Natural Capital and Biodiversity

Policy and Basic Approach
Information Disclosure based on TNFD Proposals
Governance
Strategies
Management of Risks and Impacts
Metrics and Targets
Initiatives

Policy and Basic Approach

Recent years have seen deteriorating ecosystem services due to loss of natural capital and biodiversity recognized, alongside climate change, as a key issue capable of severely impacting business operations. Against this backdrop did the Kunming-Montreal Global Biodiversity Framework, adopted at the 2022 UN Biodiversity Conference (COP15), include a list of international targets aimed at realizing the global vision of a world living in harmony with nature by 2050. Such a concept is endorsed by the Nippon Kayaku Group, which is using the framework provided by the Taskforce on Nature-related Financial Disclosures (TNFD) to identify and evaluate the dependencies and impacts of its business operations upon nature. We are also continuously analyzing and examining the risks and opportunities presented by the above. We will continue to aim for a sustainable society living in harmony with nature through sustainable raw material sourcing, more efficient use of water resources, and reduced consumption of chemical substances, thereby feeding in to natural capital conservation and improved resilience.

Information Disclosure based on TNFD Proposals

Governance

Regarding the environmental aspect of its key sustainability issues, the Nippon Kayaku Group positions the conservation of natural capital, in addition to climate change response, as a material issue. These issues are managed under the same governance, promotion, and monitoring framework as climate change response.
Our natural capital initiatives are discussed, and their status summarized and evaluated, during the business plan review conducted by our Sustainable Management Meeting, which is chaired by our President. The results of such reviews are then relayed to the Board of Directors, which performs a supervisory role. Yet deeper discussions on natural capital and biodiversity issues are held from a cross-cutting groupwide perspective by the Environment, Safety, Quality Management Committee, chaired by our Managing Director in charge of Technology and serving as an advisory body to the Sustainable Management Meeting.
When advancing natural capital initiatives, we place importance on links with stakeholders and showing consideration for the local communities in which our business sites are based. We are also, under the Nippon Kayaku Group Human Rights Policy and Policy on Responsible Mineral Procurement, conducting human rights assessments and Sustainable Procurement Surveys on our suppliers in order to reduce risks connected with environmental harm and human rights violations.
Step-by-step are we advancing our human rights system for all regional stakeholders involved in our business, including indigenous peoples, and looking to expand the scope of our human rights due diligence going forward.
For details on our human rights due diligence, please see here. For details on Sustainable Procurement, please see here.

Strategies

In expanding several businesses onto a global scale, the Nippon Kayaku Group feels it essential to ascertain and evaluate the nature-related risks and opportunities facing each business unit. As such, we have utilized the LEAP approach recommended in the TNFD framework to implement our risk and opportunity assessments for natural capital and biodiversity. We have now completed such assessments for all our principal businesses via analysis of our three business units: Mobility & Imaging, Fine Chemicals and Life Science. Our analysis has covered both plants housing direct manufacturing operations and the sites of our main primary suppliers, thereby enabling us to identify risks and opportunities across the entire business process.

Schematic Diagram of the Main Value Chain

Analysis Flow based on the LEAP Approach

Locate: Identification of Regions Requiring Attention

As our relationship with nature means that we greatly depend on the environments around our business bases, we studied these environments from three standpoints: “Key Biodiversity Areas,” “Highly-Sufficient Ecosystem Areas” and “High Water-Risk Areas.” Our research incorporates internationally popular tools such as the Integrated Biodiversity Assessment Tool (IBAT), Global Forest Watch, the GLOBIO Model, and Aqueduct.

