realize work-style flexibility, we introduced a remote working system in fiscal 2019 which achieves both ease of working and security.
SEKISUI CHEMICAL Group announced details of its Declaration of Health and established the Basic Policy for Health and Productivity Management in March 2019. This Declaration and Policy summarizes the Group’s philosophy and stance toward health management and provides the roadmap for further improving the physical and mental health of its employees, which is recognized as the foundation for diversity management. SEKISUI CHEMICAL Group positions health as the “Well-being” that is defined in the WHO Charter, aiming for health as a state of complete physical, mental and social well-being. To achieve the well-being of all employees, we are working toward medium- and long-term goals established for 5 different segments: 1. Physical, 2. Mental, 3. Organization, 4. Groupwide initiatives, and 5. Job satisfaction and productivity improvement. More specifically, some initiatives include extending healthy life by promoting 7 healthy habits, creating a lively workplace and supporting mental health through effective application of stress checks, and carrying out health promotion activities based on data analysis using information and communication technology (ICT). In some high-risk workplaces where these initiatives were carried out from the second half of fiscal 2018 to fiscal 2019, the workplace environment was improved by utilizing systematic approaches such as detailed analysis of stress check results and interviews with employees.
These efforts to resolve issues related to employee health with an all-company perspective were recognized, and we were certified as a Health and Productivity Management Organization in the large enterprise category (“White 500”) by both the Ministry of Economy, Trade and Industry and the Nippon Kenko Kaigi, which operates the Health and Productivity Management Organization Recognition Program, for the fourth year in a row.
SEKISUI CHEMICAL Group will push forward corporate activities grounded in digital transformation (DX) which supports the basis of LIFE and continues to create “peace of mind for the future” in order to realize a sustainable society.
SEKISUI CHEMICAL Group’s DX mission is to accelerate and support the growth strategies and structural reforms necessary to realize its long-term vision. To achieve sustainable growth in an increasingly uncertain business environment, we will take another look at conventional governance (internal control) as well as our business model and processes, while undergoing a transformation from the perspectives of “visualization and standardization,” “productivity increase” and “sophistication.”
We hope to remain a company that continues to provide value to society by raising productivity, shifting “people” to value-based operations, and challenging our employees to meet their full potential.
Under the Medium-term Plan (fiscal 2020-2022), we will strengthen the promotion structure while supporting growth strategies and structural reforms.
With the goal of improving global productivity for SEKISUI CHEMICAL Group as a whole, we are promoting resolution of the most recent issues and formulation of a long-term growth framework. In fiscal 2020, we will begin reforming each business area starting with global purchasing reforms, in parallel with the management structure reform program for global ERP (Enterprise Resource Planning: Integrated Core Business System) which is the core of our DX.
We are also carrying out investment in stages related to the infrastructure and securities supporting these reforms, with diversification of working styles in the ongoing COVID-19 pandemic as a prerequisite.
Based on its technology platform, SEKISUI CHEMICAL Group is making efforts to fuse together its various internal and external stakeholders and companies while accelerating innovation.
To date, SEKISUI CHEMICAL Group has accelerated a variety of initiatives by fusing together technologies, business opportunities, and management resources. At the same time, we have created new products and businesses and cultivated new fields, areas, and applications, while promoting business structural reforms aimed at enhancing profitability. Under the previous Medium-term Management Plan (fiscal 2017-2019), we set the goals of increasing sales through fusion and accelerating the creation of new businesses. As a result, we were able to increase sales by approximately ¥40 billion compared with fiscal 2016, promote the Town and Community Development business in earnest as a part of measures aimed at creating new businesses, and take the next step in demonstrating the technology for converting waste into ethanol.
In August 2020, the Minase Innovation Center (MIC) was established within the Research & Development Institute at our High Performance Plastics Company’s main design base. As 5G spreads in the communications industry and progression of CASE, including automated driving, continues in the automotive industry, fusion and innovation are becoming increasingly important alongside changes in the communications and automotive industries, and we are aiming for further acceleration of the cross-field fusion and innovation of both personnel and information.
Moving forward, we will continue to accelerate internal and external fusion and promote open innovation to create and disseminate innovative products and businesses that contribute to the resolution of social issues, and increase sales volume.
SEKISUI CHEMICAL Group recognizes that maintaining a prominence in technology is the bedrock for creating value. This is particularly the case in the “Residential and Social Infrastructure Creation” and “Chemical Solutions” fields, where the Group’s technology platform provides the underlying strength of its competitive advantage. In order to further advance this prominence in technology, the Group is committed to consistently strengthening its human resources and organizational structure in the research & development, manufacturing and intellectual property fields.
In the Group’s long-term vision “Vision 2030,” the vision statement is “Innovation for the Earth.” In the four domains of residential (housing), advanced lifeline (social infrastructure), innovative mobility (electrics/mobility), and life science (health and medical), as well as next-generation frontiers, we will continue to generate innovation with prominent core technology at its origin to generate new fields, support the foundations of life, and pursue the creation of “peace of mind for the future.”
Forming the basis of these efforts are the 28 technological platforms with direct links to the Group’s two business domains, “Residential and Social Infrastructure Creation” and “Chemical Solutions.” These are the core technological platforms that support the Group’s product lineup and should even be said to be the source of the competitiveness that has been cultivated over many years. An example of this would be our processing, which imparts smart value to components and our molding that enhances the functionality of materials. In this area, we listen to the needs of our customers as a way to best determine the path to adding value. Moreover, by effectively combining multiple platforms, we will continue to develop new products and services that are capable of maintaining a clear lead in the market even in a harsh competitive environment.
