SustainabilityLong-term vision and materiality

Long-term vision and mission

We are pursuing solutions for social issues and improving our corporate value as a group in line with our Vision (Goal for 2030) and Mission.

Vision (Goal for 2030)

Contributing to a bright future for people and nature

Mission

Enhance corporate value through continuous growth focused on ESG

Provide high quality and high value-added products (coatings) to customers
Be always trusted by customers, shareholders, business partners, and local residents
Contribute to environmentally friendly technologies
Be a company that all employees and their families are proud of, and create a safe working environment where employees enjoy working

Materiality and KPI

We have identified specific issues (materiality) to focus on to fulfill our Vision (Goal for 2030) and Mission.

We identified the points of materiality by first reviewing international standards, such as the GRI Standards, and then selecting possible candidate issues while considering megatrends, social issues, and the requirements and expectations of stakeholders.

We then considered them in relation to the strategies of the medium-term management plan and selected the issues that were in accord with the medium- and long-term direction of our business. The Board of Directors approved the following five items as issues of materiality.

Furthermore, we have set key performance indicators (KPIs) to manage our materiality.

Materiality	Main initiatives	Related information
1. Advanced coating and latent market development	Invest with a focus on developing advanced coatings Develop high-performance coatings for the foundational elements of people’s lives (such as digitalization, infrastructure, medical care, agriculture) Develop coatings that help proliferate and improve the efficiency of renewable energy power generation (such as wind power, hydropower, geothermal power, storage batteries) Develop coatings that help customers reduce greenhouse gas emissions (by supporting non-fossil fuels, recycling equipment)	Solutions Surface modification technology′s ability to protect the future global environment Quality management and customer satisfaction
1. Advanced coating and latent market development	Offer optimal solutions to customers Grow from a supplier to a partner Set up projects in priority areas Foster experts in problem-solving
2. Environmental impact reduction measures	Advance decarbonization (carbon neutrality) Investigate thermal spraying methods that do not use fossil fuel Reduce power consumption by improving processing methods Use renewable energy	Environmental management Material balance Targets and results Climate change measures Waste reduction and environmental conservation
2. Environmental impact reduction measures	Measures to reduce waste and protect the environment Reduce, recycle, and properly dispose of waste Understand and improve water and air pollution conditions Reduce the use of harmful substances
3. Manufacturing sophistication and quality improvement	Improve manufacturing process sophistication and efficiency Promote automation and IoT Begin practical application of new coating formation technology Create smart on-site construction	Quality management and customer satisfaction
3. Manufacturing sophistication and quality improvement	Reinforce the quality control system Establish and promote product performance assurance Implement quality controls systems (such as ISO) Construct a Product Qualification Plan	Quality management and customer satisfaction
4.Cultivate and activate diverse human resources	Form a medium- and long-term human resource development plan Develop human resources and technical training Methodically develop global human resources	Human resource development Occupational safety and health Diversity
4.Cultivate and activate diverse human resources	Create a comfortable work environment Fully engage in safety first Promote diversity (value the talents of women, persons with disabilities, mid-career employment) Promote workstyle reform
5. Thorough compliance (acting in accordance with corporate ethics)	Lay the management foundation for a long-surviving company Act in accordance with corporate ethics (social mores, ethics and morals, the environment, local community contribution) Actively promote ESG initiatives Promote engagement with domestic and foreign investors Fully comply with the Corporate Governance Code	Compliance Corporate governance

Scope of KPIs: TOCALO Co., Ltd. (non-consolidated)

1. Advanced coating and latent market development

Main initiatives	KPI	Definition	Fiscal 2025 goal	Fiscal 2023 achievement	Fiscal 2022 achievement	Fiscal 2021 achievement
Invest with a focus on developing advanced coatings Develop high-performance coatings for the foundational elements of people’s lives (such as digitalization, infrastructure, medical care, agriculture) Develop coatings that help proliferate and improve the efficiency of renewable energy power generation (such as wind power, hydropower, geothermal power, storage batteries) Develop coatings that help customers reduce greenhouse gas emissions (by supporting non-fossil fuels, recycling equipment)	No. of patents owned	(1) Domestic patents (2) Overseas patents	Total: 280	Total: 257	Total: 262	Total: 251
	No. of patent applications	(1) Domestic applications (2) Overseas applications (including Patent Cooperation Treaty applications)	Total: 30	Total: 40	Total: 33	Total: 31
	Ratio of development spending to sales (consolidated)	(R&D spending + technical development spending) ÷ sales x 100	5%	5%	4.7%	5%
Offer optimal solutions to customers Grow from a supplier to a partner Set up projects in priority areas Foster experts in problem-solving	Financial value of orders received in environmental field (1) Environmental and energy equipment (2) Repaired and refurbished products	Financial value of orders received for surface treatment processing in the following areas: (1) Environmental and energy equipment (devices, facilities, and services relating to the prevention of environmental pollution, measures to counter global warming, processing of waste and effective use of resources, and conservation of the natural environment) (2) Repaired and refurbished products (items suited to reuse and refurbished use)	(1) 2,000 million yen (2) 8,500 million yen Total: 10,500 million yen	(1) 1,913 million yen (2) 7,229 million yen Total: 9,143 million yen	(1) 1,326 million yen (2) 6,401 million yen Total: 7,727 million yen	(1) 891 million yen (2) 6,117 million yen Total: 7,008 million yen
	Ratio of overseas sales (consolidated)	(1) Sales to foreign companies (2) Royalties received from overseas (3) Sales of overseas subsidiaries	Total: 25%	Total: 28.2%	Total: 23.3%	Total: 21.1%