List of Regions Posing Risks to Directly-operated Business Bases

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Related Units	Business Base Name	Important regions for biological diversity	Regions with high ecosystem sufficiency	Regions with high physical risks
Mobility & Imaging Business Unit	Nippon Kayaku Co., Ltd. Safety Head Plant	Located in a Designated Conservation Area in which biological diversity takes on high importance	-	-
	Kayaku Safety Systems Europe a.s. (KSE)	-	-	-
	Kayaku Safety Systems (Huzhou) Co., Ltd. (KSH)	-	-	Located in a high water stress region
	Kayaku Safety Systems de Mexico, S.A. de C.V. (KSM)	-	-	Located in a high water stress region
	MOXTEK, INC.	-	-	Located in a high water stress region
	WUXI POLATECHNO OPTICS CO.,LTD. (WPLC)	-	-	Located in a high flood-risk region
	RaySpec Ltd.	-	-	Located in a high water stress region
Fine Chemicals Business Unit	Nippon Kayaku Co., Ltd. Asa Plant	-	-	Located in a high flood-risk region
	Nippon Kayaku Co., Ltd. Tokyo Plant	-	-	Located in a high flood-risk region
	KAYAKU CHEMICAL (WUXI) CO.,LTD. (KCW)	-	-	Located in a high flood-risk region
	WUXI ADVANCED KAYAKU CHEMICAL CO., LTD. (WAC)	-	-	Located in a high flood-risk region
Life Science Business Unit	Nippon Kayaku Co., Ltd. Takasaki Plant	Located in a Designated Conservation Area in which biological diversity takes on high importance	-	-
Life Science Business Unit	NIPPON KAYAKU FOOD TECHNO CO.,LTD.	Located in a Designated Conservation Area in which biological diversity takes on high importance	-	-

Our research has revealed that some of our business sites are indeed located in conservation areas, including Key Biodiversity Areas, water stress areas, and flood hazard areas. While establishing a base of thorough compliance with legal standards at every business site, we also recognize the importance of boosting risk management and monitoring activities for the environment and ecosystems surrounding sites in Key Biodiversity Areas. We are also enhancing water resource management at sites in water stress regions, even though their water use is already minimal, and working towards enhanced measures for sites in flood hazard areas based on TCFD scenario analysis. We have also conducted a similar analysis of our 20 biggest suppliers by volume for the Safety Systems and Polatechno groups in our Mobility & Imaging Business Unit, our Fine Chemicals Business Unit, and the Agrochemicals and Pharmaceuticals groups in our Life Science Business Unit. Our audits have enabled us to press for improvements from suppliers in high-climate-risk regions, and promote natural environment considerations across the entire supply chain.

Evaluate: Identification and Assessment of Dependencies and Impacts

For our assessment of how our Group’s business activities depend and impact upon natural capital, we made use of ENCORE to construct a heat map of every step of the manufacturing process from the upstream stage. The analysis results can be found in the table below.

Direct Operations

Results of the ENCORE Dependency Item Assessment（Direct Operations）

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Activity				Dependencies
Activity				Service supplied		Adjustment and maintenance services
Value chain	Business		Business Activity	Genetic resources	Water supply	Climate matters for the region as a whole	Rain pattern adjustments	Regional climate matters	Air purification	Soil and sediment preservation	Purification treatment for solid waste	Water purification	Water current adjustments	Flood controls	Storm relief	Noise Reduction	Others (Natural excesses)	Mitigation of Sensory Impacts (e.g., Light Pollution)
Direct Operations	Mobility & Imaging Business Unit	Safety Systems Business	Automobile parts manufacturing	-	L	VL	VL	L	VL	M	L	M	M	M	M	VL	L	VL
	Mobility & Imaging Business Unit	Polatechno Business	Manufacture of Optical and Precision Analytical Instruments	-	M	VL	VL	L	VL	L	L	M	M	M	M	VL	L	VL
	Fine Chemicals Business Unit	Functional Materials Business	Chemical manufacturing	-	M	VL	VL	L	VL	M	M	M	M	M	M	VL	L	VL
		Color Materials Business
		Catalysts Business
	Life Science Business Unit	Pharmaceuticals Business	Pharmaceutical and Medical Device Manufacturing	H	H	VL	-	L	VL	M	M	VH	H	M	M	VL	L	VL
	Life Science Business Unit	Agrochemicals Business	Agrochemical Manufacturing	-	H	VL	M	L	VL	M	M	M	H	M	M	VL	L	VL

Results for the ENCORE Impact Item Assessment（Direct Operations）

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Activity				Impacts
Activity				Inputs		Outputs
Value Chain	Business		Business Activity	Land use	Water use	GHG emissions	Air pollutant emissions	Soil and water pollutant emissions	Nutrient Emissions to Soil and Water	Solid waste	Interference (noise pollution, light etc.)
Direct Operations	Mobility & Imaging Business Unit	Safety Systems Business	Automobile parts manufacturing	L	L	VL	L	M	-	L	M
	Mobility & Imaging Business Unit	Polatechno Business	Manufacture of Optical and Precision Analytical Instruments	L	M	M	H	VH	-	M	M
	Fine Chemicals Business Unit	Functional Materials Business	Chemical manufacturing	L	M	M	M	VH	-	M	VH
		Color Materials Business
		Catalysts Business
	Life Science Business Unit	Agrochemicals Business	Agrochemical Manufacturing	L	M	M	M	VH	VH	M	VH
	Life Science Business Unit	Pharmaceuticals Business	Pharmaceutical and Medical Device Manufacturing	L	M	M	M	VH	M	M	VH

