Sustainability Management (Materiality and SDGs)
System of Sustainability Management
Our group has identified 15 material topics that are material to sustainability management and divided them into four pillars: "Fostering trust with stakeholders," "Solving social and customer issues through products," "Minimizing environmental load," and "Respecting human resources and their active participation."
Materiality related initiatives are pursued by defining the ideal state and KPIs. Material issues are discussed individually at weekly Corporate Strategy Committee meetings as required, deliberated by Sustainability Promotion Committee, and particularly important issues are discussed by the Board of Directors.Progress is reported in our annual Sustainability Data Book and on our website. Among the material topics, the most important is "mitigation of and adaptation to climate change," and the entire Group is addressing this with the long-term goals of PACIFIC Environmental Challenge 2050. Regarding one of the themes covering four material topics, "respecting human resources and their active participation," five material topics are all related to our human resources strategy, which is linked to our PURPOSE, and our human resources strategy is developed through discussions that include board members.
Materiality and SDGs
Materiality about Sustainability
To realize the Pacific Industrial Group's values and vision as a company and achieve the SDGs (Sustainable Development Goals), we identified key issues (material topics) related to sustainability in 2020 with a target year of 2030, specifying four pillar themes, 15 material topics, and SDG themes to focus on.
In 2025, we revised these material topics in response to environmental changes and growing global demand for sustainability disclosure standards. By continuing to integrate business activities based on these material topics and apply them to specific actions, we will hone our competitiveness over the medium to long term, work to achieve the SDGs company-wide, and enhance our "existence value" into the future.
1. Fostering trust with stakeholders
- Corporate ethics and compliance
- Responsible procurement
- Improvement in customer satisfaction
- Local community development
- Particularly relevant SDGs
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2. Solving social issues through business
- Contribution to a sustainable mobility society and prosperous living
- Improving mobility safety
- Development of environment-conscious products
- Particularly relevant SDGs
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3. Achieving a society in harmony with nature
- Mitigation of and adaptation to climate change
- Sustainable resources use
- Conservation of water and nature
- Particularly relevant SDGs
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4. Human resource advancement and respect for human rights
- Employee engagement
- Creation of a secure and vibrant work environment
- The safety and health of employees
- Development of human resources and cultivation of culture that we can tackle new endeavors
- Diversity and inclusion
- Particularly relevant SDGs
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In the first revision in five years, project teams in Corporate Planning, Environment, Human Resources, General Affairs, and Procurement conducted a series of studies and shared ideas with business divisions, identifying issues based on stakeholder engagement and in consultation with directors as appropriate. As a result, although there were no major changes from those previously identified, the following are our thoughts on key areas for change and revision.
1. Revised wording of the four pillars
One of the pillars used to be "solving social and customer issues through products," but now it is more simply "solving social issues through business," expressing our desire to create value for society, including our customers, and through our business as a whole, not only our products.
As the concept of "nature positive" continues to spread, we have made another pillar "achieving a society in harmony with nature" instead of the previous "minimizing environmental load," in order to include our desire to inclusively realize a society that can coexist with nature.
"Respect for human rights" was one of the 15 material topics in the past because it is important and relates to a wide range of human-related issues, but this time, we have made it a higher-level theme, "human resource advancement and respect for human rights."
2. "Conservation of water resources" changed to "conservation of water and nature"
We have renamed this material topic to reflect our awareness that water resources are closely tied to natural capital and biodiversity, and that they should therefore be promoted in an integrated manner.
3. Changes to human resource-related material topics
We have made "employee engagement" a stand-alone material topic, as it is a key element in the realization of our Purpose as well as a management objective.
The phrase "stable employment and decent work environment" has been changed to "creation of a secure and vibrant work environment," a more easily communicated expression that includes company-wide efforts to ensure psychological safety.
Identification process
1. Setting prerequisites
The perspective of the social and environmental effect on our corporate value and finances (risk and opportunity) as required by the ISSB*, SSBJ*, TCFD*, and others, and the perspective of the effect (impact) of our business on society and the environment, which we used to work on and report on based on GRI* etc., are very closely related. We have therefore adopted a double materiality approach that allows us to understand them both inclusively and tackle them efficiently.