Serving as the R&D system in the Group responsible for these platforms are the four primary R&D centers within the Housing Company, the UIEP Company, the HPP Company, and the Corporate headquarters. In addition, Sekisui Medical Co., Ltd., and other key affiliated companies maintain independent R&D divisions and facilities.
Directly linked to the enhancement of existing businesses and the pioneering of new frontiers, the R&D conducted at divisional companies focuses on product development and manufacturing technology themes that will lead to profit in the near future. In fiscal 2019, we launched our "new smart power station," which enhanced the safety and convenience of energy self-sufficient housing by strengthening IoT functions, our "large-scale high-drainage system,” which provides four times the drainage capacity of traditional products of the same size to cope with frequent torrential rains, and our “high thermal conductivity sheets,” a heat dissipating material for the growing market of 5G. Looking ahead, SEKISUI CHEMICAL Group will continue to actively introduce new products in fiscal 2020 as a part of efforts to secure a new phase of growth.
In contrast, as an independent research unit, the R&D center within Corporate headquarters is conducting research into themes that present extremely high technical hurdles to be addressed over medium- and long-term timeframes, large-scale themes spanning the entire Company, and new business domain themes that we have never challenged before as a group. For example, with our manufacturing technology that converts waste to ethanol, the first of its kind worldwide, we have formed an agreement with Sumitomo Chemical Co., Ltd. for cooperation on social implementation of manufacturing technology that creates polyolefin from waste raw materials, and have begun moving toward commercialization. We are also vigorously promoting development with the goal of creating new, attractive business related to other themes.
Moreover, divisional companies and Corporate headquarters are bringing to the table their respective intellectual capital while engaging in co-development activities to promote a variety of fusion themes. SEKISUI CHEMICAL Group has also established the New Innovation Committee (NIC) as a forum to support these endeavors. The NIC is comprised of officers who oversee the Group’s R&D, manufacturing, business strategy and human resources functions, and is charged with the responsibility of calling for and evaluating themes with the potential for fusion. Those themes considered worth pursuing are then supported either through corporate expenses or through the dispatching of personnel. Several themes have already been approved and are in the process to realization. As one example, SEKISUI CHEMICAL Group is taking preparatory steps to develop a Town Energy Management System (TEMS) under which the Company will purchase excess electricity generated solar power generation cells from customers living in SEKISUI HEIM houses. In addition to supplying this excess electricity to customers living in SEKISUI HEIM houses that are not equipped with power-generating facilities, the purchased power will also be made available use at domestic plants and business sites of the Group. This service was launched in fiscal 2019. We will continue to promote cross-company fusion for creation in fields such as town development, aircraft and moving bodies, cell culturing solutions, AI, and IoT.
The Group is working to promote R&D that helps to create new products. At the same time, the Group is placing equal emphasis on strengthening its manufacturing capabilities in a bid to reinforce the competitive advantage of its existing products.
In the “Drive2022” Medium-term Management Plan, “realization of an on-site environment where the fusion of on-site ability and digital technology enables all workers to work vigorously to contribute with peace of mind” is listed as a policy related to manufacturing capabilities, with the goals of zero major incidents and doubled productivity. In this Medium-term Management Plan, we are working on three initiatives: internal control, production technology, and ICT.
For internal control, we are strengthening our ability to prevent quality tampering through digital conversion of the quality inspection process and also building and deploying a predictive risk management system. For production technology, we are automating processes, using digital technology for formalization, and carry out personnel training to promote on-site ICT and IoT. For ICT, we are promoting the development of a global standard model through the unification of data infrastructure and intra-factory data linkage infrastructure.
Such organizational approach will enable the Group to engage its prominent technologies and quality in the continuous development of new frontiers in the domains of “Residential and Social Infrastructure Creation” and “Chemical Solutions” for the betterment of the environment and the people’s lives in the world.
SEKISUI CHEMICAL Group’s Customer Consultation Office receives over 10,000 inquiries and comments every year. SEKISUI CHEMICAL Group directly answers each inquiry and analyzes the factors that motivated the customer to make the inquiry in the first place, in order to discover the hidden needs of customers. By drawing out customer opinions and providing continuous feedback to the business units of each divisional company, these efforts assist CS quality improvement measures such as review of product specifications.
SEKISUI CHEMICAL Group aims to improve three qualities (people, systems, products and services) based on feedback from customers.
As part of our system for the evaluation and appreciation of superb researchers and engineers, the Group has established the “Technology Award” and “Invention Grand Prize.”
The Group has also established a specialist position system for researchers and engineers with highly specialized skills. The system selects exceptional individuals who have been recognized as possessing highly advanced skills and appoints them to uniquely defined specialist positions. The system promotes ongoing development and aims to cultivate outstanding researchers and engineers recognized both inside and outside the Company. As of April 2020, 27 people have been appointed to specialist positions, and we are promoting technology platform strengthening initiatives with a long-term perspective.
The Group introduced the Meister position to recognize individuals that exemplify the range of manufacturing skills and technical objectives of the Group. The position is intended to promote the Group tradition of superior skill and craftsmanship and increase the motivation of each and every technician. As of April 2020, 3 people held Meister positions. Cultivating and encouraging the Group’s talented manufacturing technicians by acknowledging their highly refined skills inspires motivation and will further elevate the Group’s high level of manufacturing expertise in the years to come.