Our assessment results have reconfirmed the essentiality of water use to operations in all three business units, and our dependency on natural environment water supplies for securing core-operation water resources. Further environmental impacts were confirmed to a certain extent in the form of GHG emissions, environmental pollution (air, water and soil), solid waste emissions, and interference (noise, light pollution etc.). Our findings also indicate that reducing these impacts enables the natural environment’s waste assimilation, water purification functions and buffering capacity to support our operations to a certain extent. We were also able to confirm a certain level of dependency on the base maintenance functions (soil and sediment preservation, water current control, flood control, storm mitigation) of the natural environments surrounding manufacturing sites, and how such functions help reduce the risk of natural disasters at these sites. We are also implementing a companywide system of measures and monitoring procedures to ensure that impacts and outputs of every business operation are not only quantitatively grasped but falling within the regulatory limits set by each region.

Upstream Value Chain

Results of the ENCORE Dependencies Item Assessment（Upstream）

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Activity			Dependencies
Activity			Service supplied		Adjustment and maintenance services
Value Chain	Business Activity		Biological resource supply	Water supply	Climate matters for the region as a whole	Rain pattern adjustments	Regional climate matters	Air purification	Soil quality management	Soil and sediment preservation	Purification treatment for solid waste	Water purification	Water current adjustments	Flood controls	Storm relief	Noise reduction	Biological pest control	Others (Natural excesses)	Mitigation of Sensory Impacts (e.g., Light Pollution)
Upstream	Crude Oil and Natural Gas Resources	Crude Oil and Natural Gas Extraction	-	M	H	-	L	VL	-	L	L	VL	M	H	L	VL	-	M	L
		Refined Petroleum Products Manufacturing	-	L	VL	-	L	VL	-	M	L	H	M	M	M	VL	-	L	-
		Plastic Products Manufacturing	-	L	VL	VL	L	VL	-	L	L	M	M	M	M	VL	-	L	VL
	Mineral Resources	Ferrous and Non-Ferrous Metal Mining	VL	H	H	VH	L	VL	-	M	L	VH	H	H	M	VL	-	M	L
		Primary Iron and Steel, Precious Metals, and Non-Ferrous Metals Manufacturing	-	H	VL	M	L	M	-	L	L	M	H	M	M	VL	-	-	VL
		Other Fabricated Metal Products Manufacturing and Metal Processing Services	-	M	VL	-	L	-	-	L	M	M	M	M	M	VL	-	L	VL
	Timber Resources	Logging	VH	M	-	-	-	H	H	VH	M	-	M	M	L	VL	H	-	VL
	Timber Resources	Paper and Paper Products Manufacturing	-	M	VL	M	L	VL	-	L	M	-	M	M	M	VL	VL	L	-

Results for the ENCORE Impact Item Assessment（Upstream）

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Activity			Impacts
Activity			Inputs						Outputs
Value Chain	Business Activity		Land use	Freshwater area used	Seabed area used	Water use	Biological resource use	Abiotic resource use	GHG emissions	Air pollutant emissions	Soil and water pollutant emissions	Nutrient Emissions to Soil and Water	Solid waste	Interference (noise pollution, light etc.)	Introduction of Invasive Species
Upstream	Crude Oil and Natural Gas Resources	Crude Oil and Natural Gas Extraction	L	VH	VH	M	-	-	H	H	VH	-	M	VH	L
		Refined Petroleum Products Manufacturing	L	-	-	L	-	-	M	H	VH	-	M	VH	-
		Plastic Products Manufacturing	L	-	-	L	-	-	M	M	VH	-	M	M	-
	Mineral Resources	Ferrous and Non-Ferrous Metal Mining	M	VH	VH	M	-	H	M	H	VH	-	VH	VH	L
		Primary Iron and Steel, Precious Metals, and Non-Ferrous Metals Manufacturing	L	-	-	M	-	-	H	H	VH	M	M	VH	-
		Other Fabricated Metal Products Manufacturing and Metal Processing Services	L	-	-	M	-	-	L	L	VH	-	L	M	-
	Timber Resources	Logging	VH	M	-	M	VH	-	M	VH	M	-	L	H	M
	Timber Resources	Paper and Paper Products Manufacturing	L	-	-	M	-	-	M	H	M	-	H	M	-

