Climate change
Climate change is impacting our business, people, and communities. We will work to reduce our greenhouse gas emissions, manage climate-related risks, and capture climate-related opportunities

• Regulatory changes and impacts, such as carbon pricing and greenhouse gas emission reduction targets
• Increased extreme weather events (e.g. flooding) and climate impacts (e.g. water stress) impacting operations and supply chain
• Increased supplier costs from climate adaptation and decarbonization actions
• Changes in customer and consumer expectations and behavior during the transition to a low-carbon future
• Product claims and brand damage due to performance deterioration (e.g. temperature extremes)

• Market growth for sustainable products (e.g. low-carbon, improved performance in temperature extremes)
• Development of new products and services to capture climate-related business opportunities

Resources and environment
Our business and communities depend on the sustainable consumption of natural resources and protection of the environment and biodiversity. We will work to improve the life cycle and circularity impacts of our products and supply chain

• Regulatory changes and impacts, such as waste disposal restrictions and increased costs
• Supply constraints and increased costs associated with resource scarcity
• Major site incident or contamination (e.g. soil/ groundwater) causing harm to people and community
• Changes in customer and consumer expectations and behavior during the transition to a circular economy future

• Market growth for sustainable products (e.g. renewable content, post-consumer waste recovery)
• Enhanced competitiveness throughdevelopment and use of recycling technologies, resource efficiencies, and circular raw materials

Safe people and operations
There are significant safety and health risks in our business that could impact our people, supply chain, and communities. We will work to manage these risks effectively and prevent harm, with a priority focus on high-consequence risks

• Major site incident (e.g. fire) causing asset damage, supply chain disruption, and significant harm to people and community
• Loss of safety management effectiveness from introduction of significant changes (e.g. new or modified plant/process)

• Minimizing risks through adoption and sharing of global best practice, particularly for high-consequence risks
• Enhancing brand reputation, employee engagement, and attracting talent as a safe employer

Diversity & Inclusion
Respect for the people around us, respect for human rights and active acceptance of diverse values are important for our sustainable growth. We value diversity of ideas and thinking to foster innovation and growth

• To improve employee engagement and create continuous innovation, fostering a diverse and inclusive work environment is essential to increase human resources with diverse backgrounds. Failure to do so risks hindrance of the growth strategy
• We may face perception risk if diversity initiatives are not properly positioned. Globally, many companies have come under scrutiny for implementing programs or campaigns that are either superficial to appear ‘in tune’ with popular trends and current topics, or are not well-received by their employees due to unintentionally excluding some groups in order to highlight others

• Securing diverse and competent human resource talent as a global company
• Creating wealth for companies, workers, and local communities by creating diverse and inclusive organizations

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

• Significant damage to the corporate brand if the company is not perceived as a good corporate citizen that is connected to and invests in local communities
• Damage to the public image of the paint industry caused by inadequate activities oriented toward the local community

• Improving public awareness of the corporate brand through value chain investment in communities
• Promoting the sound growth of communities through social contribution activities to increase the positive public view of our Group

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

• Significant hindrance to future corporate earnings owing to inability to generate innovation due to slow response to new markets

• Expansion of market for products that contribute to controlling and adapting to climate change
• Products and services that address social issues contribute significantly to society and help boost corporate earnings in the long term

All Materiality categories*

• If our autonomous and decentralized internal control system aligned with our Asset Assembler model does not work effectively, this will create a risk of damage to our Group

• Social requirements regarding corporate governance are becoming increasingly demanding, which provides an opportunity for our Group to increase our significance of existence and strengthen competitiveness by addressing future issues and fulfilling social requirements ahead of time

All Materiality categories*

• The risk of raw materials not meeting sustainable criteria now adds to the Iong list of possible disruption to the raw material supply chain. We will continue to be vigilant and proactive to identify potential risk
• The failure to ensure responsible sourcing (e.g. conflict minerals and chemicals of concern) will affect company reputation and may lead to legal implications

• Our sustainability survey of suppliers allows us the opportunity to identify potential risk in advance. We will work with suppliers who are aligned with our sustainable aspiration towards a more resilient supply chain and to develop sustainable products

• 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

• 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 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

• 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)

• 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)