Intellectual property is the source of competitiveness for companies, and is an important management resource that underpins growth and revenue aimed at optimizing corporate value. At SEKISUI CHEMICAL Group, in order to utilize the prominence of our technology to its fullest potential and contribute to our business, we conduct competition environment analysis using information related to intellectual property, markets, and competition, and this serves as a starting point for our strategy development, intellectual property portfolio management, and other strategic intellectual property promotion activities. In addition, we have been working on applications for digital transformation for some time and are now proactively branching out into new intellectual property trends such as materials informatics and AI. Through the activities above, we are contributing to growth and creation for our business in the intellectual property field in the Medium-term Management Plan “Drive2022”.
At SEKISUI CHEMICAL Group, we have established independent intellectual property divisions for our Corporate headquarters and each divisional company to promote intellectual property activities corresponding to the Divisional Company Organization System.
At Corporate headquarters, we carry out planning and drafting of shared intellectual property strategies used by all companies, as well as trademark preservation, intellectual property education, and intellectual property management activities. In addition, we implement IP landscaping with a future perspective in the planning stages that expands on not only patent information but also a wide range of non-patent information related to business activities, promoting strategic intellectual property activities which take the initiative for the creation of new products and businesses.
By maintaining constant cooperation among the intellectual property, business, and R&D divisions at each divisional company, we are promoting intellectual property activities for the expansion and growth of our business, giving us an advantage over our competitors.
In this way, the intellectual property divisions at our Corporate headquarters and each divisional company promote intellectual property activities matched to their respective roles while maintaining close cooperation, leading innovation in the intellectual property field for the Group as a whole.
With the goal of increasing employee awareness of intellectual property, we started a system in fiscal 2010 which grants "P-Badges" to those who submitted a certain number of patent applications. Currently, our corporate culture considers it a matter of course for all engineers to earn one.
There are a variety of awards systems in place for intellectual property activity achievements, and in addition to awards for inventions which contribute to profits, there are others which use different criteria such as number of patent applications in a year, invention originality, and strength of the application network. We also give awards for actions utilizing licenses and rights, such as earning license revenue and blocking the entry of other companies. These awards systems are intended to increase employee motivation related to intellectual property.
Within this awards framework, there is a special company president award called the “Invention Grand Prize” which recognizes the achievements of inventors whose inventions make major contributions to profit for the Group as a whole. The Invention Grand Prize is divided into 4 grades ranging from Special Class to 3rd Class, assigned depending on the extent of the invention’s profit contribution, and there are bonuses awarded to winners for each grade. The Special Class bonus has no upper limit and is instead defined as a ratio of the profit contribution amount. This system has been in place since fiscal 1999 and is now in its 21st year. In fiscal 2019, a 1st Class Invention Grand Prize was awarded for an invention related to interlayer film for use with laminated glass.
We have established a training program for new engineers during their first 3 years which covers essential topics ranging from fundamentals of intellectual property to strategy development and is implemented at all companies. In fiscal 2019, lectures were implemented 28 times and roughly all of the target group, approximately 480 engineers, participated.
In addition to the above, we provide individual specialized education programs for each divisional company to cultivate practical skills in line with their business. For trademarks and branding issues, the target group for education programs is expanded to include marketing and sales staff as well.
Source: Patent Result Co., Ltd.
“Chemical Industry: Patent Asset Scope 2019 Ranking”
Source: Patent Result Co., Ltd.
“Chemical Industry: Ability to Restrain Other Companies 2019 Ranking”
In order for SEKISUI CHEMICAL Group to expand our contributions to resolving social issues in a sustainable manner and to achieve sustainable growth, we must strengthen the management foundation to prevent serious incidents and to avoid inviting major damage to corporate value as a result of such incidents. Several examples of major incidents include compliance issues, such as quality data misrepresentation and accounting fraud, which have emerged as problems throughout the world; industrial accidents, such as factory explosions and harmful substance leaks; and quality problems, such as large-scale recalls.
The Group has defined those incidents that hold the potential for major Groupwide impacts under five domains (safety, quality, accounting, legal/ethical, information management) and established the medium- to long-term priority of these from a Groupwide perspective. Based on the definition and priority of each, we have been advancing measures from the two approaches of reducing the frequency of incidence Groupwide through focused investment of resources (people, goods, money) and of mitigating the degree of impact following an incident. Under the current Medium-term Management Plan, the Group specifically focused on promoting measures to enhance cyber security, such as those for cyber attacks, system failures, and confidential information leaks, and measures to ensure the durability of quality inspection data, in combination with the themes of digital transformation and automation.
At the core of safety, it is important that each and every employee has the ability to identify dangerous situations and take appropriate steps to protect themselves and fellow employees. Even if equipment can be made completely safe, it is necessary to recognize that work and actions taken by individuals can have hidden risks. For this reason, we are making concerted efforts at safety education and raising sensitivity to risks, while following rules and creating a protective corporate culture.
At the same time, constructing a work environment in which employees can work with safety and security is our responsibility as a company and we consider it to be one of the most important priorities for management. SEKISUI CHEMICAL Group is implementing total safety activities (i.e. zero occupational injuries, zero equipment-related accidents, zero commuting-related accidents, and zero extended sick leave) based on five themes.*
As part of our safety activities, the Group recognizes that it is of utmost important for the top managers at business sites to exercise leadership and take the initiative. In fiscal 2019, 38 employees (68 in total since fiscal 2017) were certified under the “safety leader” qualification to serve as personnel who take the initiative in safety activities. In addition, we encourage employees to obtain the qualification called “safety sub-assessor,” holders of which play a role in promoting intrinsic safety in equipment. Since fiscal 2017, 140 employees in total have been certified as safety sub-assessors.
