Sustainability

Summary of “Vista2021 Stage II”

In April 2019, we, Nissan Chemical Corporation and its group companies started “Vista2021 Stage II”, the second three years of the mid-term business plan, “Vista2021”. Looking ahead to FY2030 under the long-term business plan, “Progress2030”, we set our ideal situation in FY2021 as a stepping-stone, and defined our basic strategies: “Increase profitability of products that are the sources of growth", “Strengthen ability to create new products”, and “Improve ability to adapt to social/market changes”, to achieve that long-term plan.

Management Indicators

Achieved and significantly exceeded all income targets for FY2021 in the mid-term plan formulated prior to COVID-19 (announced in May 2019)
Operating profit reached the record high for 8 consecutive years
Achieved the operating profit target “\50 billion” in the long-term business plan “Progress2030”, 9 years ahead of schedule

	FY2021 (plan)	FY2021 (actual)
Sales	235.0 billion yen	208.0 billion yen※
Operating Profit	43.0 billion yen	51.0 billion yen
Ordinary Income	44.0 billion yen	53.7 billion yen
Net Income	33.0 billion yen	38.8 billion yen
Operating Profit Margin	Above 18%	24.5%
ROE	Above 16%	19.2%
Dividend Payout Ratio	45%	44.9%
Total Payout Ratio	75%	75.6%

Including effects of changes in accounting policies (-22.9 billion yen)

Efforts for Materiality and KPIs

Materiality	Factor	Our Initiative	FY2021 Target	FY2021 Result
Provision of new value for helping to enrich people’s lives	Contribution to health issues	Creation of pharmaceuticals that meet medical needs and biomedical materials that contribute to advanced medical care	License out candidates of drug agents	Anti-arrhythmic agent: Completed the investigator-initiated clinical trial Nucleic acid drug: Started 2 new collaborative drug discovery themes
	Contribution to health issues		Launch of new medical materials	Delayed clinical trials due to the spread of COVID-19
	Supply of environmentally friendly products and services	Sale of high-grade urea solution for exhaust gas purification of diesel vehicles Development of energy harvesting materials that contribute to the utilization of unused energy	Launch of new environmentally friendly products	Organic thin film solar battery materials: Confirmed effectiveness confirmed, continuing evaluation Secondary battery materials: Expanded sample evaluation expansion ORGABEADS®: Continued evaluation for adoption
	Contribution to the improvement of the quality of life	Research and supply of veterinary pharmaceuticals for companion animals and sales of disinfectants for drinking-water	Number of people positively impacted by the sales of disinfectants for drinking water: 2.5 million per year	0.76 million per year
	Contribution to smart society	Development of sensor materials required for IoT and wiring materials that contribute to higher capacities and speeds of data communications	Expanded adoption of sensors and semiconductor packaging materials/Adoption and launch of materials for optical communications	CIS materials: 61% higher sales than FY2018 Wiring formation materials: Continuing evaluation for commercialization Optical interconnect materials: Progressed evaluation toward commercialization RDL Materials for FOWLP: Continuing study of material improvement
	Contribution to the food issues	Supply of agrochemicals to increase crop yields and conserve agricultural labor, and the expansion of veterinary pharmaceuticals to livestock	Achieving 10% higher sales of agrochemicals than in FY2018	15.6% higher than FY2018
Strengthening of Nissan Group's business base	Enhancement of R&D capability	Deepening core technologies, promotion of open innovation, and introduction of new technologies such as AI	Reaching 1,350 patent applications in three years by FY2021	Cumulative number of patent applications since FY2019: 1256 (FY2021: 415 patent applications)
	Improvement of products quality	Continuous improvement of management systems and operations based on quality policy	Achieving 80% outsourcer audit rate in three years by FY2021	83%
	Maintenance and improvement of employees’ health	Review of health promotion measures by the health promotion committee and mental health checkups	Consecutively acquiring White 500 certification	Acquired White 500 certification for six consecutive years from FY2016
	Creation of a comfortable workplace	Promotion of work-life balance, measures against harassment, and support for childcare and family care	Achieving ratio of taking annual leave of 80% or higher	76%
	Personnel retention and trainings	Provision of educations and capability trainings, and introduction of overseas study program	Achieving 10% more job training time per employee than in FY2017	9 hours of training (11 hours in FY2017)
	Promotion of diversity	Promotion of active participation of women, hiring foreign students and people with disabilities	Achieving proportion of females among employees in the regular position of 10%	11.1%
	Promotion of fair-trading	Implementation of internal training on the “Act against Delay in Payment of Subcontract Proceeds, etc. to Subcontractors” and the insider trading regulations	Holding consultation meetings with Legal Office throughout the Group by FY2021	100% (Implemented at all business locations including offices)
	Promotion of CSR procurement	Conduct of assessment and audits of suppliers on CSR	Achieving CSR questionnaire survey coverage of 90% (in terms of monetary amount)	92.2%
	Adaptation to climate change	Formulation of BCPs to prepare for the plants’ inability to operate due to natural disasters	Formulating BCP where products account for 50% of ordinary income	Formulated BCP where products account for 76% of ordinary income
Continuous improvement of responsible care activities	Mitigation of climate change	Energy saving through equipment improvement and fuel conversion that leads to GHG (Green House Gas) emissions reduction	GHG emissions: Reducing by 20% from FY2013 level Energy consumption rate: Improving by 20% from FY2013 level	GHG emissions: Reduced by 25% from FY2013 level Energy consumption rate: Improved by 19% from FY2013 level
	Promotion of occupational health and safety	Establishment of an occupational safety management system and execution of capital investment in safety	Achieving zero accident requiring staff time off from work	One accident occurred requiring staff time off from work
	Biodiversity conservation	Operation of Bio-Park and support for the NPO “Kurohama-numa Shuhen no Shizen wo Taisetsu ni Suru Kai”	Achieving 100% initiative for prefectures in which our Head Office, plants, and laboratories are located	83%
	Management of chemical substances	Minimization of negative impacts on human health and the environment throughout the life cycle of chemical products	Creating safety summaries of chemical substances of products that account for 90% of our total production	90%
	Reduction of industrial waste and pollutant emissions	Reduction of the amount of waste for final disposal volume by reusing and recycling waste and changing intermediate process methods	99.5% or more recycling rate Achieving 75% reduction of exhaust gas (SOx + NOx) emissions compared to FY2013	Recycling rate: 97.2%^※ Exhaust gas (SOx+NOx) emissions: Reduced by 73% from FY2013 level

