Top Message

With huge waves sweeping over us such as the pandemic, further divisions afflicting the world, and the soaring prices of natural resources and raw materials, the environment surrounding our business is becoming even more uncertain. Nevertheless, we have continued to grow, deftly steering through such challenges.

Aiming for continuous growth by strengthening each business, we have been focusing on correctly getting our jobs done by allocating limited human resources and time to daily management and operations. You will see our performance records as proof that such efforts have resulted in our mid-to-long-term growth. Aside from aiming for continuous growth, we have put into practice sustainability initiatives as a key management issue for half a century, since long before the concept of sustainability gained currency.

President Yasuhiko Saitoh

Environmental

We have been taking on challenges to improve our technologies that contribute to the environment and have implemented in our plants the innovative technologies thus developed. One prime example is Shintech Inc., our U.S. subsidiary. Having started the production of polyvinyl chloride (PVC) in 1974, Shintech has scrupuously adhered to this policy since the beginning of this production, continuously investing in technologies that reduce environmental impact. Shintech also strives to earnestly develop a trusting relationship with local communities and has been welcomed by the local governments and communities as a company highly supportive of their development. Backed by meticulous environmental measures and favorable relationships with local communities, Shintech has kept investing to carry out major plant expansions, steadily capturing the increasing demand for PVC worldwide, eventually becoming the world’s largest PVC manufacturer. We follow the same practices in all our businesses and group companies.

In May 2023, we announced our “Plan for Realizing Carbon Neutrality by 2050.” To reduce greenhouse gas emissions, we will promote “switching to renewable energy”, and advance “Utilization of green and blue hydrogen,” ”Continued improvement of manufacturing technologies,” ”CCUS1,” and ”Utilization of biomass fuel.” For material manufacturers that use materials and energy in production, achieving carbon neutrality is a huge challenge. However, for the last 30 years, our engineers have constantly taken on challenges for rationalization, productivity improvemet, and technological innovations, eventually reducing greenhouse gas emissions per production intensity to almost half that of 1990. Going forward, we will continue to work on carbon neutrality with the technologies and the prowess we have developed to solve issues, and our strong resolve to tackle challenging objectives.

Many of our products help reduce greenhouse gas emissions, thereby contributing to the reduction of environmental impact and the realization of a sustainable society. In June 2021, the Japanese government announced, “Green Growth Strategy Through Achieving Carbon Neutrality in 2050,” citing 14 areas that need to be worked on to go carbon neutral by 2050. The sales of our products for these 14 areas now account for 70% of our consolidated sales. We will expand the product lineup that will solve our customers’ and societies’ issues to bring about a sustainable society.

  • 1CCUS: Carbon dioxide Capture, Utilization and Storage technology

Social:

The Group policy is to grow together with the regional communities in which we operate. Business brings employment, the growth of business increases employment, and its economic effects spread to the regional communities. And we contribute to the development of the nations and regional communities through tax payment.

Respect for human rights is one of our core values. In business locations around the world, we have been fully ensuring people-first management. Aside from adhering to the international codes of conduct related to human rights2, we have established our own human rights policy and conduct surveys to ensure that our businesses are undertaken in accordance with this policy. Furthermore, we have expanded our human rights initiatives to our supply chains. In FY2022, we conducted a survey with about 70% of the Group’s primary suppliers to find out the current state of their sustainability initiatives including for human rights. Going forward we will steadily manage our businesses with respect for human rights at the core.

Our management also incorporate SDGs. When new investments are considered or new products are developed, we require that there will be an evaluation as to which of the SDG targets they contribute to. Furthermore, since 2006, we have been sending employee donations every year to the UNHCR’s refugee support activities.

  • 2 International codes of conduct related to human rights: Refers to global human rights rules such as the Universal Declaration of Human Rights, ILO International Labour Standards, UN Guiding Principles on Business and Human Rights, The Ten principles of the UN Global Compact, etc.

Governance:

We also actively work on corporate governance. In 2001, our then President Chihiro Kanagawa invited Mr. Frank Popoff, the former Chairman and CEO of Dow Chemical (U.S.), to become our Outside Director, saying “We have continuously attained record-high sales and profit but sometimes things go unnoticed by internal directors. I want someone outside to look at our management stringently and give candid opinions.” We have invited top professionals from various sectors to become our Outside Directors, who have since given us wide-ranging advice such as on shareholder returns, capital investment, ESG, and carbon neutrality. As the Outside Directors have fully played their roles, our corporate governance has steadily advanced. Since June 2023, 5 of our 9 Directors are independent Outside Directors (1 U.S. national, and 1 woman,) and 3 of our 4 Audit & Supervisory Board members are Outside Audit & Supervisory Board members (of whom 2 are women.) Our Board of Directors, comprising Outside Directors with diversity including in nationality, gender and tenure of service and our Managing Corporate Officers, will continue to work on continuous growth.

Human capital and intellectual properties:

What drives our growth is people. People grow through their work, and people’s growth results in the company’s growth. In developing human resources, we are strongly supporting the enhancement of people’s ability to work and grow. With OJT (on the job training) as the basis, we provide various learning programs in such fields as globalization, manager training, AI training, legal knowledge training etc. Operating businesses in 21 countries around the world, we have employees of diverse nationalities, genders, and fields of expertise.

Technology is also a source of our competitiveness. Protecting our technologies is an extremely critical issue, and we have long been taking strict and effective measures in this regard. Our efforts for intellectual property have been commended by an external institution for 12 consecutive years, for the superiority of our patent ideas and for the continuity in creating ideas.

Preparing for risks

Business goes hand in hand with risks, and risk management has increasingly become an important management issue amid the heightened uncertainty in world affairs and world economy. We have made capital investments with careful evaluation of country risks and spread our material procurement over multiple regions and suppliers, while selling our products to wide-ranging customers. We have also never ceased to ensure cybersecurity measures. Aside from these management measures, our continuous growth has been underpinned by preparedness for other risks, such as executing contracts, hedging risks with insurance, adhering to laws and regulations and ensuring compliance.

As an essential supplier

As an essential supplier supporting the lives and industries of people around the world, the more our products and technologies are used, the more can we play our part in bringing a sustainable world—That’s our goal “Shin-Etsu Everywhere”. We will work with society on sustainable growth by providing products that will improve the quality of life and contribute to solving social issues.

In January 2023, our chairman, Chihiro Kanagawa, passed away. It was a great loss for our company. We will carry on his torch and move forward with vigor.
We would greatly appreciate your continued understanding and support as we move ahead.

I would appreciate it if you could refer to this report for the description of our individual sustainability programs.

June 2023

President Yasuhiko Saitoh