OHSMS (Occupational Health and Safety Management Systems) audit evaluation reports are drafted and used in self-assessments and corporate audits at each business site. Evaluation items are revised annually, which include incorporating ISO 45001 requirements published in March 2018. Taking into consideration the status of safety management activities and the incidence of natural disasters, corporate audits were conducted at 20 business sites in Japan, a smaller number than in previous years, in fiscal 2019.
Article 14 of the Group’s Safety Management Rules stipulates that a comprehensive preliminary occupational safety assessment must be undertaken by the business general manager concerned when launching a new business. Based on this stipulation, the relevant divisional company that is looking to launch a new business implements an assessment.
We have conducted practical risk assessment-improvement training since fiscal 2016 in order to develop personnel able to identify by themselves and mitigate risks at their workplaces. This training program has been held at a total of ten workplaces, with the number of participants reaching 239 to date. The Company monitors the participants' identification of risks and the status of improvement in each workplace. More than 1,900 risk items have been identified through this training with steps taken to improve unacceptable risks.
To prevent fires and explosions that, once they occur, have a major impact on the surrounding environment and on business continuity, in addition to the safety audits performed thus far, we implement emergency response audits, to which we invite outside disaster experts. We verify items such as the storage and handling status of hazardous materials as well as the recovery systems used following a disaster, including natural disasters, and promote the quick identification of disaster risks and the subsequent implementation of preventative measures.
Of the 147 measures implemented to prevent a reoccurrence of the 20 fires (including small fires) between fiscal 2014 and fiscal 2017, we confirmed that 139 were still in place. We recommended further measures for strengthening the remaining eight measures and confirmed that these improvements had been made.
Based on the second edition of the accident prevention handbook issued in 2019, we have worked to identify fire and explosion risks at 48 workplaces nationwide and identified 4,072 risks as of fiscal 2019. Of the 2,069 risks requiring improvement, 1,858 (90%) were mitigated as of the end of fiscal 2019.
We have established getting caught or entangled in machinery at a production facility, falling off equipment or falling over at a business site, and a fire or explosion in a chemical process as high-risk scenarios on which SEKISUI CHEMICAL Group should place a particular focus on preventing. The Company conducts “Heads-up Training” where chemical processes are integral to production.
At SEKISUI CHEMICAL Group, we conduct “Heads-up training” to fortify the decision-making abilities of all our employees in the event that they encounter an emergency situation. More specifically, supervisors with years of experience will ask trainees what they would do if equipment designed to prevent danger fails and the trainees will be tasked with providing responses off the top of their heads. This training improves the skills needed to respond to unexpected situations in the event of a disaster by passing down to younger employees the on-site safety know-how accumulated over many years by senior employees. Through this training, we were able to improve equipment countermeasures and revise operating procedures. In addition to teaching trainees how to handle potential problems, the training has been applied on various occasions, including evacuation drills and disaster prevention drills.
At our overseas production sites, which operate under the varying laws and regulations as well as differing cultural awareness of safety issues in each region, SEKISUI CHEMICAL Group has, since fiscal 2013, been deploying safety global standards to raise the level of safety activities. Having commenced safety audits based on these global standards in earnest in fiscal 2014, in fiscal 2019 we implemented audits at 7 business sites. We are also holding regional safety brainstorming sessions in North America and China to share regional issues and discuss countermeasures. Planning and implementation, which had been previously spearheaded by the Company’s headquarters, have been shifted to regional head office staff. The program is undertaken each fiscal year based on such themes as policy development, sharing workplace initiatives, lectures by experts, and methods to investigative the causes of accidents.
In fiscal 2019, the final fiscal year in the Medium-term Plan, there was one incidence of a major quality issue*1. There has been no major quality issue relating to new products*2. External failure costs*3 decreased compared with fiscal 2016. To achieve zero major quality issues in the future, we will promote quality management activities across the entire supply chain based on the Development Guide-lines and Everyday Management Guidelines. In addition, we will aim to decrease external loss costs by rolling out across the entire Group a more robust quality assurance system, management of changes and alterations, and quality risk-reduction activities based on the prevention of defects.
Recognizing that it is the fields of manufacturing development that support quality, since fiscal 2006 SEKISUI CHEMICAL Group has focused its efforts on innovation in production. Based on its belief that quality defects lead to higher costs arising from handling complaints or increased waste, we are trying to reduce costs by targeting the “three zeros” of accidents, waste, and complaints.
In light of the frequent occurrence of quality control related fraud from 2017 to 2018 in Japan, SEKISUI CHEMICAL implemented an in-house investigation to confirm that our quality data is not fraudulent and that inspection has not been conducted by uncertified personnel for all products throughout the Group in order to ensure that we do not put the lessons learned by others to waste. As a result, we have confirmed that there are no cases of deficiencies regarding certification of auditors, official certification and quality that hold the risk of violation or fraud.
SEKISUI CHEMICAL Group took steps to put in place a structure, systems, and framework to prevent further data falsification in fiscal 2019. This initiative is to coincide with the start of the new Medium-term Plan from fiscal 2020. SEKISUI MEDICAL CO., LTD. also received quality certification from the U.S. Food and Drug Administration (FDA) for the first time in fiscal 2019.
SEKISUI CHEMICAL Group will continue to ensure that the specifications agreed upon with our customers are observed and that we re-instill an awareness of compliance for the purpose of enhancing our quality assurance capability. At the same time, by ensuring the reliability and transparency of inspections, we will continue to implement in-house quality control investigations that extinguish any potential for fraud.
