Materiality (important issues)

Process for identifying materialities

To achieve sustainable medium- to long-term value creation together with society, ESPEC identifies and prioritizes key material issues (“materiality”).
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 our long-term vision. 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.

FY 2024 Materiality KPI Targets & Results
FY 2025 Materiality KPI Targets

■ FY 2024 Materiality
KPI Targets & Results

Please scroll horizontally to look at table below.

Materialities		KPI Targets	KPI Results
Solve social challenges through global business	Expanding sales of products and services in advanced technology fields Strengthen Technology Development Capability	Increased sales of products and services, mainly in advanced technology fields Consolidated Net Sales: 65 billion yen	Consolidated net sales: 67.2 billion yen (up 8.3% year on year) Expanded product lineup for advanced technology fields, including rapid-rate thermal cycle chambers Launched ECO-type low-temperature constant (and constant humidity) chambers with significantly reduced power consumption Group company launched rapid temperature change chambers equipped with low-GWP refrigerant R-473A Opened the “Aichi xEV Battery Safety Test & Certification Center” and expanded the functions of the Toyota Test Center under the “Aichi Next-Generation Mobility Test Lab” initiative
	Strengthening global marketing	Improvement of regional sales makeup with consideration of geopolitical risk	Net sales increased mainly in Japan and the U.S. Overseas sales ratio: 51.9% (down 1.2 percentage points year on year) Breakdown of Net Sales by Region Japan: 48.1% (up 1.2 points year on year) North America: 16.6% (up 1.3 points year on year) Europe: 4.3% (down 1.2 points year on year) China: 17.4% (down 2.2 points year on year) Taiwan: 1.7% (±0 points year on year) South Korea: 4.4% (up 0.2 points year on year) Southeast Asia and India: 5.9% (up 0.5 points year on year) Others: 1.6% (up 0.3 points year on year)
	Creation and expansion of new businesses that contribute to solutions for social issues	Creation and cultivation of new business	Launched thermal deformation measurement and thermal image analysis services related to CAE (Computer Aided Engineering) Released the “Ultra-Low Temperature Shock Freezer,” which enables freezing while maintaining the freshness of perishable foods
Provide products and services with responsibility	Strengthening the global supply chain (stable procurement) Sustainable procurement	Establishment of a supply chain that considers geopolitical risk and sustainable procurement Optimization of inventory assets	Launched and began activities under the Procurement Project Reduced inventory through initiatives for optimization of inventory assets year on year
	Utilizing technologies (IT, AI) Strengthening our core plants (production functions) and enacting manufacturing innovations	Expansion of domestic production capacity	Increased domestic production capacity by 1.3 times year on year
	Increasing customer satisfaction	Providing new products and services that serve customer needs Expansion of preventive maintenance services (network services) Global deployment of QMS (Quality Management System)	Expanded product lineup for advanced technology fields, including rapid-rate thermal cycle chambers Launched ECO-type low-temperature constant (and constant humidity) chambers with significantly reduced power consumption Group company launched rapid temperature change chambers equipped with low-GWP refrigerant R-473A Opened the “Aichi Battery Safety Testing Center” and expanded the functions of the Toyota Test Center under the “Aichi Next-Generation Mobility Test Lab” initiative Achieved sales targets for preventive maintenance (network) services Deployed the Quality Standards Manual to Group companies
Be environmentally friendly	Measures to Combat Global Warming	Environment Targets for FY 2024, “Measures to Combat Global Warming”	Environment Targets for FY 2024, “Measures to Combat Global Warming”
Be environmentally friendly	Conserving Biodiversity	Environment Targets for FY 2024, “Preserving biodiversity”	Environment Targets for FY 2024, “Preserving biodiversity”
Securing and Cultivating Diverse Human Resources	Creating work satisfaction and improving engagement	Enhancing support systems in skill development 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	Held companywide event “Progressive Plus” Conducted a “Round-Up Training Course” to promote the dissemination of the corporate philosophy Participants: 375 Conducted managerial position renewal assessments and promoted 1-on-1 meetings Formulated a new human resource evaluation system (introduced in April 2025) Conducted engagement surveys Improvements to overall results compared to last fiscal year
	Providing employees with opportunities to grow and shine	Providing employees with opportunities to grow and shine Training of the next generation of upper management; holding Junior Board meetings Securing and training global personnel and DX personnel	Conducted career training by age group Completed Junior Board program Implemented overseas training system “Global Trainee Program” Promoted acquisition of IT Passport and similar certifications for managers
	Diversity & Inclusion (women, seniors, foreign nationals, people with disabilities, LGBTQ)	Training women for management positions Percentage of female managers: 10% or more Promoting disability hires Rate of disability hires: 2.5% or more	Percentage of female managers: 9.8% (as of April 1, 2025) Received the Platinum “Kurumin” Certification from the Ministry of Health, Labour and Welfare Received top-tier “Three-Star” and “Ikumen Promotion Company” certifications under the Leading Company in Women’s Advancement in Osaka City Employment rate of persons with disabilities: 2.46% (as of March 31, 2025)
	Respect for human rights, ensuring employee health and safety	Implementation of harassment education: 1 or more times Promotion of initiatives to reduce workloads Establishing companywide policies for health management	Conducted harassment prevention training for managers Two sessions held Introduced labor-saving equipment at domestic production sites Annual paid leave utilization rate: 77.8% (74.3% in the previous year) Set “Promotion of Health and Productivity Management” in the FY2025 Management Plan
Enhancement of Group Governance	Fair and Transparent Management (Corporate Governance / Compliance)	Full compliance with the Corporate Governance Code Thorough permeation of the Code of Conduct and Behavior Guidelines in the group both domestically and internationally	Full compliance with the Corporate Governance Code Conducted education on the Code of Conduct and Behavior Guidelines at domestic and overseas Group companies