Waste soil from Toyama Plant has been added to the calculation since FY2021.

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For process of materiality identification and materiality matrix, see https://www.nissanchem.co.jp/
eng/ir_info/archive/ar/ar2021_09.pdf

Progress in Implementing Measures Based on Basic Strategies

Basic Strategy 1. Increase profitability of products that are the sources of growth

Decided to withdraw from melamine business to promote structural reform of Chemicals Business
Expanded sales and by increasing product lines, widened target applications of photo IPS
Decided to establish a new NCK plant to increase production capacity of semiconductor materials (Investment amount: 8.5 billion yen (rounded number), planned completion: July 2023)
Expanded the agrochemical product portfolio through acquiring businesses of fungicides, “DITHANE” and “QUINTEC”
Established Nissan Bharat Rasayan Private Limited (India), the first overseas agrochemical production site, to expand the capacity to supply products

Basic Strategy 2. Strengthen ability to create new products

Established Planning and Development Division (April 1, 2020)
Functions were integrated such as theme and market developments, for stronger planning and development abilities.
[Life Science Materials Development Dept.]
Materials for cosmetics market and regenerative medicine market, etc.
[Information & Communication Materials Development Dept.]
Novel electronic materials for information & communication, etc.
[Environment & Energy Materials Development Dept.]
Materials for secondary batteries and solar cells, etc.
[Innovative Materials Planning Dept.]
Creation and introduction of new themes and technology
Invested in a venture capital and considered introducing technology and products from start-up companies
Promoted joint research and development with pharmaceutical companies and strategic alliance with Luxana Biotech Co. (Secured 7 nucleic acid target themes)

Basic Strategy 3. Improve ability to adapt to social/market changes

Established a Nomination and Remuneration Advisory Committee
Introduced a Performance-linked Stock Compensation Plan
Increased the number of outside directors (one each in June 2019 and June 2021, for a total of four outside directors)
Appointed first female outside director (June 2021)
Established a long-term target for reducing GHG emissions by at least 30% compared to FY2018 by FY2030 and promoted related measures (such as fuel conversion at Onoda Plant)
Conducted and published climate change scenario analysis and announced the support for recommendations of TCFD (Task Force on Climate-related Financial Disclosures)
Established and published a Diversity Statement and Diversity Vision
Established Health Promotion Office and strengthened the promotion of health management

Sustainability

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