In May 2023, we announced a plan to achieve net-zero greenhouse gas (GHG) emissions (Scope 1 and 2), i.e. carbon neutrality, by 2050. The core of this plan is our assiduous efforts to reduce production intensity, increase the capacity to recover the heat emanating from the production process and improve energy efficiency.Over the past 30 years, we have halved our GHG emissions per production unit compared to the 1990 level. Meanwhile, we are increasing our production capacity and growing our businesses. In the process, the absolute amount of energy consumption increases. Achieving carbon neutrality presents a major challenge to a material manufacturer that relies on raw materials and energy for production. Nevertheless, we will unceasingly continue our efforts to boost productivity and conserve energy. For example, some of our manufacturing requires combustion or cracking. There are emerging technologies and initiatives that we should consider for possible implementation, and we will put these options into our plans. Recycling plays an essential role and we will continue to promote it jointly with our customers and the industries. For the energy we use (mostly electricity), we are evaluating various sourcing options and discussing them with suppliers. We are assessing technologies that will economically enable us to transition from natural gas to hydrogen to meet our fuel requirements. We are also evaluating solar power generation and carbon capture and storage projects.All of these must be done without sacrificing cost competitiveness. While maintaining cost competitiveness and responding to customers' requests, we will be innovative and remain open to everything that we can make use of to reach CN.

In Japan, the natural gas cogeneration system that we operate at one of our manufacturing facilities was awarded the first prize at the 2023 Cogeneration Awards. We participate in a hydroelectric PPA^* for local production and local consumption. In the meantime, many of our products contribute to lowering GHG emissions and are helping to increase energy efficiency and lessen environmental impacts. The Japanese government has listed 14 areas that will be integral to achieving carbon neutrality and approximately 70% of the sales of our products currently go to these fields. The fields include housing, infrastructure, electric vehicles, digital transformation, and green transformation.

To promote and strengthen our people’s professionalism, we invest in our human resources in various ways. In an effort to promote diversity, we held roundtable discussions between our female outside independent director and audit & supervisory board members and female employees. The objective there is to facilitate the exchange of opinions regarding women’s empowerment and their work. Given the demographic circumstances in Japan, discussions about diversity tend to be quantitative, focusing on the utilization of women as work force. I am actually hopeful that qualitative discussions of diverse ideas will contribute to the raising of our corporate value.

To build responsible supply chains, we make sure our suppliers know about the Shin-Etsu Group Human Rights Policy, our Basic Procurement Policy, and our CSR Procurement Guidelines. In these policies and guidelines, we call on our suppliers to eliminate discrimination, abide by the labor standards of the International Labor Organization, and not engage in unfair labor practices. We are also actively taking steps to exclude minerals that have a clear link to conflicts or human rights violations from all the items we procure.

The safety of our employees is a No.1 premise of our operation. To achieve zero-accident at our sites, the fundamental thing we do is to eliminate any latent minor mistakes and incidents. To this end, we rigorously enforce the following three key safety guidelines for action: (1) make sure to abide by the rules and operational procedures; (2) cultivate the sensitivity to risks; and (3) eliminate safety risks swiftly.

The board of directors is at the center of our corporate governance. It consists of nine directors, five of whom are independent outside directors (including one from the United States and one female director). Along with it, we have the audit & supervisory board. This board consists of four members, three of whom are independent (including two female members). They all participate in discussions and provide suggestions and inputs concerning important matters of the company, including shareholder returns, investments, and sustainability. Given the uncertainty in world affairs and the economy, risk management is crucial. We make a point of assessing country risks and other factors in capital investments and raw material procurement. We are strengthening information security and seriously working on countermeasures against cyberattacks and data leakage.

The Shin-Etsu Group has adopted the slogan of Shin-Etsu Everywhere. It means that we are an essential supplier supporting people’s lives and industries worldwide, contributing to environmental and social sustainability through the use of the Group’s products and technologies. We are properly aware of this responsibility and we will continue to set our sights on sustainable growth together with society.