For the upstream process spanning raw material procurement to processing, we have confirmed the distinctive dependency-impact relationships for each individual material we handle (crude oil and natural gas, minerals, and wood). Throughout our analysis of the initial upstream phases of mining, drilling and lumbering, we found trends of deep dependency on natural environment aspects such as a stable climate and abundant water resources, and significant land use impacts on ecosystems and the natural environment. Moving from there to the manufacturing phase of refining and manufacturing, we found process trends common to all resources in the form of rising environmental impacts stemming from air, soil, water, noise and light pollution.

Assessment: Identification and Evaluation of Risks and Opportunities

When examining nature-related risks and opportunities, in addition to the Regions Requiring Attention and dependency-impact relationships analyzed in the Locate and Evaluate phases, we considered the environmental data for each operation site and identified the following five areas as particularly critical dependency-impact items for Nippon Kayaku Group business operations.

Identified Material Topics	1. Water Resources (Withdrawal)
	2. Environmental Pollution (Air, Water, and Soil)
	3. Resource Circularity & Waste
	4. Local Environmental Disturbance (e.g., Noise and Light Pollution)
	5. Natural Physical Regulation Functions (e.g., Disaster Risk Reduction)

Using these priority areas as our starting point, we identified and evaluated the risks and opportunities brought by nature to our business, as well as the impacts of our business upon nature.

Nature-related Risk Inventory

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Category	Related Priority Area	Key Risks in Business Activities	Impact on Nature	Risk Time Horizon	Relevance			Key Mitigation Measures
Category	Related Priority Area	Key Risks in Business Activities	Impact on Nature	Risk Time Horizon	Mobility & Imaging Business Unit	Fine Chemicals Business Unit	Life Science Business Unit	Key Mitigation Measures
Policy and Legal	2. Environmental Pollution	Increased costs of responding to strengthened emissions regulations for air, water and soil pollutant, and operational restrictions	Improved local environments through strengthened emissions regulations on air, water and soil pollutants	Medium to long-term	Medium	Medium	Medium	・Emissions status for every pollutant measured and disclosed ・Combustion facilities renewed at high VOC-producing plants; emissions reductions confirmed ・Waste water treatment equipment renewed ・Zero emissions into soil of PRTR listed substances
	2. Environmental Pollution	Tightened regulations for agrochemicals used by our customers lead to restrictions on ingredients and uses, resulting in the added costs of reassessing product designs and introducing alternative technologies		Medium to long-term	-	-	Medium	・Residual and biodegradability impacts are analyzed, and the relevant certifications are gained, at the sales stage ・Appropriate use briefings are provided to customers
	3. Resource Circularity & Waste	Increased costs of responding to strengthened regulations on waste emissions	Fewer hazardous substances emitted through reduction of waste	Medium to long-term	Medium	Medium	Medium	・Tracking implemented in pursuit of newly-fixed 1% or less zero-emissions targets ・Waste volume measurements per-sales-unit completed for high-waste-producing business sites
	4. Local Environmental Disturbance	Tightened regulations for noise, light and odor pollution, and agreements with local regions, lead to restrictions on operating hours and conditions, lowering efficiency and increasing adaptation costs	Reduced disturbance (noise and light pollution) of the surrounding environment	Medium to long-term	Low	Medium	Low	・Appropriate exhaust equipment is selected from a flowchart ・Heat treatment of VOC emissions
Market	1. Water Resources 2. Environmental Pollution 3. Resource Circularity & Waste	Raw material price increases due to demand concentrating around low environmental impact materials	Loss of existing ecosystems due to excessive harvesting of biomass resources and human-driven land conversion	Medium to long-term	High	High	High	・Engaging our suppliers with the aim of promoting sustainable procurement
Reputation and Liability	1. Water Resources 2. Environmental Pollution 3. Resource Circularity & Waste 4. Local Environmental Disturbance	Non-environmentally-friendly operations, including in raw material procurement, lead to worsening evaluations and reputational damage, causing customers to remove us from lists of suppliers and perhaps triggering litigation from local authorities	An improved environment through heightened importance of environmental considerations	Medium to long-term	Low	Low	Medium	・Zero use of restricted chemical substances inside Japan and in certain overseas countries ・Taking steps to ensure zero procurement of raw materials containing chemical substances appearing in a survey based on Green Procurement Regulations
Acute Physical Risks	5. Natural Physical Regulation Functions	Suspended operations and repair costs incurred at certain business sites due to flooding of nearby rivers and landslides caused by typhoons and heavy rain etc.	Disruption of ecosystems in surrounding regions, including rivers; soil deterioration	Short to long-term	Low	Medium	Low	・Quantification of financial impacts, and firming up of flood measures based on flood simulation results
Chronic Physical Risks	1. Water Resources	Operational restrictions or suspensions due to water shortages	Declining river flows and groundwater availability may disrupt riverine and surrounding ecosystems, resulting in biodiversity loss	Medium to long-term	Medium	Medium	Medium	・Strengthening of water-saving measures during the production process; examination of water reuse and recycling methods ・Water intake efficiency with respect to sales ascertained through water intake measurements ・Measures to reduce water use and introduce water storage tanks at water-stress-risk business bases have commenced

