Material Issues for Sustainability

The Nitto Group has identified material issues for sustainability in order to simultaneously solve social issues and create economic value. Two criteria were used for selection: whether it is for “co-creating value through innovation,” which is achieved through products and services, and whether it is for “enhancing management quality for co-creating value,” which is made possible by reinforcing the management foundations. In addressing these, we begin by recognizing risks and opportunities associated with each issue and feed them back to business plans.

Identification Process

Co-creating Value through Innovation (Issues to be Addressed through Products and Services)

Initiatives taken spontaneously through businesses designed to “simultaneously solve social issues and create economic value”

step 1	Making a list of social issues (Social issues as business opportunities)	From among major documents on SDGs compiled by governments, academic societies, NPOs, and businesses, we have sorted out issues that are deemed to be socially important and compiled them in a list. We then selected issues that are relevant to us from the perspective of business opportunities after taking into account our business domains and the future course of our business.
step 2	Materiality assessment	For each of the social issues selected in Step 1, we assessed their materiality for society at large and the company over a 10-year period. Social materiality= How seriously and rapidly the extent of their impact is expanding (high growth potential of the relevant market) Nitto Group’s materiality= How possible it is for Nitto Group to provide products/services that tap into its strengths
step 3	Determining material issues	Based on the assessment results in Step 2, we identified “social issues whose relevant market offers high growth potential and is easy for the Nitto Group to gain an advantageous position” as material issues for sustainability for the Nitto Group.

step
1

Making a list of social issues
(Social issues as
business
opportunities)

From among major documents on SDGs compiled by governments, academic societies, NPOs, and businesses, we have sorted out issues that are deemed to be socially important and compiled them in a list. We then selected issues that are relevant to us from the perspective of business opportunities after taking into account our business domains and the future course of our business.

step
2

Materiality
assessment

For each of the social issues selected in Step 1, we assessed their materiality for society at large and the company over a 10-year period.

Social materiality=: How seriously and rapidly the extent of their impact is expanding (high growth potential of the relevant market)
Nitto Group’s materiality=: How possible it is for Nitto Group to provide products/services that tap into its strengths

step
3

Determining
material issues

Based on the assessment results in Step 2, we identified “social issues whose relevant market offers high growth potential and is easy for the Nitto Group to gain an advantageous position” as material issues for sustainability for the Nitto Group.

Enhancing Management Process for Co-creating Value
(Issues to be Addressed by Reinforcing the Business Foundations)

A prerequisite to “simultaneously solve social issues and create economic value,” which is addressed in response to requests from stakeholders

step 1	Making a list of requests from stakeholders (Requests from economic, environmental, and social aspects)	The “GRI Standards” issued by the Global Reporting Initiative (GRI) were used to select and make a list of requests from stakeholders.
step 2	Materiality assessment	For each of the requests from stakeholders selected in Step 1, we assessed their materiality for society at large and our company over a 10-year period. Social materiality= Breadth of stakeholders that make the requests Nitto Group’s materiality= Magnitude of impact on the Nitto Group and compatibility with its policies
step 3	Determining material issues	Based on the assessment results in Step 2, we identified “social issues whose solution is requested by a broad range of stakeholders and that have major impact on the Nitto Group” as material issues for sustainability for the Nitto Group.

step
1

Making a list of requests from stakeholders
(Requests from economic, environmental, and social aspects)

The “GRI Standards” issued by the Global Reporting Initiative (GRI) were used to select and make a list of requests from stakeholders.

step
2

Materiality assessment

For each of the requests from stakeholders selected in Step 1, we assessed their materiality for society at large and our company over a 10-year period.

Social materiality=: Breadth of stakeholders that make the requests
Nitto Group’s materiality=: Magnitude of impact on the Nitto Group and compatibility with its policies

step
3

Determining material issues

Based on the assessment results in Step 2, we identified “social issues whose solution is requested by a broad range of stakeholders and that have major impact on the Nitto Group” as material issues for sustainability for the Nitto Group.

Risks and Opportunities

Co-Creating Value through Innovation

Material Issues for Sustainability	Risks	Opportunities
Support for health and longevity (lifestyle-related diseases, non-infectious diseases) Providing healthcare and long-term care services to all Control of infectious diseases on a global scale	Increase in the company’s cost and risk in case of extended period and/or greater expenses of developing pharmaceutical products Lowering of the company’s competitive edge and growth potential in case of failure to meet unmet medical needs Increase in social responsibilities, such as prevention of harm to patients due to quality problems, adverse reactions, etc.	Increase in demand for products and services that realize good health and longevity Increase in demand for pharmaceuticals, medical materials, and nursing care products Increase in business opportunities by providing products/services that improve QOL and prevent disease progression
Development of infrastructure for intelligent society Reduction in traffic jams/accidents Providing public transportation services for vulnerable road users	Lowering of products’ competitive edge as alternative technologies emerge and the company’s technologies become commoditized Increase in responsibilities as a result of the company’s products, etc. playing key roles in ensuring safety of traffic systems	Increase in demand for components, devices, and materials as IoT and digitalization advance Increase in demand for products that improve traffic flow and the safety level of automobiles Increase in business opportunities by providing products/services that facilitate self-driving
Promotion and spread of renewable energy and energy conservation Promotion of cyclic use of plastics, metals, water, carbon, and other materials Prevention of air, water, and soil pollution	Increase in difficulty in sales of existing products as environmental regulations are tightened Decrease in order volume in case of falling behind in addressing environmental need Lowering of trust in the company over the long term due to failure to meet expectations of the market/customers concerning environmental measures	Increase in business opportunities by providing products with a low carbon footprint Increase in business opportunities by providing products/services that facilitate energy conservation by EVs and low-powered-mobility Increase in demand for technologies/products for cyclic use of various resources/materials Increase in demand for technologies/products that contribute to separation, removal, purification or otherwise, of hazardous substances

Enhancing Management Process for Co-Creating Value

Material Issues for Sustainability	Risks	Opportunities
Recruitment/development of employees Diversity, equity & inclusion	Increase in difficulty in maintaining stable business operations due to shortages of human resources Decrease in competitive edge due to inability to respond to rapid changes in the business environment	Increase in productivity by way of workstyle reform and human resource development Organizational growth and creation of new values made possible by innovative human resources Hiring human resources that meet our needs by providing diverse people with an environment that empowers them
Enhancement of safety and quality of products Improvement of workplace environment Respect for human rights in supply chains	Occurrence of recalls, lawsuits, etc. due to quality problems Personal damage and shut-downs due to work-related accidents Damage to the company’s reputation as seen by customers, society at large, and shareholders due to occurrence of human rights issues and other scandals	Acquisition of customer trust and support by providing them with safe and quality products Increase in productivity and acquisition of trust from customers by providing a safe and secure workplace environment Secure and stable product supply and acquisition of trust by respecting human rights throughout the supply chain
Reduction in CO₂ emissions Efficient use of energy, raw materials, water, and other resources Emissions-reduction of pollutants and hazardous substances	Difficulty in continuing business activities due to delay in responding to the decarbonized society Shut-downs due to increased cost and difficulty in procurement Increase in the cost for compliance and difficulty in obtaining operational licenses due to delay in taking environmental measures	Increase in productivity due to a shift to eco-friendly production lines that meet the demand for GHG reduction Expansion of a resource recycling business by establishing recycling technology Acquisition of trust from local communities and customers by properly managing pollutants and hazardous substances