Shin-Etsu Group Key Sustainability Issues

The Shin-Etsu Group recognizes the challenges, risks, and opportunities of all key Sustainability issues and addresses them accordingly.

Key Sustainability Issues Major Risks and Opportunities Initiatives
The foundation of all activities: legal compliance, fair corporate activities Risks 惻Impact of legal violations and improprieties on corporate management.
惻Damage to corporate value due to loss of trust from society.
惻Demand thorough compliance awareness among officers and employees through training, etc.
惻No provision of unfair benefits or demands thoroughly with the aim of preventing corruption
惻Regarding the prevention of bribery, ensure No provision of unfair benefits or demands thoroughly, and establish internal rules at each overseas group company
惻Cutting ties with anti-social forces
惻Compliance with sound business practices with suppliers and service providers
惻Support for the
" Declaration of Partnership Building "

KPI
惻Number of serious violations of laws and regulations: 0
Opportunities 惻Ensuring full compliance awareness and fair corporate activities leads to:
(1) Formation of the foundation of corporate value
(2) Elimination of risks
(3) Building of customer trust and expansion of business opportunities
(4) Hiring and retaining of excellent human resources
Health and safety of employees and contractors Risks 惻Impact of accidents and environmental problems on local communities and employees.
惻Damage to equipment caused by typhoons, earthquakes, or other natural disasters.
惻Impact of an infectious disease outbreak on operations.
惻Safety education for employees through disaster prevention drills and workshops
惻Environmental control and safety audits
惻Improvement of the workplace environment and promotion of employees' health

KPI
惻Number participants in safety training
(Total number of persons): 75,406
惻Number of work-related employee fatalities: 0
惻Number of serious accidents: 0
惻Lost-time accidents rate: 0.00 (Japan), 1.15 (overseas)
惻Lost-time accidents severity rate: 0.00 (Japan), 0.03 (overseas)
Opportunities 惻Implementing measures to prevent accidents and developing new production processes enable the creation of a safe working environment and the improvement of stable production and higher productivity
惻Hiring and retaining excellent human resources
惻Continuing operations, shutting down operations, and resuming operations safely by designing the plant in anticipation of a natural disaster and taking measures against risks
惻Promoting employee health, achieving a work-life balance, and cultivating a sense of motivation and fulfillment in work
Energy-saving, resource-saving, and reduction of environmental impacts Risks 惻 Additional costs of stricter regulations related to greenhouse gas emissions
惻 Price increases and difficulty in procuring raw materials for the quantity needed
惻 Increased water risks, such as water depletion and flooding
惻Promoting the reduction of environmental impact
惻Waste reduction
惻Pollutant countermeasures
惻Response to climate change
惻Resource recycling
惻Water resource conservation and water pollutant elimination
惻Conservation of biodiversity initiatives

KPI
惻GHG Emissions (Scope1+Scope2): 6,613 thousand tons of CO2e
惻Emissions intensity index of production volume relative to 1990: 54.2%(Shin-Etsu Group), 46.8%(Shin-Etsu Chemical)
惻Sales ratio of our group's products that contribute to CN:approx. 70%
惻Water recycle ratio: 92.6%
惻Waste recycling ratio: 71%(Japan), 75%(overseas)
Opportunities 惻The constant challenge of technological innovation leads to the enhancement of "manufacturing ability".
惻Increasing competitiveness by conserving energy and resources, reducing environmental loads, and improving productivity
惻Increasing the demand for products that contribute to the environment
惻Developing technologies that recycle water, thus contributing to business continuity
Product quality improvements and product safety control Risks 惻Loss of trust due to product quality issues
惻Direct or indirect impacts on product safety
惻Quality control
惻Quality audits and support
惻Product safety control
惻Promote automation of quality inspections and assurance (reduce personnel involvement)
惻Verification of the statistical validity of inspection variations and standard ranges

KPI
惻Number of participants in product safety training: 71,142
Opportunities 惻The track record of continuing to deliver products of the promised quality on time will lead to increased customer trust.
惻 Sincere efforts to ensure product safety and accumulation of achievements will lead to the trust of customers and society.
Promoting CSR procurement and the diversification of supply sources Risks 惻Impact from not being able to procure raw materials, such as discontinuation of manufacture and shipment delay to customers
惻Problems arising in the supply chain
惻Create "Shin-Etsu Group CSR Procurement Guidelines" and revise them as appropriate
惻Ensuring compliance with subcontracting laws by attending seminars and conducting internal audits
惻Implementing initiatives to eliminate the use of conflict minerals
惻Implementing the supplier CSR procurement survey
惻 Participation in RSPO "Roundtable on Sustainable Palm Oil"