■ FY 2025 Materiality KPI Targets
* Partial revision of materiality implemented from FY2025

As of October, 2025

Please scroll horizontally to look at table below.

Materialities

Risks and Opportunities

KPI Targets

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 earnings from products and services focused on advanced technology fields

(Consolidated) Net Sales	¥68.0 billion
Operating Profit	¥8.5 billion
Operating Profit Ratio	12.5%

Strengthening global marketing

[Risks]

Impact on profits due to global political and economic anxiety

[Opportunities]

Global profit growth and stable profits

Establish competitive advantages in global markets by leveraging the Group’s collective strengths

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

Develop new products and services in the thermal solutions and food machinery businesses

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
Declining product sales due to inability to adapt to regulations in each country
Human rights violations in the supply chain

[Opportunities]

Achieving stable procurement
Enhanced product competitiveness through compliance with regulations in each country

Implement Business Continuity Plan (BCP) for critical components

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

Introduce systems and equipment to promote automation and labor savings in production
Shorten production lead times

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

Provide new products and services that serve customer needs
Expand preventive maintenance services using network technologies
Reduce product defect rates in the market

Be environmentally friendly

Measures to Combat Global Warming

[Risks]

Declining product sales due to inability to adapt to environmental regulations
Higher energy costs

[Opportunities]

Expansion of the 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 FY2025, “Measures to Combat Global Warming”

Conserving Biodiversity

[Risks]

Declining social assessments

[Opportunities]

Increasing sales in the environmental preservation business and biodiversity business
Improving social assessments

Environment Targets for FY2025, “Conserving 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

Announce and promote long-term vision “ESPEC Vision 2035”
Introduce and operate a new vision-driven personnel evaluation system
Conduct “Round-Up Training Course” (to promote understanding of the corporate philosophy and vision), including domestic and overseas Group companies
Promote 1-on-1 meetings
Conduct one engagement survey
Employee engagement improved year on year
Introduced the Trust-type Employee Shareholding Incentive Plan (E-Ship®)

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

Formulated talent development plans for each division
Training of next-generation management
University degree qualification course:
2 participants completed
Implemented overseas training system “Global Trainee Program”

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: 15% or more (at April 2026)
Promote and stabilize employment of persons with disabilities
Employment rate of persons with disabilities: 3%

Ensuring employee health and safety

[Risks]

Declining labor productivity and outflows of personnel due to poor physical health

[Opportunities]

Improving labor productivity and securing excellent personnel

Formulate policies for health management

Respect for Human Rights

Respect for human rights throughout all corporate activities

[Risks]

Loss of social credibility and employee turnover

[Opportunities]

Securing social credibility

Formulate human rights policy
Conduct harassment prevention training (for all employees and managers)
2 sessions
Conduct companywide harassment survey
1 time

Use of Digital Technologies

Use of digital technologies throughout all corporate activities

[Risks]

Insufficient development of digital personnel
Declining labor productivity

[Opportunities]

Development of digital personnel
Labor-saving and productivity improvement through automation

Introduce and operate new cloud storage services

Enhancement of Group Governance

Fair and Transparent Management
(Corporate Governance / Compliance)
Enhancement of information security

[Risks]

Loss of social credibility, declining corporate value

[Opportunities]

Securing transparency in decision-making and sustained growth
Securing stakeholder trust

Formulate “ESPEC Vision 2035” to clarify our desired position ten years from now
Conduct education on the corporate philosophy, Code of Conduct and Behavior Guidelines at domestic and overseas Group companies
Rebuild BCP (Business Continuity Plan)
Establish internal control systems and strengthen information security across domestic and overseas Group companies