Nature-related Opportunity Inventory

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Category	Related Priority Area	Key Opportunities in Business Activities	Impact on Nature	Opportunity Time Horizon	Relevance			Key Mitigation Measures
Category	Related Priority Area	Key Opportunities in Business Activities	Impact on Nature	Opportunity Time Horizon	Mobility & Imaging Business Unit	Fine Chemicals Business Unit	Life Science Business Unit	Key Mitigation Measures
Resource efficiency	1. Water Resources	Production cost savings due to more efficient use of water resources	Water resources in rivers and groundwater will be conserved, helping preserve riverine and surrounding ecosystems.	Short to long-term	Low	Medium	Low	・Water use reduction measures implemented at every plant ・Specific targets under examination
Resource efficiency	3. Resource Circularity & Waste	Cost savings due to waste recycling and reuse	Avoidance of hazardous substance emissions through sustainable resource use and waste management	Short to long-term	Low	Low	Low	・Measures for recovery of heavily-used solvents generally implemented ・Investigating and exploring the merits of other solvent recoveries
Products, services and market	1. Water Resources 2. Environmental Pollution 3.Resource Circularity & Waste	Growing demand for products that contribute to reducing environmental impacts throughout their lifecycle, including manufacturing, use, and end-of-life stages	Improved environment due to reduced environmental impacts	Medium to long-term	High	High	Medium	・Looking at switching over from petroleum-derived to biomass-derived organic materials ・Aiming for development of lighter products which use fewer resources and reduce environmental impacts at the point of use
Products, services and market	2. Environmental Pollution	Tightened agrochemical regulations and growing concerns about biodiversity conservation are increasing demand for low-toxicity agrochemicals and creating new business opportunities for environmentally friendly products.	The introduction of low-toxicity agrochemicals and alternative pest control techniques reduces impacts on ecosystems and water quality	Medium to long-term	-	-	Medium	・Development of agrochemicals with extremely low impact on pollinators leads to expanded sales opportunities
Reputation	All of 1-5	Increased corporate value from improved ESG evaluations and reputation due to natural conservation activities during the conduct of business	Improved environment due to promotion of eco-friendly activities	Medium to long-term	Medium	Medium	Medium	・Proactive disclosure of environmental information ・Examination of environmentally-related goals

Scenario Analysis

Identified risks and opportunities were considered in terms of the uncertainties and severities outlined in future scenarios based on TNFD guidance. Our analysis was fixed around two axes for Service Deterioration (Physical Risks) and Market and Non-market Adjustability (Transition Risks), and four scenarios.

Scenario Images

Based on these four scenarios, each business site’s interactions with nature and environmental data,
and the policy directions of regions and national governments, the strategies demanded of the Nippon Kayaku Group can be organized as follows.

Scenario Ⅰ

Rapid responses to environmental regulations (via product development and process improvement) and promotion of a Nature Positive approach necessitates appropriate information disclosures. Although physical risks are limited, reducing environmental impacts continues to be important for preserving our reputation.