2. Environmental impact reduction measures

Main initiatives	KPI	Definition	Fiscal 2025 goal	Fiscal 2023 achievement	Fiscal 2022 achievement	Fiscal 2021 achievement
Advance decarbonization (carbon neutrality) Investigate thermal spraying methods that do not use fossil fuel Reduce power consumption by improving processing methods Use renewable energy	Greenhouse gas emissions (Scope 1, 2)	Non-consolidated Scope 1 and 2 emissions (Fiscal 2013 emissions: 14,736 t-CO₂）	7,900 t-CO₂ (Achieved less than 54% of fiscal 2013 emissions)	7,819 t-CO₂	6,990 t-CO₂	17,450 t-CO₂
Measures to reduce waste and protect the environment Reduce, recycle, and properly dispose of waste Understand and improve water and air pollution conditions Reduce the use of harmful substances	Ratio of waste recycled	Recycled volume ÷ (volume of waste + recycled volume) x 100	40%	48.6%	33.1%	30.7%

3. Manufacturing sophistication and quality improvement

Main initiatives	KPI	Definition	Fiscal 2025 goal	Fiscal 2023 achievement	Fiscal 2022 achievement	Fiscal 2021 achievement
Improve manufacturing process sophistication and efficiency Promote automation and IoT Begin practical application of new coating formation technology Create smart on-site construction	Amount of capital investment contributing to improving sophistication and efficiency of manufacturing process	Capital investment for promotion of automation and IoT and practical application of new coating formation technology	400 million yen	298 million yen	ー	ー
Reinforce the quality control system Establish and promote product performance assurance Implement quality controls systems (such as ISO) Construct a Product Qualification Plan	No. of employees passing QC test	No. of employees passing test (Grade 3 or higher) relating to quality control approved by the Japanese Society for Quality Control (total number)	60 persons	91 persons	49 persons	31 persons
	No. of employees possessing qualifications as nondestructive inspection engineers	No. of employees possessing qualifications as nondestructive testing engineers approved by the Japanese Society for Non-Destructive Inspection (1) Penetrant testing (2) Ultrasonic testing	Total: 25 persons	Total: 20 persons	Total: 18 persons	Total: 15 persons

4. Cultivate and activate diverse human resources

Main initiatives	KPI	Definition	Fiscal 2025 goal	Fiscal 2023 achievement	Fiscal 2022 achievement	Fiscal 2021 achievement
Form a medium- and long-term human resource development plan Develop human resources and technical training Methodically develop global human resources	No. of technology-related external presentations	(1) Presentations to professional societies (2) Published essays and commentary articles	Total: 25	Total: 21	Total: 28	Total: 18
	Number of certified technicians	Number of employees possessing technical qualifications Number of people possessing the following national qualification (total) (1) Spraying technician (2) Machining technician (Grade 2 or higher) (3) Metal heat treatment technician (Grade 3 or higher)	Total: 240 persons	Total: 231 persons	Total: 226 persons	Total: 178 persons
	Educational spending per employee	Annual educational spending ÷ no. of employees at end of term (including temporary employees)	80,000 yen	75,800 yen	63,200 yen	54,200 yen
Create a comfortable work environment Fully engage in safety first Promote diversity (value the talents of women, persons with disabilities, mid-career employment) Promote workstyle reform	Rate of frequency of occupational accidents	No. of deaths and injuries due to occupational accidents ÷ total no. of actual working hours x 1,000,000	Aiming for zero	2.06 (Including temporary employees)	1.80 (Not including temporary employees)	0.62 (Not including temporary employees)
	Severity rate of occupational accidents	Total no. of working days lost ÷ total no. of actual working hours x 1,000	Aiming for zero	0.08 (Including temporary employees)	0.03 (Not including temporary employees)	0.00 (Not including temporary employees)
	Ratio of female full-time employees	No. of female full-time employees ÷ total no. of full-time employees x 100	13%	12.2%	11.0%	9.5%
	Ratio of female managers	No. of female managers ÷ total no. of managers x 100	5%	2.1%	2.3%	1.4%
	Ratio of men taking childcare leave	No. of men taking childcare leave ÷ no. of men eligible for childcare leave x 100	90%	82.8%	68.0%	31.3%

5. Thorough compliance (acting in accordance with corporate ethics)

Main initiatives	KPI	Definition	Fiscal 2025 goal	Fiscal 2023 achievement	Fiscal 2022 achievement	Fiscal 2021 achievement
Lay the management foundation for a long-surviving company Act in accordance with corporate ethics (social mores, ethics and morals, the environment, local community contribution) Actively promote ESG initiatives Promote engagement with domestic and foreign investors Fully comply with the Corporate Governance Code	Ratio of employees receiving compliance training	No. of employees receiving compliance training ÷ no. of eligible employees x 100	100%	100%（Conducted 4 times）	100%（Conducted 3 times）	ー