Sustainability Initiatives

The Nippon Paint Group will aim to create wealth by addressing social issues with the goal of achieving Maximization of Shareholder Value (MSV).

Materiality

Materiality supporting Asset Assembler model

We will aim for MSV by using sustainability activities centered on initiatives on materiality that support Asset Assembler model.

Nippon Paint Holdings is pursuing MSV as its sole mission and believes, first and foremost, that the fulfillment of obligations to customers, suppliers, employees, society, and others is the major premise for accomplishing this goal. Initiatives for key sustainability issues (materiality), identified in 2020 from a global perspective, require the fulfillment of our obligations and a direct linkage to our businesses, such as identifying new business opportunities and tapping into new markets. Furthermore, these initiatives are also expected to prevent expenses from increasing and reduce business risks by complying with future laws and regulations while responding to supply chain issues ahead of competitors.
Nippon Paint Group continues to use initiatives that are directly linked with business activities and based on a thorough understanding of materiality-related risks and opportunities from a medium- to long-term perspective. In accordance with Asset Assembler model, we are linking these initiatives to the creation of innovations that support the growth of existing businesses. We believe that these initiatives to achieve MSV will result in revenue growth and higher expectations for our value (maximization of EPS/PER).

The materiality identification process

We identified materiality by creating a list of material issues which society requires us to address. This process included international ESG guidelines such as the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB) as well as items required by ESG research organizations. We then performed a quantitative evaluation of the issues and verified their significance from two perspectives: the level of importance to stakeholders and the level of importance to Nippon Paint Group’s businesses. In addition, we used external experts to receive objective viewpoints and held discussions with our partner companies around the world to identify material issues associated with our business model and the business environment. These issues were then designated as our materiality.
For more information about our framework for sustainability initiatives and the identification of KPIs, see “Sustainability Strategy

Sustainability
Materiality (material issues)
Asset Assembler model
Maximization of
Shareholder Value (MSV)

*Further information about ESG Management system is available here.

Preliminary
list
  • We created a long list of 75 items that is our obligation to address based on international ESG standards and guidelines for disclosure and reporting derived from 11 ESG rating agencies and organizations. We then consolidated the list down to a preliminary list of 32 items.
Stakeholder opinions
Internal discussion
Internal
questionnaire
  • The newly-established then ESG Committee met in April 2020 and deliberated on the materiality identification process. Also, we distributed a questionnaire to the 25 committee members and the staff of the then ESG Promotion Department for their input on the items in the preliminary list.
Incorporating
global risks
  • To incorporate global risks, the discussions also included chemical sector risk scenarios based on information in the Vigeo EIRIS Controversy Risk Assessment and other reports. Peer companies in the global chemical sector and forward-thinking Japanese companies were also referred to.
Internal
discussion
  • Based on the weighting of importance for stakeholders and for Nippon Paint Group we identified six groups of items of materiality for business sustainability. During the process, we placed particular importance on discussion and agreement with overseas partner companies.
Internal discussion
Stakeholder
opinion
  • We interviewed various stakeholders and Independent Directors to gather their opinions on the potential items of materiality and created the final proposal through internal discussion.
Stakeholder opinions
Internal discussion
Approval
  • We deliberated on the final proposal at the then ESG Committee meeting in July 2020 and obtained final approval at the Board of Directors meeting in August.
Internal discussion

Materiality map

Materiality map

Relevant SDGs

Materiality Relevant SDGs Explanation of Materiality
Climate Change

Climate Change

The impact of climate change on our daily lives is increasing each year. The Group is doing its part to mitigate the impact of climate change by reducing greenhouse gas emissions while minimizing the business risk posed by the changing climate conditions.
Resources and Environment

Resources and Environment

The sustainability of our business depends on the effective use of water, energy, and other resources and the prevention of environmental pollution. The Group applies measures in these areas throughout its product lifecycles.
Diversity & Inclusion

Diversity & Inclusion

Respecting the people around us and embracing diverse values are essential for sustainable business growth. The Group respects human rights and emphasizes the importance of diversity in its employees and all individuals involved in our business operations.
Safe People and Operations

Safe People and Operations

As a chemicals manufacturer, we are constantly assessing the potentially major risks to health and occupational hazards associated with handling chemical substances. We conduct capital investment and education to ensure the utmost safety and to minimize the risks to our employees and all people involved in our businesses.
Growth with Communities

Growth with Communities

We generate sustaining growth for our business investing in communities through our value chain, expanding our markets, strengthening our brand, and maintaining positive relations with local communities.
Innovation for a Sustainable Future

Innovation for a Sustainable Future

Today’s society is facing a growing number of problems that cannot be fully solved with methods used in the past. We are actively engaging in partnerships to enhance our ability to generate innovative solutions.

