Group-wide Strategy
CSO Message

As the Mitsui Chemicals Group's business expands further across the globe and becomes increasingly complex, I have been appointed to the newly-established position of chief strategy officer (CSO) with the task of promoting and supporting the execution of Group-wide strategy. My view of what the CSO role entails is to optimize the Group's business portfolio by carefully assessing financial KPIs and investment profitability, while at the same time improving the quality of our management by utilizing non-financial KPIs with the aim of building a company that can continuously create value. The word strategy in CSO spans two meanings: to formulate strategies, and to execute strategies. I believe that our immediate mission in the implementation phase of VISION 2030 is to ensure that the Basic Strategy outlined in VISION 2030 is executed from both a financial and non-financial perspective.

Since my appointment as CSO, I have had discussions with the heads of each business sector and other key members in order to determine the most effective way to approach my role. As I have worked in the business sectors in the past, I am fully aware that each sector has its own logic and organizational dynamics, as well as their own priorities when it comes to execution of corporate strategy. One of my important roles is to facilitate synergies among the business sectors from a holistic perspective, while ensuring that the Group's vision and the focus of each business sector are closely aligned.

In view of the accelerating speed of change in the external environment, the Basic Strategy of VISION 2030 reflects a sense of urgency that the Mitsui Chemicals Group must transform and evolve from its past self. In particular, Pursuing business portfolio transformation and Building solutions-based business models are two important drivers that will enable us to achieve dynamic change.

In Pursuing business portfolio transformation, we have set a new goal of achieving growth by expanding and fleshing out our businesses in growth domains, for example, by positioning the Life & Healthcare Solutions business segment as our first earnings pillar. We aim to achieve operating income before special items of 90 billion yen in Life & Healthcare Solutions in fiscal 2030. Naturally, this requires not only expanding our existing businesses, but also pursuing inorganic growth including acquiring new business platforms through mergers and acquisitions (M&A) and alliances with external partners. However, looking back over the past M&As conducted by the Group, some of these projects may not necessarily be considered successful, and on occasion we have received harsh feedback from investors regarding our performance in this area. However, after analyzing past projects within the Group and holding discussions on the feedback received from external parties, we feel that the accuracy of our project screening and our ability to implement post-merger integration and other measures have steadily improved. In addition, in the Mobility Solutions business segment we aim to shift to a business model of providing products and services that meet the changing social needs related to mobility by leveraging the solution capabilities that we have worked to strengthen, in addition to our technological expertise as a materials manufacturer.

One other major change is the establishment of the ICT Solutions business segment. This segment brings together the ICT-related products, technologies, and human resources that were previously dispersed across the respective business segments in response to the megatrend of exponential growth in ICT-related businesses. In doing so, we aim to respond to changes in the market environment and the speed of technological innovation characteristic of the ICT sector, which differs significantly from other business fields, while at the same time generating a range of technological and human resource synergies.

We have also relaunched with a new organization the New Business Incubation Center, which has been responsible for developing new businesses within the Group as the core organization for creating next-generation businesses. By utilizing the newly established corporate venture capital fund and through other means, we will proactively incorporate external knowledge and utilize the Group's resources in new ways. By working with the same sense of speed as startup companies and other partners, we will raise the success rate of new business and new product creation. I also believe that this initiative may help spark the transformation of our corporate culture, building a foundation for further innovation.

In Building solutions-based business models, we are breaking away from our conventional business model of supplying materials. Going forward, we will adopt a higher point of view and work to swiftly identify changes in society so that we can provide materials, propose applications for these materials, and deliver solutions that also integrate our services to help solve challenges faced by our customers and society as a whole. In order to achieve this, the way we carry out operations at each worksite must also evolve. As flexible and innovative thinking is more important than ever, we will also work to promote change at the business segment level.

The Group's ESG promotion policy is to pursue the sustainable development of society and the Group by seeking business opportunities linked to ESG issues, striving to solve these challenges through our business activities, and recognizing and addressing future risks while upholding our corporate social responsibility.

Based on this policy, when formulating VISION 2030, we redefined our ideal future society and reviewed our material topics. For each of our material topics, we have established new metrics (non-financial KPIs), which are used in processes including business evaluations and investment decision making. In such ways, we have adopted a management approach that integrates financial and non-financial perspectives. An executive officer has been assigned responsibility for each non-financial KPI, and the Corporate Sustainability Committee, the Company-wide Strategy Committee, and other decision-making bodies will conduct thorough reviews not only verifying the achievement status of these KPIs, but also analyzing progress in light of changes in the environment and examining the appropriateness of targets.

As one of our non-financial KPIs, we have also established targets for the sales revenue ratios of Blue Value™ and Rose Value™ products — initiatives unique to the Group — at the Group-wide and business segment levels toward the year 2030. Our Blue Value™ and Rose Value™ products exemplify the creation of social and corporate value we are striving for. In the 10 years since we launched this concept in 2011, each of our business segments have grown increasingly aware of the importance of this initiative and the value it contributes to society. We are also working across the Group to expand the range of products and applications certified through collaboration and information sharing. I consider Blue Value™ and Rose Value™ products and services as a type of differentiation strategy. In practice, these products have helped us provide unique solutions to our customers' manufacturing cost-reduction challenges, as well as the prevention and mitigation of disasters and reduction of food loss — issues that are difficult to quantify in terms of tangible losses. I believe that further refining these efforts and incorporating a Blue Value™ and Rose Value™ perspective from the product design and marketing stages will lead to tangible results in the form of profit contribution.

Bolstering circular economy initiatives, another point in our Basic Strategy, includes the expansion of the Blue Value™ products I mentioned above, the utilization of digital technology, and the initiatives we are pursuing at the Carbon Neutral Research Center, which we established through a collaboration with Kyushu University. The Basic & Green Materials business segment will play an important role in implementing this strategy. Our Group is unique in that we have manufacturing facilities for petrochemicals and basic chemicals, such as naphtha crackers, which are positioned upstream in the chemical product value chain, and the Basic & Green Materials segment plays a key role in supporting the creation of added value in the growth domains. In order to achieve carbon neutrality and a circular economy, we are striving to establish advanced proprietary technologies in order to leverage the strength of our presence across the value chain, including introducing bio-based hydrocarbons, chemical and mechanical recycling, and developing technologies to reduce greenhouse gas (GHG) emissions from naphtha crackers, which account for a significant portion of our GHG emissions. We believe these technologies will have a tremendous impact, as their widespread implementation in society will lead to product differentiation from the perspective of environmental friendliness and help to realize a circular society.

As a chemical manufacturer, I believe that our Group shoulders a great responsibility as the global community increasingly focuses on addressing a range of social challenges, as exemplified by the SDGs. At the same time, this is also an opportunity for us to give full play to the technological capabilities we have developed over the course of our history. VISION 2030 reflects our resolve to not only reduce the negative impacts from GHGs and other sources to zero, but also to generate positive impacts. As stated in our Corporate Mission, throughout our history we have contributed to the resolution of social challenges through technological innovation, and I always emphasize to our employees that innovation is a key part of who we are as a company. Of course, change also brings with it risks. However, I believe that if we can build up solid profits in the short-term while also managing risk, and if each and every employee is aware of both our financial and non-financial objectives and works to implement positive changes step by step, a wide range of stakeholders will recognize the value that the Group provides to society. In my role as CSO with responsibility for the Corporate Planning Division and the Corporate Sustainability Division, I am committed to leading these changes and ensuring that the Mitsui Chemicals Group continues to be trusted by a wide range of stakeholders.