In SEKISUI CHEMICAL Group, we established our “Compliance Declaration” based on principles such as “contributing to society,” “being a trusted company,” and “adherence to the letter and spirit of the law.” In keeping with the spirit of the Group Principles and our Corporate Code of Ethics, we defined our stance for the acquisition of high social trust through compliance. Compliance is management itself for SEKISUI CHEMICAL Group, and in order to ensure SEKISUI CHEMICAL Group will be widely trusted by society, we will continue to carry out initiatives for improving compliance awareness.
Under the target of “zero incidents of major compliance issues” stated in the Medium-term Plan (FY2017-FY2019), no major compliance issues arose in fiscal 2019, making for continuous achievement of zero incidents since fiscal 2015. In the CSR Medium-term Plan, which kicked-off in fiscal 2020, we carried over the target of “zero incidents of major compliance issues,” and continue to strengthen our management of compliance and work to prevent compliance issues before they occur.
SEKISUI CHEMICAL Group distributed the Compliance Manual, in which are described the matters with which each Group employee should comply, and a pocket version called the Compliance Card in order to instill awareness of compliance in each and every employee. The Compliance Manual includes information on topics such as the prohibitions on corruption and bribery, respect for human rights and the prohibition of discrimination, data management and protection, compliance with antitrust legislation, prohibitions on insider trading, conservation of the global environment and compliance with labor-related laws and regulations, and the internal whistleblowing system; it publicizes, and promotes thorough adherence with, these requirements among all employees.
We have also created a Global Compliance Manual covering regulations around the world. To allow all overseas Group employees to understand this manual, we have created not only English, but also Chinese, Thai, Indonesian, German, and Korean editions, and are proceeding with translating the manual into more local languages.
We also focus on employee compliance education, and continuously provide opportunities for all Group employees to learn about the importance of compliance, such as by introducing compliance study into training for new employees and rank-specific training, and conducting e-learning sessions specific to compliance quarterly.
To further strengthen the Group’s compliance activities, the Sustainability Committee, chaired by the president, deliberates the Fundamental Compliance Policies, which are subject to approval by the Board of Directors. In order to manage compliance-related initiatives across the Group, we established a Compliance Subcommittee—which reports to the Sustainability Committee and is chaired by the executive officer who heads the Legal Department—to put forward policies and implementation measures. Similarly, we have established compliance promotion subcommittees at headquarters and at each divisional company and appointed persons responsible for putting compliance promotion into practice as a means of implementing and deploying each measure. In the unlikely event that a major compliance issue arises, we will hold a Compliance Advisory Board meeting to respond as appropriate and examine measures to prevent a recurrence.
SEKISUI CHEMICAL Group has been reinforcing its legal affairs structure by developing and deploying legal personnel, strengthening collaboration among legal departments and enhancing legal functions. In fiscal 2017, employees responsible for legal affairs took up new posts at regional headquarters in Europe and Thailand. In fiscal 2017, we also began implementing those initiatives that have been undertaken during the Compliance Reinforcement Month in North America and China. Since fiscal 2018, we have deployed these initiatives horizontally on a global scale, for example by extending them to and implementing them each year in the Southeast Asian and European regions.
In 2002, SEKISUI CHEMICAL Group developed the Sekisui Compliance Assist Network (S.C.A.N.) intra-company whistle-blowing system, which is operated under the supervision of the executive officer in charge of the legal department as a mechanism that is available for use by all SEKISUI CHEMICAL Group employees and its business partners. In addition to enabling direct reporting to outside law firms, S.C.A.N. also plays a role as a point of contact for consultations such as whether a specific act would be classed as a compliance violation.
While the internal whistle-blowing rules require employees to report when they become aware of a compliance violation, the system also prescribes the protection of the whistleblower and stipulates that information on the person who provided the information be kept secret from everyone other than at the point of contact and the prohibition of any prejudicial treatment toward that person. Regarding the report content, interviews are held to investigate the claims of both the informer and the informee, and eyewitnesses are interviewed as well when necessary. The truthfulness of these reports is confirmed in this way, ensuring intra-organizational issues are handled in a fair manner.
In fiscal 2015, we reconfigured the internal reporting system, and established reporting and consultation points for executive officers and employees of business partners in Japan who are continuously conducting business transactions with SEKISUI CHEMICAL Group companies.
Based on the spirit of the UN Global Compact, signed and approved by the Group, we promote efforts to prevent acts of bribery and corruption before they occur. Along with introducing Group-wide internal regulations to prevent bribery and corruption, SEKISUI CHEMICAL Group formulated anti-bribery guidelines, which summarize matters concerning bribery and corruption, that employees should observe when doing business in Japan, the United States and China, and has worked to make these known.
For example, when a government official is to be entertained or presented with a gift, a form must be submitted in advance to obtain approval from management. In our efforts to prevent the breaking of any laws, we identify high risk cases regarding corruption and bribery, and put countermeasures in place. In the event that we appoint an agent or consultant in connection with business transactions, including those involving public officials from other countries, we stipulate that this can only be undertaken once we have confirmed that payments of remuneration to that agent or consultant could not be classed as bribes, that there are no reasonable grounds to suspect that payments could constitute bribes and only after a predetermined settlement procedure has been followed.
In the sales and purchasing departments, which are especially at risk for bribery and corruption, we encourage them to learn about regulations and guidelines, such as by conducting training specific to countering graft and corruption, and to make full use of the relevant forms, among other measures. In fiscal 2019, in connection with the “Compliance Reinforcement Month,” held yearly throughout the SEKISUI CHEMICAL Group in October, we conducted bribery prevention training at each Group company in China. We also called attention to bribery prevention during overseas assignment pretraining for those employees being assigned overseas for the first time.
No cases of major violations of the laws governing bribery and corruption occurred in fiscal 2019.
