Approach to Sustainability & Materiality

With various global initiatives for achieving the Sustainable Development Goals (SDGs) adopted at the United Nations Summit, companies are growing aware that achieving sustainability is an important management priority.
The Oiles Group positively and actively tackles sustainability issues based on the spirit of "serving society through technology," expressed in our corporate philosophy, to achieve development and create new corporate value for the Group.
We position our contribution to solving the sustainability issues exemplified by Environment, Society, and Governance as the mainstay of our corporate activities and promote various initiatives to do so.

Achieving sustainability depends upon fostering a corporate culture in which each and every employee views sustainability as a key value under the leadership of top management. The Sustainability Promotion Council, chaired by the president and attended by all directors and auditors, convenes twice a year to deliberate on important sustainability issues, such as the policy and status of ESG initiatives, including environmental efforts and diversity.
Established under the Sustainability Promotion Council is the Sustainability Committee, a working department chaired by the officer in charge of sustainability. Under the umbrella of the Sustainability Committee, we have established eight promotion sub-committees, which work toward resolving sustainability issues.

Key Sustainability Topics

The Oiles Group focuses on six key topics: 1. Enhanced Governance, 2. Responding to Consumer Issues, 3. Environmental Protection, 4. Respect for Human Rights and Appropriate Labor Practices, 5. Fair and Equitable Trade, and 6. Coexistence with Local Communities to promote sustainability activities. Through sincere and fair business activities based on our Management Philosophy, Long-Term Vision, and Oiles Group Corporate Conduct Charter, we work to put these key topics into practice as we fulfill our responsibilities as a company toward sustainability issues.

Major Issues (Materiality) for Sustainable Growth

The Oiles Group recognizes that sustainable corporate growth based on the further evolution of non-financial capital is important for achieving our medium-term management plan (fiscal 2021-2023). Therefore, concurrently with the plan formulation, we also identified the major issues (materiality) necessary for our sustainable growth. By strengthening our efforts to address materiality, we will contribute to addressing sustainability issues to achieve sustainable growth and increase corporate value.

Reviewing Materiality from the Perspective of Sustainable Growth

Step 1: Identifying the social issues to be addressed
Based on sources that include international standards such as ISO 26000, major guidelines, ESG ratings, and international integration frameworks, we identified more than 50 social issues that companies are expected to address to achieve sustainable growth.

Step 2: Analyzing the importance to society and stakeholders (vertical axis assessment)
We assessed the level of importance of the issues identified above to society and stakeholders (vertical axis assessment) while referring to the assessment parameters of ESG assessment organizations and supplier survey items.

Step 3: Analyzing the level of importance to the management of the Oiles Group (horizontal axis assessment)
We added the issues identified above to the Long-Term Vision and assessed their importance to the management of the Oiles Group from the perspectives of both our new medium-term management plan and the implementation of each department's plans (horizontal axis assessment).

Step 4: Identifying major issues (materiality)
Using the materiality matrix based on the above vertical and horizontal axis assessments, the Sustainability Promotion Council, composed of management members, identified the major issues (materiality) necessary for the sustainable growth of the Oiles Group.

Major Issues (Materiality) for Sustainable Growth

Materiality		Opportunity	Risk	Major initiatives
S: Society Developing and providing advanced products and technologies that contribute to the resolution of social issues	Developing advanced products and technologies to satisfy and surpass customer needs	Strengthening competitiveness and enhancing corporate value as a market-creating company Sustainable enhancement of corporate value by achieving sanpo-yoshi (good for three parties) for customers, society, and the Group	Decreased competitiveness as a company due to a weakened ability to innovate	Continue prioritizing the allocation of management resources (R&D expenses, personnel) to research and technology development Significantly expand floorspace for technology and R&D by restructuring the Fujisawa Plant (constructing new plant building) Promote the development of products and technology that contribute to solutions to climate change issues in areas such as EV readiness and renewable energy
	Contributing to the evolution of the mobility society
	Improving product quality
E: Environment Environmental initiatives	Preventing global warming (addressing climate change issues)	Increasing corporate value by providing products and technologies that help resolve climate change issues Gaining stakeholder confidence through recognition of the company’s environmental responsiveness	Loss of profit opportunities if the company fails to develop and enhance products that address climate change issues Possibility of losing credibility with customers, shareholders, and others if our CO2 emissions reductions are inadequate Interruption to the Group’s production activities due to unprecedented natural disasters (especially wind and water damage)	Implement initiatives to achieve our environmental targets (reduce total domestic CO2 emissions by 46% from FY2013 levels by FY2030) on the path to achieving carbon neutrality by 2050 — Implementing full-scale solar power generation at the Fujisawa Plant and other initiatives Promote the development of products and technology that contribute to solutions to climate change issues in areas such as EV readiness and renewable energy
E: Environment Environmental initiatives	Sustainable use of environmental resources
S: Society Human resource measures	Human resource development	Gaining growth opportunities as a company by securing talented and diverse human resources who share the company’s vision Increased corporate value achieved by improving employee engagement	Impact on continuity of employment due to the decline in the working-age population and increased competition in recruitment Damage to corporate value due to penalties and criticism of inappropriate labor practices	Promote initiatives to diversify our workforce — Improve our ratio of female employees, not only by setting targets for female managers, but also by setting targets for the hiring ratios of female new graduates Establish an environment and culture for employees to grow together with the company and raise employee engagement
	Diversity and inclusion
	Respect for human rights and appropriate labor practices
G: Governance Corporate governance	Strengthening governance in light of the market structural reform of the Tokyo Stock Exchange	Gaining trust from stakeholders by enhancing corporate governance Achieving stable management through appropriate risk management and the establishment of a robust compliance system	Damage to corporate value due to inadequate corporate governance Occurrence of scandals due to inadequate compliance	Enhance the effectiveness of our Board of Directors — Increase the diversity of the Board of Directors and raise the ratio of independent outside directors (ratio of independent outside directors: one-third) Improve how the Board of Directors and other management meetings operate based on questionnaires assessing the effectiveness of the Board of Directors
	Solid compliance management
	Risk management