- ISSB: International Sustainability Standards Board
- SSBJ: Sustainability Standards Board of Japan
- TCFD: Task Force on Climate-Related Financial Disclosures
- GRI: Global Reporting Initiative
Prerequisites
- Themes related to Sustainability
- Roughly 10 years in mind, until 2035
- Consideration includes global and value chain importance
2. Materiality Analysis
We analyzed the degree of influence of our business on the value chain from two perspectives: the effect (impact) our business has on society and the environment, and the effect society and the environment have on our corporate value and finances (risk and opportunity), using items based on ESRS* themes and our own ideas.
To do so, we conducted a simplified natural capital assessment by referring to TCFD for climate change risks and opportunities and TNFD* for environmental impacts, risks and opportunities, and an integrated evaluation of impact on society based on a human rights risk assessment.
- ESRS: European sustainability reporting standards
- TNFD: The Taskforce on Nature-related Financial Disclosures
- ENCORE: Online tool to analyze the dependence and impact of business on natural capital
- IBAT: Online tool to identify key biodiversity areas
3. Materiality assessment results
Materiality was rated on a scale of A to E for impact and potential by theme, with scores ranging from A5 to E1. Impact and potential were rated separately in terms of impact and risk/opportunity, and items with a total of 15 points or more were designated as materiality topics. However, while water use, pollution prevention, biodiversity, and chemical substances individually score less than 15 points, we acknowledge their interrelatedness and growing importance, making them the material topic "conservation of water and nature."
4. Discussions and Review
Material topics are verified from multiple angles based on things like global standards, requests from domestic and overseas customers, materiality of auto parts manufacturers, and exchanges of opinions with technical development departments. As a result, among the material topic candidates, there were no themes that seemed to be lacking in terms of standards, customer requests, or company comparisons. We concluded that there are several themes unique to our company, all of which we consider important to us.
5. Expert Review
Keisuke Takegahara, Professor of the National Graduate Institute for Policy Studies, has evaluated our material topics, based on his expertise in sustainability management, his extensive experience in advising on materiality assessment, his third-party opinion in a previous materiality assessment, and his deep understanding of our company, including an interview with our Chairman Shinya Ogawa (then President).
Third-party opinion
There have been many changes over the past few years regarding non-financial information and its disclosure. While standardization of a single materiality axis is promoted by the ISSB, some companies have had to deal concurrently with double materiality from a multi-stakeholder perspective, as exemplified by the ESRS in Europe. The TNFD, a natural capital-related financial disclosure framework, has also emerged, which requires analysis of the dependence on and impact of natural capital on the entire value chain. In addition, human rights issues have become a growing concern as globalization has made supply chains more complex, and there is an urgent need to consider and respond to various international rules and regulations. Companies' value creation stories and the materiality analysis that supports them are also at risk of becoming quickly obsolete due to successive changes.
In light of this external environment, I believe that this review of your company's materiality based on the mid- to long-term business plan “Beyond the OCEAN” and the new mid-term business plan “NEXUS-26” is a very timely initiative. A notable feature of your company is your identification process of incorporating and carefully analyzing a wide variety of internal and external factors. This was clearly demonstrated again this year, with the inclusion of new elements such as a double materiality perspective, natural capital analysis, and human rights due diligence. Your consistent stance, including your continued adoption of double materiality despite European regulatory uncertainty and your stakeholder engagement on human rights due diligence, effectively conveys your integrated thinking as you pursue the creation of corporate value while meeting the expectations of society. The participation in this process of many departments within the company is another achievement that needs to be emphasized.
Most impressive is the continuity of newly identified material topics with previous ones, even though the review was based on some major changes. I believe this is evidence of how well your previous materiality analysis matched the characteristics of your business. For that reason, there is a concern that a comparison of the old and new material topics may not, at first glance, reveal any significant differences. I expect that you will further promote your company's strengths by providing some form of disclosure of the detailed identification process that took place during this time and the knowledge gained (which is a valuable intangible asset for your company.)
Professor, National Graduate Institute for Policy Studies
6. Approval and Decision
Final approval was given by the Board of Directors after discussion at a strategy meeting. We will proceed with internal penetration, establish KPIs, and implement a PDCA cycle.