Following the expansion of its overseas businesses, NPHD reviewed its materiality based on the policy of placing the perspective of SDGs and ESG at the core of management.

Materiality identification process

In identifying materiality, we created a list of crucial issues which society requires us to address by referencing international guidelines such as GRI and SASB, as well as items required by ESG research organizations, and performed quantitative evaluation of these issues and verified their importance from the two aspects of “degree of importance to stakeholders” and “degree of importance to businesses.”
We incorporated an objective viewpoint through dialogue with external experts and held discussions with our partner companies in Japan and abroad to extract crucial issues based on our business model and business environment. We subsequently reviewed these crucial issues, mainly by the management team, and identified the materialities of the Company. Based on these materialities, we will work on resolving social issues by leveraging the Group’s strengths and proactively cooperating with external parties. We will contribute to the achievement of the Sustainable Development Goals (SDGs), which were set and adopted by the United Nations in 2015. We will also set KPIs for each identified materiality and manage and oversee the progress of materiality initiatives at Board of Directors meetings.

Materiality identification process

Preparing a middle list	We created a long list by extracting 75 items which the Company is required to address based on 11 global standards, including the ESG disclosure guidelines, evaluation by ESG evaluation organizations, and the Code of Conduct, and integrated it into middle list of 32 items.	Stakeholders’ opinions
Internal questionnaire	We held a meeting of the newly-established ESG Committee in April 2020 and deliberated on the materiality identification process. Also, we conducted a questionnaire of 25 committee members and staff of the ESG Promotion Department, and compiled their opinions on the 32-item middle list.	Internal discussion
Reflecting global risks	In order to reflect risks that are occurring globally, we reflected the risk scenario in the chemical sector in our discussions by referring to items such as the controversy report by Vigeo EIRIS. We referenced companies in the global chemical sector and forward-thinking Japanese companies in general as peer companies.	Internal discussion
Internal discussion	Based on the required items from stakeholders and the degree of importance recognized in the Company, we identified a group of six potential materialities from the perspective of business sustainability. In the materiality identification process, we placed particular importance on discussion and agreement with overseas partner companies.	Internal discussion
Opinions of stakeholders	We interviewed various stakeholders and outside directors to gather their opinions on the potential materialities, and created the final proposal through internal discussion.	Stakeholders’ opinions
Approval	We deliberated on the final proposal at the ESG Committee meeting in July 2020 and obtained final approval at the Board of Directors meeting in August.	Internal discussion

Materiality map

Reasons for identification as materiality and relevant SDGs

Climate change		Climate change is beginning to have a serious impact on our lives every year. To mitigate the impact of climate change, we will work to reduce greenhouse gas (GHG) emissions and minimize business risks caused by climate change.
Resources and environment		Effective use of resources such as water, energy, and raw materials, and prevention of environmental pollution are important matters for sustainable business. We will advance these efforts throughout life cycle of products.
Diversity & Inclusion		Respect for the people around us and active acceptance of diverse values are important for our sustainable growth. We place great importance on the diversity of employees and other people involved in the business and respect human rights.
Safe people and operations		As a chemical manufacturer, we still believe that accidents and health damage caused by handling chemical substances are major risks. We will ensure the safety of employees and everyone involved in our business, and will make investments and education to minimize risks.
Growth with communities		We will invest in communities through our value chain and to achieve sustainable business growth based on market growth, brand strengthening and good relationships with local communities.
Innovation for a sustainable future		In today’s society, problems that are difficult to solve with past methods are becoming more and more apparent. We will strengthen our innovation output with active utilization of partnerships.