Policy and Basic Approach
Amidst efforts to achieve SDGs and overcome other social challenges, companies are facing increasing expectations and demands for proactive actions and they are expected to play ever more important roles. Under these circumstances, we recognize that the chemical industry is responsible for the foundation of society and innovation, and that it bears a great responsibility to solve social issues. In order to realize a sustainable society, it is essential for companies themselves to grow while continuously creating social value, by providing diverse solutions. To this end, it is now even more important that companies accurately identify opportunities and risks from an ESG perspective and reflect them into management.
The Mitsui Chemicals Group has been promoting a variety of initiatives since it launched its triple bottom line management of economy, environment, and society in 2006. In April 2018, we established the Corporate Sustainability Division, expressing our intention to refine the triple bottom line management approach and commit to corporate management with ESG elements at its core. In 2022, we launched VISION 2030 to further embody the incorporation of ESG elements into management/strategies, proceed to the execution phase, and strengthen our efforts to disclose information to stakeholders.
Sustainability in the Mitsui Chemicals Group
In addressing global social challenges highlighted in the SDGs and other initiatives, we aim to achieve sustainable development in society and the Group by implementing the following:
- Seek business opportunities and strive to solve challenges through business activities
- Recognize future risks for the Group and uphold our corporate social responsibility
Incorporation of ESG elements into management/strategies
- Reflect ESG considerations in management and strategy discussions at the Board of Directors, Company-wide Strategy Committee, and Corporate Sustainability Committee meetings
- Generate business involving business and R&D divisions and promote innovation
Improvement of ESG information disclosure
- Boost appeal to institutional investors, customers, and sustainability rating agencies
- Strengthen ESG dialogue
System and Responsible Officers
The person in charge is the responsible officer for the Corporate Sustainability Committee.
With ESG concerns as a central feature of the Group’s sustainability management, steps are being taking to discuss the Group’s overall direction at various organizations including the Board of Directors and Corporate Sustainability Committee. In addition, the progress of VISION 2030 non-financial metrics and reviewing material topics are also undertaken within this system.
Sustainability Management System
Corporate Sustainability Committee
In June 2018, Mitsui Chemicals restructured the CRS Committee into the Corporate Sustainability Committee in order to further enhance its ESG-related initiatives. The roles of the committee are presented as follows.
- Deliberate on the Group’s policies, strategies, plans, and measures as they relate to the promotion of ESG
- Define the priorities and direction for strengthening and improving individual committees, including the Responsible Care Committee, Risk & Compliance Committee, and Circular Economy CoE
- Conduct performance evaluations of the Group’s ESG initiatives and oversee internal distribution of results
- Consider other important matters relating to ESG
Although in principle, the company rule requires the Corporate Sustainability Committee to meet twice a year, it has been meeting three times a year since its launch. In FY2022, the committee will begin meeting four times annually, in response to the recent increase in the number of topics to be discussed.
If circumstances require us to plan new important matters related to promoting sustainability strategies and propose measures accordingly, the committee chair will establish a subcommittee to address such matters. Until FY2021, the committee has been working on climate change and plastics strategies by establishing a dedicated subcommittee. However, the recent trend, including the increasing call for carbon neutrality, has led to a wider range of initiatives for the subcommittee, increasing the need to further deepen and accelerate them. In response, in FY2022, the committee has restructured and upgraded the subcommittee into the Circular Economy Center of Excellence (CoE) to further strengthen the initiatives.
Details of the committee’s deliberations and activity results are reported to the Management Committee. In addition, the committee submit particularly important agenda items to the Management Committee and Board of Directors for approval.
Composition of the Corporate Sustainability Committee
|Vice Chair||Responsible officer for the Corporate Sustainability Committee|
|Members||Executive Officers with specific titles, Sector presidents, Center Executive of the R&D Center, Center Executive of the Production & Technology Center, General Manager of the Corporate Planning Division, General Manager of the Human Resources Division, General Manager of the RC & Quality Assurance Division, General Manager of the Corporate Administration & Legal Division, General Manager of the Corporate Communications Division, General Manager of the Corporate Sustainability Division, other members appointed by the Chairperson|
|Secretariat||Corporate Sustainability Division|
Corporate Sustainability Committee (August 2021–May 2022) main discussion items and opinions (excerpt)
Set VISION 2030 non-financial metrics, formulate annual budgeting policy for non-financial matters
- It is important to clarify the basis for KPIs and target-setting and explain it to stakeholders.
- It is important to monitor whether we are progressing toward our ideal vision for 2030 from both financial and non-financial perspectives.
- As with financial metrics, it is important to stipulate the responsible departments and for each department to incorporate it into their annual budget as a matter of relevance and steadily implements it.
