Materiality (important issues)

Process for identifying materialities

When identifying materialities (important issues), we first referred to GRI standards, SDGs (Sustainable Development Goals), external investigations, and other materials, and identified the social issues. Next from the identified issues, we selected the issues which we will address in order to achieve continuing growth from the perspective of consistency with THE ESPEC MIND and ESPEC Vision 2025. The selected issues were discussed and decided by the executive Committee in order to identify ESPEC materialities. With respect to materialities, we will make flexible revisions as suitable to changes in society.

Please scroll horizontally to look at table below.

Materialities		Risks and Opportunities	FY 2024 KPI
Solve social challenges through global business	Expanding sales of products and services in advanced technology fields Strengthen Technology Development Capability	[Risks] Declining predominance and sales for our products Obsolete business models due to the arrival of new technologies [Opportunities] Increasing predominance for our products in advanced technology fields Capturing new markets through new Environmental Creation Technology	Increased sales of products and services, mainly in advanced technology fields Consolidated Net Sales: 65 billion yen
	Strengthening global marketing	[Risks] Impact on profits due to global political and economic anxiety [Opportunities] Global profit growth and stable profits	Improvement of regional sales makeup with consideration of geopolitical risk
	Creation and expansion of new businesses that contribute to solutions for social issues	[Risks] Stunted growth due to reliance on existing businesses Declining stakeholder assessments [Opportunities] Securing new sources of profit Improving stakeholder assessments	Creation and cultivation of new business
Provide products and services with responsibility	Strengthening the global supply chain (stable procurement) Sustainable procurement	[Risks] Impact on procurement and profits due to global political and economic anxiety Human rights violations in the supply chain [Opportunities] Achieving stable procurement	Establishment of a supply chain that considers geopolitical risk and sustainable procurement Optimization of inventory assets
	Utilizing technologies (IT, AI) Strengthening our core plants (production functions) and enacting manufacturing innovations	[Risks] Losing opportunities due to prolonged lead times Variations in product quality and declining product predominance [Opportunities] Expanding manufacturing capabilities, standardizing product quality, shortening lead times, and improving product predominance Improving labor productivity through the use of IT and AI	Expansion of domestic production capacity
	Increasing customer satisfaction	[Risks] Declining predominance and profits for our products Declining points of contact with customers in advanced technology fields [Opportunities] Increasing predominance for our products through differentiation with competitors Capturing customers’ needs in advanced technology fields	Providing new products and services that serve customer needs Expansion of preventive maintenance services (network services) Global deployment of QMS (Quality Management System)
Be environmentally friendly	Measures to Combat Global Warming	[Risks] Declining product sales due to inability to adapt to environmental regulations Higher energy costs [Opportunities] Propagation of products and services with enhanced environmental performance Increase in sales for the environmental preservation business and plant cultivation equipment business	Environment Targets for FY 2024, “Measures to Combat Global Warming”
Be environmentally friendly	Conserving Biodiversity	[Risks] Declining social assessments [Opportunities] Increasing sales in the environmental preservation business and biodiversity business Improving social assessments	Environment Targets for FY 2024, “Preserving biodiversity”
Securing and Cultivating Diverse Human Resources	Creating work satisfaction and improving engagement	[Risks] Worsening of corporate culture Declining labor productivity and outflows of personnel [Opportunities] Improved vitality in the organization, labor productivity, and motivation	Sharing and transparency for corporate philosophy/vision Updating management style, 1on1 meetings Reforms to the human resource evaluation system Implementation of engagement surveys; improvements to overall results compared to last fiscal year
	Providing employees with opportunities to grow and shine	[Risks] Declining adaptability to change due to obsolete personnel skills and a shortage of specialized expertise Declining capacity of the company to maintain sustained growth [Opportunities] Further growth driven by highly capable personnel Continuous training of core personnel	Enhancing support systems in skill development Training of the next generation of upper management; holding Junior Board meetings Securing and training global personnel and DX personnel
	Diversity & Inclusion (women, seniors, foreign nationals, people with disabilities, LGBTQ)	[Risks] Declining capacity for innovation due to personnel characteristics and skill imbalances Declining social assessments due to slow response [Opportunities] Innovation from creative organizations Improving social assessments	Training women for management positions Percentage of female managers: 10% or more Promoting disability hires Rate of disability hires: 2.5% or more
	Respect for human rights, ensuring employee health and safety	[Risks] Loss of social credibility Declining labor productivity and outflows of personnel due to poor physical health [Opportunities] Securing social credibility Improving labor productivity and securing excellent personnel	Implementation of harassment education: 1 or more times Promotion of initiatives to reduce workloads Establishing companywide policies for health management
Enhancement of Group Governance	Fair and Transparent Management (Corporate Governance / Compliance)	[Risks] Loss of social credibility, declining corporate value [Opportunities] Securing transparency in decision-making and sustained growth Securing stakeholder trust	Full compliance with the Corporate Governance Code Thorough permeation of the Code of Conduct and Behavior Guidelines in the group both domestically and internationally