KPI
Ratio of sustainability surveys conducted at suppliers: approx. 70%
Opportunities 惻Dversifying suppliers enable stable procurement, purchasing at optimal prices, and procurement of raw materials through fair transactions
惻Thorough CSR procurement will lead to the trust of customers and society
Respect for human rights, the development of human resources, and the promotion of diversity Risks 惻Occurrence of human rights infringements in the Group's business activities and supply chain
惻Occurrence of differences and biases in the effectiveness of on-the-job training
惻Negative impact of performance-based evaluation (Putting emphasis on short-term results, bias in evaluation depending on department, performance decline due to external factors, etc.)
惻Increase in turnover rate and decrease in job seekers due to inability to meet needs for diversification of work styles

惻Promotion of respect for human rights based on the Universal Declaration of Human Rights
惻Implementing human rights due diligence
惻Supporting employee growth through a training system
惻Promote communication between superiors and subordinates
惻Promoting penetration of an evaluation compensation system focused on skill development
惻Creating an environment where people can play an active role regardless of gender or age
惻Enhancement of work-life balance system

KPI
惻Ratio of awareness of Human Rights Policy within the Group: approx. 90%
惻Number of child labour: 0
惻Number of forced labour: 0
惻Ratio of women in managerial
positions at manager level and above: 12.6%

Opportunities 惻Improving the market evaluation of companies that promote respect for human rights
惻Active participation of excellent human resources who have cultivated practical skills through on-the-job training
惻Accumulation of knowledge, skills and experience
惻Maintaining and improving organizational vitality brought about by a strong desire to take on challenges to achieve goals
惻Business growth and new business development by hiring, developing, and selecting talented human resources
Respect for and protection of intellectual property Risks 惻The adverse effect on product sales due to infringement of our intellectual property
惻Restrictions on our product sales and business due to the patents of other entities
惻Impact of cyber-attacks on production, sales, and R&D activities
惻Loss of trust in the company due to information leakage
惻Intellectual property management
惻Initiatives for information asset management
惻Protection of personal information
惻Initiatives for cyber security

KPI*
惻Patents acquired: 1,714
惻Patents held: 22,310
*Scope: Main consolidated manufacturing companies
Opportunities 惻Promoting product development and unique manufacturing methods by protecting and utilizing our intellectual property
惻Contributing to the development of industry and the society by publishing inventions
惻Implementing technology innovation and operational reforms by utilizing digital technologies while thoroughly protecting and managing information assets and taking measures against cyber attacks
Contribution to industry and social initiatives Risks 惻Loss of trust from local communities due to social contribution activities not meeting local needs
惻Impact on the world development due to the delay in achieving a sustainable world that the SDGs aim to achieve
惻Contribution to SDGs goals and targets
惻Fundraising for the U.N. World Refugee Day
惻Traffic Safety Activities
惻Career development for local elementary school students
惻Supporting the Science and Technology in Society forum
惻Supporting the Children of the Next Generation
惻Support for Eradicating Poverty in Africa
惻Contribution to Society Activities at Overseas Group Company
Opportunities 惻Creation of employment opportunities, stable employment and tax payment due to business stability
惻Building relationships of trust with the local community through dialogue and continuous activities
惻Contributing to a better world by addressing SDG issues through business operations
Accurate and timely information disclosure and communication with stakeholders Risks 惻Impairment of corporate value through the non-disclosure and inadequate disclosure of information
惻Loss of trust from stakeholders and the society due to failure to fulfill accountability
惻Appropriate and timely disclosure of company information
惻Communication with stakeholders
惻Dialogue with mass media including conference calls with analysts and investors after the announcement of financial results
惻Holding an exhibition

KPI
惻Presentations of earnings and conference calls for analysts and institutional investors: 4 times
惻Plant tours for analysts and institutional investors / Business briefing session: 1 time
惻One-on-one meetings with analysts: 312 times
惻Small meetings for investors hosted by securities companies: 5 times
Opportunities 惻Creating a fair market evaluation and improving corporate value
惻Earning the trust of stakeholders and the society

Specifying Key Sustainability Issues

Performance and Outcome