Measures to reduce GHG emissions
- For each facility, we should not only set drastic reduction targets, but also consider step-by-step switchover measures.
- When considering measures to reduce GHG emissions, we must also take into account not only the cost aspect, but also marketing strategy to promote how reductions improve the added value of products.
- Regarding the utilization of biomass raw materials, it is necessary to grasp the supply chain data and prepare for procurement risks.
Developing a foundation for life cycle assessment (LCA), including product carbon footprint (PCF)
- When accentuating the expansion of Blue Value™ products, we want to be able to externally communicate environmental impact (contribution level).
- We should respond with a sense of speed, with a stance of first moving to execution even if it is not 100% complete and making revisions and improvements in the implementation process.
Revision of Human Rights Policy
- There are limitations on how much corporate divisions alone can manage the supply chain. They should collaborate with plants, business divisions, and others.
- Our attitude should be clearly communicated. At the same time, there are also difficulties in situations such as screening partners and business partners in countries with high human rights risks.
Revising corporate sustainability system
- We have currently established a steering committee to respond to climate change and problems with plastic waste, but one of the opening points of discussion is whether this system will continue to be suitable.
- Discussions are necessary on what kind of system we should take concerning companywide risk management. TCFD response is also part of this.
*Corporate auditors also attend committee meetings and are able to offer their opinions whenever necessary.
*The chairperson is able to call on the attendance of executive officers and general managers who have an interest in the matters being deliberated and ask for their explanation and opinion.
Incorporating ESG elements into the management system
The Mitsui Chemicals Group aims to build a management system that integrates financial and non-financial aspects by incorporating ESG elements into its management practice and strategies.
Incorporating ESG elements in investment and financing decisions
The Mitsui Chemicals Group has established a system to incorporate ESG elements and perspectives on social challenges, including the SDGs, when making decisions on major investment and financing cases. Starting in FY2019, we decided to include estimates calculated based on ICP*1 in the investment planning form. Furthermore, in FY2022, in addition to IRRs, which were usually evaluated, we added ICP-based IRRs (c-IRR)*2 as a reference for investment/financing evaluation. We also updated the ICP price, based on a discussion by the Corporate Sustainability Committee.
Internal carbon pricing.
IRR calculated by the following formula: Incremental profit ± GHG increase or decrease × ICP price
Investment planning form (Example)
FY2022 major investments*
Incorporating ESG elements in annual budgets
Mitsui Chemicals incorporates ESG elements into its basic company-wide budgeting policy.
In FY2020, in our efforts to accelerate the production of Blue Value™ and Rose Value™ products and services, we adopted the sales revenue ratios of Blue Value™ and Rose Value™ products and services as performance indicators in line with the goal under VISION 2030 (40% of sales revenue by product and service). Each business division plans its annual budget based on the challenges and measures for the targets and tracks their progress.
As for climate change measures, each division includes its short-, medium-, and long-term challenges, goals, and measures in its annual budget, and also adds measures for circular economy starting in 2022.
In addition, we have set KPIs and targets that are linked to our material topics as non-financial metrics for VISION 2030. By strengthening our managerial monitoring from both a financial and non-financial perspective, we aim to enhance our corporate value. For each KPI, we have designated an officer or a general manager responsible for monitoring progress, and the respective divisions manage these KPIs by incorporating them into their annual budgets and targets. In addition, the Corporate Sustainability Committee and the Company-wide Strategy Committee will review progress and related issues from the perspective of how progress toward KPIs each fiscal year will contribute to the achievement of non-financial targets for 2030 (appropriateness of KPI/target setting) and how efforts to achieve non-financial targets will contribute to the achievement of financial targets (relationship between financial and non-financial targets).
In order to practice ESG management, the Mitsui Chemical Group believes that it is essential for each and every employee to understand ESG and to incorporate it into their work.
To that end, we have been holding ESG Link Café one-point lessons since fiscal 2020, which are dialogue-based online lessons for all employees to freely participate in, with the concept of “anyone can join as they please.” These lessons deal with and provide simple introductions of a wide variety of ESG-related topics with high social interest in addition to the Group’s ESG-related initiatives. With time set aside for free discussion after the lesson, the events are also utilized as a place for ESG-themed internal communication.
In addition to these lessons, we also work to instill understanding in the Company in a variety of ways, including a series of posts on the internal site explaining ESG-related terminology and workshops for workplaces and departments. Through a multi-layered approach, we will continue to support each and every employee in incorporating ESG into their own work, thereby facilitating the practice of ESG management.
Main themes for ESG Link Café
- The Mitsui Chemicals Group’s initiatives to promote sustainability strategies
- The Mitsui Chemicals Group’s carbon neutral strategies
- Plastic waste trend of each country
*Held ten times in FY2021, with 1,118 participants in total