Materiality, Risk, Opportunity, and ESG Agenda

Materiality Risks Opportunities ESG Agenda
Climate Change

Climate Change

  • Enforcement/change of policies and legal regulations such as introduction of a carbon tax
  • Impact on production and shipment from extreme weather, such as typhoons and heavy rainfalls, that are becoming increasingly common in recent years
  • Changes in customer behavior toward transition to a decarbonized society
  • Expand the market for environmental products, such as products contributing to decarbonization
  • Develop new businesses through research and development
  • Reduce greenhouse gas emissions
  • Identify risks and opportunities
Resources and Environment

Resources and Environment

  • Impact on business activities from depletion of energy and water resources
  • Tightening regulations on wastes and increase of waste disposal cost
  • Changes in customer needs related to raw materials
  • Expand the market for environmental products
  • Enhance competitiveness by advancing recycling technologies, improving resource efficiency, and utilizing diverse raw materials
  • Efficiently reuse waste and use energy, manage water usage volume and environmental pollutants, engage in product stewardship
Diversity & Inclusion

Diversity & Inclusion

  • Difficulty securing human resources that satisfy diversity requirements with a decrease in the university graduated population
  • Slowing of business activities that reflect diversity in customer needs
  • Secure diverse and competent human resource talent as a global company
  • Create wealth for companies, workers, and local communities by creating diverse and inclusive organizations
  • Increase the percentage of female managers
  • Raise employee engagement
Safe People and Operations

Safe People and Operations

  • Significant impact on operations if a major accident occurs at a production site
  • Impact on safety assurance due to changes in manufacturing processes accompanying substantial increases in production
  • Improve worksite safety and hygiene by sharing best practices and education plans from around the world
  • Improve employee motivation and company competitiveness for acquiring human resource talent
  • Enhance security and disaster prevention (eliminate fire accidents)
  • Prevent occupational accidents and fatal accidents
Growth with Communities

Growth with Communities

  • Significant damage to the corporate brand if the company is not perceived as a corporate citizen by local communities
  • Damage to the public image of the paint industry caused by inadequate activities oriented toward the local community
  • Raise public awareness of the corporate brand through value chain investment in communities
  • Promote healthy community growth through social contribution activities to increase the positive public view of our Group
  • Establish strategies for social contribution
  • Strategically develop activities for social contribution
Innovation for a Sustainable Future

Innovation for a Sustainable Future

  • Significant hindering to future corporate earnings owing to inability to generate innovation due to slow response to new markets
  • Expand market for products that contribute to controlling and adapting to climate change
  • Offer products and services that address social issues, contribute significantly to society, and help boost corporate earnings in the long term
  • Promote collaboration among industries
  • Develop products that provide solutions for social issues

Sustainability Strategy Updates

Released April 7, 2023

Team Materiality Main actions/achievements in FY2022 Targets/actions in FY2023 and onwards
Environment & Safety
  • Climate Change
  • Resources and Environment
  • Safe People and Operations
  • Identify further improvement focus areas for
    • Climate change
    • Resource usage
    • Significant safety risk
  • Agreed standardized metrics and implementation plan
  • Implement and disclose:
    • Scope 3
    • Water usage
    • High potential safety incidents
  • TCFD risk and opportunity assessment and actions
People & Community
  • Diversity & Inclusion
  • Growth with Communities
  • Shared actions to increase the ratio of women in all employees
  • Decide the group’s target to celebrate the diversity
  • Established a global CSR framework as a guiding structure for all partner companies
  • Increase the ratio of women in managerial positions in accordance with targets in each region
  • Develop a long-term community engagement strategy with our global framework and targets
Innovation & Product Stewardship
  • Innovation for a Sustainable Future
  • Stated ESG innovation strategy and roadmap
  • Redefined sustainable products*
  • Developed Green Design Review
  • Established packaging recycled content
  • Use Sustainability Scoreboard in broader partner companies
  • Identify and compile Chemicals of Concern and develop a phase out plan
Governance All Materiality categories
  • Increase diversity in Board of Directors
  • Enhance growth strategy discussions by Directors
  • Established the Nippon Paint Group Global Code of Conduct
  • Modified the Group Risk Management Basic Policy and established Global Basic Policy of Whistleblowing Hotline
  • Enhance growth strategy discussions and implement succession plans
  • Continuously improve group management effectiveness
  • Establish Whistleblowing Hotline and verify its effectiveness
  • Reform governance framework responding to changes in social demand (including in compliance and risk management)
Sustainable Procurement All Materiality categories
  • Established global team
  • Developed Supplier Code of Conduct and supplier questionnaire
  • Organize regional teams
  • Conducted trial supplier survey
  • Conduct supplier survey
  • Define supplier ESG assessment methodology
  • Scope 3 disclosure (raw materials related)
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