We do not use tax havens for tax avoidance purposes, and pay taxes appropriately in the countries and regions where we operate, thereby contributing to the economic development of those countries and regions. In regard to transfer pricing risks, our transactions are conducted in accordance with arm's length prices based on local laws and OECD (Organisation for Economic Co-operation and Development) guidelines. We use APA (Advance Pricing Arrangement) as necessary to eliminate unstable tax positions.
At SEKISUI CHEMICAL Group, we have been operating a business organization membership payment system, a pre-application and follow-up report system for competitor contact, and a price revision committee system since 2007 as a compliance program for antitrust laws. There were no cases of major violations of antitrust laws in fiscal 2019.
SEKISUI CHEMICAL Group formulated the Groupwide Cyber Security Policy as the principle for enhancing initiatives for cyber security measures Groupwide, and implements measures against the risk of information leaks, natural disasters, and other issues.
We, SEKISUI CHEMICAL Group, recognize that cyber assets—information received from individual customers and business partners, confidential corporate information, and systems for managing this information—are an increasingly important management resource and a source of our competitiveness. We believe that preparations against cyber-attacks threatening these assets are an important management responsibility, and strive to continually undertake cyber security measures as defined in the basic policy, to ensure a stable management foundation.
Headed by the Sustainability Committee, which is chaired by the president, we have established a cyber security subcommittee as a policy-making body for the cyber security area. The subcommittee is led by the Chief Information Security Officer (CISO) and it deliberates and sets policy with regard to Companywide cyber security measures or significant security incidents. To advance measures based on subcommittee decisions we have established the Cyber Security Promotion Committee, and have also created the Cyber Security Incident Response Team (CSIRT*1) as a lower-branch task force.
Having posted at least one cyber system administrator on site at each business, we have established a comprehensive Groupwide cyber management system. Even in the case of organizational changes or cyber system administrator reassignments, the Company is constantly aware of the presence or absence of the cyber system administrators at each of its business sites through its registry management system.
The Company takes every measure possible, from both system and human aspects, in order to maintain the security of customer (including personal) and internal (including confidential) information. To combat external treats, the Company has positioned its Security Operation Center (SOC)*2 as its primary entity to consistently identify new threats, such as newly reported cases of viral infections or targeted e-mail attacks, while Sekisui Chemical’s CSIRT swiftly takes action to implement appropriate countermeasures. We are also taking preventive measures such as employee education based on e-learning courses and by conducting audits.
CSIRT operations are executed based on regularly held Cyber Security Promotion Committee meetings and assessments of risk countermeasures. It also makes activity reports on cyber security at every meeting.
We have confirmed that measures are in place for earthquake resistance, seismic isolation and to counter other problems encountered by contracted data centers so that business operations can be continued even in the event that backbone systems are damaged by a major earthquake or other disaster. In addition, by dispersing data centers among multiple locations, we have established a system that will not cause work to be disrupted even if a particular data center becomes unavailable. By taking steps to completely duplicate mission-critical systems, the Company is working to shorten the lead-time needed up to the completion of repairs and recovery of business operations.
Sekisui Chemical has formulated its Personal Information Policy, which is available on the Company’s website. Based on this policy, the Company complies with legal regulations and norms regarding personal information, and by voluntarily putting in place rules and systems, strives to appropriately protect such information.
We have also formulated “Guidelines for Web Server Construction and Management,” and endeavor to protect servers managed at each company and each work site.
Here at SEKISUI CHEMICAL Group, we are working to build a risk management structure that unifies “risk management,” which aims to prevent risks from occurring in the first place, and “crisis management,” which responds to serious risks that have manifested. Through this unification of concepts, we aim to build a system that can be brought to bear on ever-changing risks and crises.
To date, the head of the HR department has overseen SEKISUI CHEMICAL Group’s risk management structure and systems. Ultimate responsibility has shifted to the Managing Director of the ESG Management Department, who now handles day-to-day risk management operations from April 2020. We are striving to publicize and thoroughly install among the directors, executive officers, and employees of SEKISUI CHEMICAL and its Group companies the “SEKISUI CHEMICAL Group Risk Management Guidelines,” which were established based on the revised “Basic Philosophy on Internal Corporate Governance Systems” of April 2015, to identify significant risks and to prevent them from manifesting by centrally and comprehensively collecting and evaluating information about risks. In the event that a significant risk does become manifest, an Emergency Response Headquarters will be established based on the “SEKISUI CHEMICAL Group Crisis Management Guidelines,” creating a framework capable of swiftly and appropriately handling the situation.
In preparation for such rare contingencies, a code of conduct regarding this framework, to be referred to by all employees, has also been shared with all group employees via the group intranet and other means.
In the Medium-term Management Plan started in fiscal 2020, we will deploy ERM* in a way that fuses our existing organization-specific risk management activities with our Group-wide risk management activities. In addition to domestic organization, we will accelerate the deployment of existing organization-specific activities in overseas Group companies (including M&A and new businesses), and instill these throughout every corner of the Group. Moreover, we will newly carry out risk assessments specific to each business domain and region as a mode of Group-wide risk management. At the same time, we will identify and evaluate major risks throughout the Group and incorporate them into action plans, design Group-wide targets, and monitor progress.
It is extremely difficult to accurately monitor for risks that could foreseeably occur at some point in the future, as our corporate activities become more complex. SEKISUI CHEMICAL Group believes that increasing risk sensitivity among employees is essential to handling such risks, and the Group continuously runs PDCA cycles in line with the international standard for risk management ISO 31000.