Scenario Ⅱ

Previous water intake restrictions lead to prioritizing of drought measures and more efficient use of water resources. Tougher monitoring of environmental deterioration necessitates appropriate information disclosures to ensure transparency over external impacts.

Scenario Ⅲ

Improved resilience in the face of physical risks, such as preparations for drought and more intense meteorological disasters (e.g. flooding), becomes paramount. Vis-a-vis a market which prioritizes short-term profit, we emphasize how such risk measures help stabilize business operations and reduce costs, and aim to create value through balancing risk measures with profit aspirations.

Scenario Ⅳ

Assuming that long-term trajectory leads to Scenario 2 or 3, long-term preparations take on added importance. Rapidly responding to heightened concerns over physical risks and environmental conservation requires the collation and disclosure of nature-related information, and advances in environmentally-friendly product development.

Material Regions

Based on the above scenario analysis, the Nippon Kayaku Group is identifying its high-priority nature-related risks and opportunities by breaking down its analysis into five priority areas (water resources, environmental pollution, resource circularity, local environment disturbance, and natural physical regulation functions) and conducting multi-faceted risk evaluations in the following double-axis, five-phase format.

・Severity: Index-based evaluation of compliance and data obtention conditions, and the extent to which we are meeting the highest global standards for environmental management

・Likelihood: Standards-based evaluation of risks assessed with external tools, past responses to risks actually faced, natural capital quantities used and levels of dependency

Through combining the results of likelihood and severity evaluations, we have systematically arranged the potential levels of risk faced by each business site. Sites assessed as having a generally high exposure to risk have had their names and key fields placed in our Nippon Kayaku Group List of Material Regions, comprised as follows:

Material Regions for Directly-operated Business Bases

Related Business	Business Base Name	Material Area
Fine Chemicals Business Unit	Nippon Kayaku Fukuyama Plant	Water Resources
Fine Chemicals Business Unit	WUXI ADVANCED KAYAKU CHEMICAL CO., LTD.（WAC）	Water Resources

For each identified Material Region, we will henceforth promote environmentally-friendly initiatives and fix specific targets according to each area’s risk characteristics (e.g. management situations for water stress, pollutants, and noise pollution).
（For the Nippon Kayaku Group’s current initiatives on water resource use, please see here）.

Upcoming Analysis

We will now advance our examination of companywide evaluation results and promote relevant responses. Concurrently, we will look to commence investigation and analysis of mining and drilling sites in the upstream value chain (raw materials and procurement phases), for which no detailed analysis currently exists. In future, we will seek to apply more pressure on suppliers in these matters as we aim to build a due diligence system that covers the entire supply chain.

Management of Risks and Impacts

The Nippon Kayaku Group has identified “Climate Change Response” and “Natural Capital Conservation” as key material issues and is actively working on these themes as integral components of its companywide Responsible Care activities.
(For more on how we identified our Key Sustainability Issues, please see here).
Our Responsible Care and Technology Division takes the lead in identifying and evaluating our dependencies and effects on natural capital, as well as nature-related risks and opportunities. It conducts investigations and analyses based on the TNFD-recommended LEAP approach, and uses the results to determine our Group’s key priority issues. Priority issues are selected via the evaluation process stated above in the Identification of Material Regions strategy item.
The issues are organized along the lines of the LEAP approach and assessed against two criteria: seriousness and frequency. “Seriousness” is evaluated from the size of the figures in the relevant indexes for business sites facing the risks in question, “frequency” is evaluated from the number of bases related to each particular business, and the issues receiving the highest overall scores are selected for prioritization.

Selected issues are then reported to our Environment, Safety, Quality Management Committee which coordinates our responsible care activities. Such reports consist of current policy and status updates, issues, problematic points and response status updates, and form the basis for examination of policy drafts for the next financial year. Our Sustainable Management Meeting then discusses that financial year’s policy further before making its final decision.
Based on the new fixed policy for the financial year, each business site and group company rolls out its responsible care activities which include natural-capital related initiatives, the status of which is confirmed and audited through periodical Central Environment, Safety and Health Inspections.
（For further information on our Responsible Care Policy and key issues, relevant systems and audits, please see here）.

