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Sustainability Management

Management System

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 2021, we launched VISION 2030 to further incorporate ESG elements into management and strategies, proceed to the execution phase, and strengthen our efforts to disclose ESG information to stakeholders.

Sustainability in the Mitsui Chemicals Group

Corporate Sustainability Policy

In accordance with SDGs and various other topics under the umbrella of ESG, we will aim to pursue sustainable development of both society and the Mitsui Chemicals Group (in a manner that improves both social value and corporate value) by implementing the following:

Look for business opportunities, and leverage our business activities to help solve social issues
Recognize and deal with future risks^* lying ahead of the Mitsui Chemicals Group while fulfilling our social responsibility as a company

* Risk:
Uncertainty and change brought about by events surrounding the Group that affect the achievement of management strategies and goals

Aiming for “integration of financial and non-financial performance”

Non-financial performance is the foundation of financial performance
Respond to “prerequisites for business continuity” and foster trust
Non-financial performance leads to the future of financial performance
Improve “abilities essential to business continuity” and accelerate growth
Non-financial and financial performance mutually affect each other
By “contributing to a sustainable society,” maximize profits

Challenges

Incorporating ESG elements into management and strategy and the implementation thereof

Reflect ESG considerations in management and policy, strategy and planning 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

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
Report and discussion of ESG promotion status in the Group
Discussion of other important matters related to ESG promotion

In principle, the Corporate Sustainability Committee meets four times each year. 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 addressing climate change and creating plastics strategies by establishing a dedicated subcommittee. However, the scope of activities in the subcommittee has expanded, including carbon neutrality responses, and the need for further deepening and acceleration of the subcommittee's activities has increased. In response, in FY2022, the committee 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

Chair	President
Vice Chair	Responsible officer for the Corporate Sustainability Committee
Members	Executive officers with specific titles, sector presidents, General Manager of the Green Sustainable Chemicals Division, General Manager of the RC & Quality Assurance Division, General Manager of the Corporate Administration & Legal Division, General Manager of the Human Resources Division, General Manager of the Corporate Planning Division, General Manager of the Finance & Accounting Division, General Manager of the Corporate Communications Division, General Manager of the Corporate Sustainability Division, and other members appointed by the Chairperson
Secretariat	Corporate Sustainability Division

*Corporate auditors also attend committee meetings and are able to offer their opinions whenever necessary.

*The chairperson is able to call on executive officers and general managers at Mitsui Chemicals who have an interest in the matters being deliberated to attend the meetings and ask for their explanation and opinion.

Corporate Sustainability Committee (April 2023–May 2024) main discussion items and opinions (excerpt)

Review of material topics and non-financial KPIs in FY2023

During FY2022, we conducted a review based on discussions among the officers of the Strategy Committee and others and a financial/non-financial relationship analysis using the logic tree. In FY2023, we linked them to risk management, which was a unique initiative to visualize how each job at work aligns with the non-financial KPIs and ultimately material topics.
Stable production, one of our material topics, is originally intended to reduce business opportunity losses. Accordingly, it is more effective to change its KPI from the number of advanced production technologies implemented to the number of problems involving high-value losses.

Carbon neutral strategy

Our carbon neutrality concept for the Osaka Works is not merely an effort of our Group alone. It requires envisioning and implementing a larger picture of the future beyond the boundaries of individual companies. We need to accelerate further collaboration with neighboring companies in the region and with peer companies.
Our carbon neutral roadmap shows that our GHG emissions will decrease over the long term, though they may increase or decrease on an annual basis. For example, our GHG emissions may increase due to the addition of new facilities, while they may decrease due to to business restructuring. Overall, the GHG emission reduction makes strides toward 2030.

Scope 3

As for Scope 3, we need to clarify the calculation method, disclose Scope 3 emissions as a Group, and present a reduction target and timeframe to stakeholders. Setting indicators and targets for biomass/recycling strategies, one of the reduction measures, is also required.

Response to human rights risks

To boost the ratio of women in management positions, a non-financial KPI, we need to promote this not only in Japan but also by appointing talent in overseas Group companies, encouraging everyone to understand their working styles. Simply raising the number of women in management positions is not enough. We must first clarify the purpose of doing so and then take effective measures to support those committed to this effort.

Human capital

Responses to human rights risks are not just the initiative of the Corporate Sustainability Division; each division should embrace them as part of Responsible Care activities from the perspective of fulfilling responsibility throughout the supply chain. The current investigation is conducted with the support of the external non-governmental organizations (NGOs), prioritizing not overlooking human risks from the internal perspective. However, in the future, we aim to establish a system to check those risks by ourselves, as the internal audit does.

Corporate Sustainability Committee (August 2024)

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 issues, including the SDGs, when making decisions on major investments 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 evaluation. ICP price, based on a discussion by the Corporate Sustainability Committee.

*1 ICP:

Internal carbon pricing.

*2 c-IRR:

IRR calculated by the following formula: Incremental profit ± GHG increase or decrease × ICP price

Investment planning form (Example)

FY2023 major investments*

*Not including alliances, M&A, financial assistance, etc. For FY2022-2024.

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 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.

In addition, we have set KPIs and targets that are linked to our material topics as non-financial metrics for VISION 2030. We aim to enhance our corporate value by effectively monitoring the financial and non-financial aspects of our management practice. For KPI, we have designated an officer or a general manager who is responsible for monitoring the progress, and each division manages 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 (consistency and 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).

Incorporating ESG elements in annual budgets

Company-wide promotion

In order to integrate ESG factors into management and strategy, the Mitsui Chemicals 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 quick and 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-related initiatives into their own work, thereby facilitating the practice.

Main themes for ESG Link Café

The Mitsui Chemicals Group's initiatives to promote sustainability strategies
Certification system and application of Blue Value™ / Rose Value™ Products
Latest trends in carbon neutrality (policy trends and our initiatives)
Mitsui Chemicals Group branding (BePLAYER™ and RePLAYER™)
Basics of Plastic Recycling (Current Status and Initiatives)

*23 times in FY2020–2023, total 2,368 participants