These activities were launched during fiscal 2011 among 27 organizations, primarily business units within the Company. The number of organizations engaged in these actions has increased each year, reaching 175 in total, including Japanese and overseas affiliates, in fiscal 2019. The percentage of consolidated revenue covered is approximately 93%. In addition, the Group is also working to improve the effectiveness of these actions through inter-organizational cooperation and linkages among specialist divisions.
To make clear which risks the Group as a whole should prepare itself for, in terms of both organization-specific risk management and Group-wide risk management, we have broadly categorized these as business environment, strategic, and operational risk, and have further subcategorized each category in order to comprehensively identify risk. Based on the different risk criteria for organization-specific risk management and Group-wide risk management, we quantitatively assess the risk level for each of the identified risks using a risk matrix that combines results and likelihood of occurrence.
Based on its experience during the Great East Japan Earthquake, SEKISUI CHEMICAL Group carried out a full-scale overhaul of its crisis management system in fiscal 2011 and has been refining that system ever since. Specifically, the Group, among other initiatives, has been conducting drills (at least twice yearly) based on the Emergency Response Headquarters Procedures Manual, annual education (for all employees) using the Emergency Situation Initial Response Procedures Manual, and organizing disaster-preparedness systems based on disaster-preparedness checklists in all offices (around 800 within Japan). As of January 2012, the rate of sufficiency regarding disaster-preparedness systems, in reference to the Cabinet Office’s “Table of Self-evaluation Items,” averaged 41% among all offices. However, because of instituting concrete measures, the Group has, since fiscal 2015, reached a point where it has been able to maintain an average rate above 90%.
In preparation for emergency situations, SEKISUI CHEMICAL Group implements Companywide response measures for emergencies as provided for in the Crisis Management Guidelines and the Emergency Response Headquarters Procedures Manual. Through education and providing the Emergency Situation Initial Response Procedures Manual to all employees, including temporary and other staff, who carry this manual at all times, we ensure that all employees can take the appropriate action in the event of an emergency. Moreover, in fiscal 2019 we implemented a safety confirmation system for all Group employees that allows us to rapidly confirm the safety of our employees, even during emergency situations.
BCP is the very essence of business strategy. Therefore, SEKISUI CHEMICAL Group, whose adoption of a Company system has made the range of the business in which it engages broad, has decided on a basic posture of having those in charge of each line of business (the heads of business units, the presidents of subsidiaries and affiliates, etc.) determine the necessity of BCP individually, based on the particulars of the business in which they are engaged. Because of this, the Group has created a support system, such as by establishing “Guidelines for Formulating BCP (BCM)” and drawing up a checklist for performing this formulation. Each person in charge of a line of business is recommended to formulate business-continuity plans and to implement business continuity management (BCM) based on these guidelines and on ISO 22301, a standard for methods of implementing BCM.
Based on its corporate “Overseas Safety Management Regulations,” SEKISUI CHEMICAL Group supports employees traveling abroad, those stationed abroad, and locally based employees in a variety of ways. This includes classifying into six global regions, sharing crisis management-related information spearheaded mainly by the Overseas Crisis-management Office, calling for caution and attention to important matters in a timely manner, instructing employees about travel restrictions, and implementing other emergency-response measures.
As the number of Group locations increases with each passing year, and given the growing importance of overseas business activity, we established Regional Headquarters in each of the four main regions and appointed the person responsible for the Regional Headquarters as the Regional Head. During an overseas crisis, the Overseas Management Group within the Headquarters Business Strategy Department and the Global Crisis Management Office (Risk Management Group within the ESG Management Department) cooperate and lead the response to the crisis.
Regarding risks particular to overseas sites, including civil unrest, terrorism, and infectious diseases, the Group has organized a support system based on signing contracts with crisis-management companies, such as those that provide security assistance and medical assistance.
With the introduction of the Digital Dashboard, a database covering the implementation status of risk management activities, we have substantially improved the efficiency by halving the preparation work for feedback to each organization. In addition, we have used the search function, which has made it easier to horizontally deploy management measures and identify risks at each organization. Moreover, in fiscal 2019 we added a function for the purpose of collaboration with the different types of audits and are now able to closely examine risk without fail.
We enriched the contents of our intranet-based e-Learning programs for those on overseas business travel. We also prepared quiz-format content that incorporates the circumstances, customs, and other aspects of each country and region. By including detailed explanations for answers, etc., we are working to provide those on overseas business travel with an insight into the types of acceptable behavior at each local site and to increase awareness toward safety. In fiscal 2019, we also deployed a practical program for regions that are often traveled to on business, and provided opportunities to study the content in greater detail.
Since January 2020, as concern over the spread of infection by the novel coronavirus began to emerge, we have implemented various measures designed to prevent infection in order to manage the health of our employees and address our social responsibility as a company. In particular, we have taken the following actions (as of March 31, 2020)
Moreover, we shipped masks and disinfectants as support for China and our affiliates in China. In the event a state of emergency is declared or infections are discovered within the Group, we will prioritize the safety of employees and further strengthen our response, including establishing a Group-wide Emergency Response Headquarters.
At SEKISUI CHEMICAL Group, we consider it our duty to advocate for the human rights of all people affected by our business activities. Nowadays, the enactment of rules and laws related to human rights is progressing both inside and outside of Japan, and human rights issues are getting increasing attention in society. In these conditions, we consider human rights initiatives for not only employees of the Group but also our business partners and other stakeholders to be essential for solidifying our sustainable management platform.