Metrics and Targets

The Nippon Kayaku Group has designated Climate Change Response and Natural Capital Conservation as Materiality issues, and is currently setting relevant targets.

Environmental Management Targets and Results

FY2025 Sustainability Targets and Results

Among the indexes either recommended or requested for disclosure within the TNFD guidance, those most closely related to our initiatives are disclosed in our ESG aggregate data.
（Please see here for the ESG aggregate data.）

Moving forward, we will press on with the releases of indexes not yet disclosed and, based on the results of such analyses as the LEAP approach, plan to determine targets centered upon the water-resource-related indexes deemed most important.
In such a way shall we strive to improve transparency around the environmental impacts of business activities, and aim to continuously reduce environmental impact on a groupwide scale.

Initiatives

Water-related Initiatives

Preventing Pollution

Water Resource Conservation

Business Site Initiatives

Takasaki Plant
Plant operations in harmony with the natural environment

Following the disposal of the former Tokyo 2nd Army Arsenal Gunpowder Manufacturing Plant into company hands, the site of the current Takasaki Plant restarted operations in April 1946 as a manufacturer of black gunpowder, before subsequently switching to medical manufacturing operations in August 1971. From the off, the plant aimed for “coexistence with nature”, and ultimately secured ISO14001 certification in January 2001.

Surrounded by the natural environments of Gunma Prefectural Park Gunma-no-Mori and the Karasu River, the plant’s slogan reads: “The Takasaki Plant: Continuing to Protect Life and the Environment.” Based on this has the plant fixed its environment policy as: “Each and every person here shall be sufficiently conscious of working in an industry connected to human life, and, based on such consciousness, work towards promoting environmental conservation and plant harmony with the abundant natural environment.”

The plant occupies a vast site of some 560,000m², with the 110,000m² of green land reported under the Factory Location Act remaining virtually in a state of natural vegetation, meaning its original ecosystem remains intact amid this natural cluster of trees within the Takasaki urban landscape. The site’s eastern, southern and northern sides are enclosed by three rivers within the Tonegawa river system: the Class A Karasu River; the Ino River, a tributary; and the Class A Kasu River within the Hirose River tributary. The northern side also abuts Gunma Prefectural Park: Gunma no Mori, which is home to deer, racoon dogs and kingfishers. We will continue to protect this abundant natural environment and ecosystem.

In addition to the Green Zone, our on-premises environmental facilities include a creek. This is part of the facility which used hydropower to drive manufacturing equipment in the days when the site served as a gunpowder factory. The vertical axis water turbine used at the time has also been carefully stored and preserved. The creek temporarily pools the water subjected to activated sludge processing by the onsite wastewater treatment facility. Only after confirming that creek water quality complies with water management standards do we release it into the river, thereby taking every precaution to prevent environmental pollution. Located far away from residential areas within a natural cluster of trees, and close to various rivers, the creek represents a safe place for animals to come, and serves as an annual oasis for migratory birds seeking food from the forests and rivers. Observing the arrival or migratory birds and their northward departures makes for an interesting seasonal employee event.

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Natural Capital and Biodiversity

Policy and Basic Approach

Information Disclosure based on TNFD Proposals

Governance

Strategies

Schematic Diagram of the Main Value Chain

Analysis Flow based on the LEAP Approach

Locate: Identification of Regions Requiring Attention

List of Regions Posing Risks to Directly-operated Business Bases

Evaluate: Identification and Assessment of Dependencies and Impacts

Direct Operations

Results of the ENCORE Dependency Item Assessment（Direct Operations）

Results for the ENCORE Impact Item Assessment（Direct Operations）

Upstream Value Chain

Results of the ENCORE Dependencies Item Assessment（Upstream）

Results for the ENCORE Impact Item Assessment（Upstream）

Assessment: Identification and Evaluation of Risks and Opportunities

Nature-related Risk Inventory

Nature-related Opportunity Inventory

Scenario Analysis

Scenario Images

Scenario Ⅰ

Scenario Ⅱ

Scenario Ⅲ

Scenario Ⅳ

Material Regions

Material Regions for Directly-operated Business Bases

Upcoming Analysis

Management of Risks and Impacts

Metrics and Targets

Initiatives

Water-related Initiatives

Business Site Initiatives

Takasaki PlantPlant operations in harmony with the natural environment

Takasaki Plant
Plant operations in harmony with the natural environment