Our Human Rights Policy was established in May 2019 following the implementation of a human rights risk assessment and approval by the Board of Directors. Unlike the earlier SEKISUI CHEMICAL Group Personnel and Human Rights Policy, which mainly focused on Group employees, the new Human Rights Policy is different in that it proposes to firmly respect human rights across the board, including the value chain beyond the Group, in compliance with the Guiding Principles on Business and Human Rights adopted by the United Nations Human Rights Council.
SEKISUI CHEMICAL Group previously released a statement in regard to the UK Modern Slavery Act through a UK Group company, but we formulated the SEKISUI CHEMICAL Group Modern Slavery Statement in September 2019 in recognition of the need for the group as a whole to take action in regard to human rights issues. The SEKISUI CHEMICAL Group Modern Slavery Statement is pursuant to section 54 (1) of the UK Modern Slavery Act 2015 and sets out the actions taken by SEKISUI CHEMICAL Group to prevent any form of modern slavery or human trafficking in any part of the Group’s business or within its supply chains.
SEKISUI CHEMICAL Group will continue to take appropriate measures to comply with human rights laws and regulations in countries and regions that are relevant to our operations.
SEKISUI CHEMICAL Group in November 2018 launched initiatives aimed at building a human rights due diligence framework. As the first step in this process, we conducted internal interviews based on the results of a risk assessment of our primary business activities conducted by a specialized agency and identified potential human rights risks within the Group. Moving forward, we intend to conduct on-site interviews at production sites in Japan and overseas to confirm that working environments for employees are satisfactory and to assess the degree of impact from the identified potential human rights risks.
In November 2018, we employed an external agency to conduct a human rights risk assessment among the primary business activities of SEKISUI CHEMICAL Group. On the basis of 10 human rights issues, this agency calculated a human rights risk score for four industries, namely Homebuilder, Auto Parts, Industrial Machinery and Goods, and Pharmaceutical. Moreover, the results, which take into account the risks of each country in which Group companies are located, confirmed that SEKISUI CHEMICAL Group business activities, particularly overseas (China, India, Thailand, Brazil), held a potentially high risk of human rights violations in terms of occupational health and safety, etc.
(1) Child labor, (2) Fair wages, (3) Fair working hours, (4) Discrimination in the workplace, (5) Modern slavery* (6) Freedom of association and right to collective bargaining, (7) Rights of indigenous peoples, (8) Rights relating to property, assets, and housing, (9) Occupational health and safety, and (10) Right to privacy
Since February 2019, we have been implementing interviews of related internal staff with third parties. By carrying out these interviews regarding countries with high latent risks identified in human rights risk assessments and with staff at the Group who have experience stationed in Thailand, China, and India, as well as related internal departments, we confirmed whether there was any gap between the assessment results and actual business conditions at the Company.
As per above, some of the findings indicated issues requiring further confirmation of on-site conditions.
We accordingly plan to conduct interviews at our production sites in Japan and overseas in fiscal 2020 with the aim of listening to the opinions of our employees to confirm if our business activities are adversely impacting human rights and to better understand how seriously those rights are being impacted. We will then work toward addressing the issues made clear during the interviews and conduct follow-up assessments as we build our human rights due diligence framework.
Along with its suppliers, SEKISUI CHEMICAL Group engages in business activities that respect human rights as part of its obligation to all stakeholders. All Group employees are provided with a copy of the Company’s Compliance Manual. We have set strict standards for respecting human rights, prohibiting discrimination, preventing harassment, and protecting personal information. We conduct training and e-learning sessions for employees about the prevention of all forms of harassment. We work diligently to raise the understanding and awareness of such issues among all of our employees.
In order to prevent power, sexual, maternity, and other forms of harassment, SEKISUI CHEMICAL Group continues to cover harassment prevention as part of its compliance educational programs during employee rank-based training, including new employee and newly appointed manager trainings. In this way, we provide knowledge for preventing harassment tailored to each rank and position. We also periodically provide harassment training as part of field-based educational programs.
Guided by its procurement policy, SEKISUI CHEMICAL Group has been conducting surveys focused on the human rights considerations of business partners, environmental conservation, and social responsibility since 2007. We began inspections of overseas group company partners in fiscal 2015. With regard to suppliers that do not meet the prescribed standards, a request is made to ensure that the necessary steps are taken to resolve any issues. SEKISUI CHEMICAL Group works together with suppliers in the implementation of appropriate measures. We are making progress with the development of mechanisms, designed specifically for our overseas business partners and suppliers, to encourage improvements via our regional headquarters.
Regarding the conflict minerals which are serving as funding for the armed forces involved in human rights violations, environmental destruction, and other actions in the Democratic Republic of the Congo and the surrounding nations as well, we are conducting surveys on the use of conflict minerals throughout the supply chain, in accordance with the Conflict Minerals Survey Guidelines launched in April 2017.
In fiscal 2019, we implemented CSR procurement surveys for the partner firms of SEKISUI CHEMICAL Group companies in the EU to get a better understanding of the status of human rights-related initiatives. We were accordingly able to confirm that no major human rights infringements, including child labor and forced labor, occurred at our major suppliers. As for conflict minerals, a total of 619 conflict mineral surveys were implemented for Urban Infrastructure & Environmental Products Company, High Performance Plastics Company, and their Group companies. No cases corresponding to smelting facility uncertainties or conflict minerals were found.
Regarding consideration of human rights problems within the supply chain as a whole, although we are only confirming conditions for direct clients at present, we are collecting opinions from outside experts and developing a framework for understanding the overall supply chain, including secondary, tertiary, and lower level suppliers. In addition, we are also considering endorsing and participating in accredited supply chain initiatives in order to further improve the quality of human rights due diligence.