Sustainability in the NAGASE Group

The measures for sustainability-related issues lead to the highest standards of integrity that the NAGASE Group pursues as its management philosophy and the world in our vision for the future. We acknowledge that continuing corporate activities that contribute to the solution for social and environmental issues enables sustainable growth, and thus we make proactive efforts by developing a policy for sustainability activities.

NAGASE Group　Sustainability Basic Policy

Our company has established a Sustainability Committee chaired by the President and Representative Director. We aim to sustainably enhance the corporate value of the NAGASE Group by contributing to the solving social and environmental issues through our business activities.
The committee consists of one chairperson and two or more members. Members are assigned by the President from among directors and representatives of group companies.
The Sustainability Committee identifies and revises materiality (key issues), establishes and maintains a group-wide promotion structure, and monitors various initiatives, including non-financial targets (KPIs). Progress on these initiatives is reported to the Board of Directors at least once a year, and is subject to its resolution and monitoring.

Additionally, the Sustainability Committee has identified the following as high-priority issues of Materiality: “ Employee engagement improvement”, “ Realize a decarbonization”, and “ Transparency in corporate governance ”. For “Employee engagement improvement” and “Realize a decarbonization”, we have established corporate projects composed of directors, executive officers, and senior management of group companies.

For details on Materiality, please see NAGASE Group Materiality (Key Issues).

Each project discusses specific policies and measures for achieving non-financial target under the monitoring of the Sustainability Committee. Key matters of the project are also reported to the Board of Directors at least once a year through the Sustainability Committee and are subject to its oversight.

Each company is working on measures for internal penetration of sustainability. In July 2023, a video explaining sustainability trends and basic knowledge was distributed, and from FY2023 to FY2024, casual, face-to-face educational activities were launched (18 sessions with a total of over 100 participants). In addition, Nagase Viita has published a “Sustainability Communication Book 2024” to share its “ideal state,” “goals,” and “action plan” within the company.

The NAGASE Group's materiality (key issues)

NAGASE Group has been identifying our materiality (key issues) since FY2021, when we formulated our Mid- Term Management Plan ACE 2.0. In September 2024, we partially revised our materiality, in light of changes in the external environment.

We believe that we should define as Materiality the social issues we can address through our business activities.
Therefore, in addition to the areas we have continuously prioritized—“Employee engagingment improvement,” “Realize a Decarbonization,” and “Transparency in corporate governance”—we have added three items more closely tied to our business: “Extend a healty life expectency,” “Achieve Sustainable supply chains,” and “Driving a Circular Economy.” We are currently operating under these six Materiality.

Details of Each Materiality

The NAGASE Group's materiality		Related SDGs
Employee engagement improvement	We believe that improving employee engagement is paramount to achieving sustainable growth. Our definition of engagement is “the company (organization) and its employees have a mutual understanding and are looking in the same direction as equal partners,” and this is our goal. Toward this goal, we continuously implement engagement surveys and conduct various improvement activities based on the results.
Realize a Decarbonization	For the NAGASE Group, which operates globally, addressing climate change is a critical challenge.We have manufacturing functions in addition to trading functions. Therefore, we have initiatives across two axes and four quadrants—“Trading/Manufacturing” and “Visualization/Reduction”—aiming to achieve carbon neutrality with net-zero GHG emissions by 2050.
Extend a healthy life expectancy	We are committed to contributing to the well-being of people and the planet. Therefore, extending healthy life expectancy is a crucial theme for us. NAGASE handles food ingredients and additives for the food industry, as well as pharmaceutical raw materials and medical devices for the pharmaceutical and medical industry. Beyond material proposals as a trading company, we leverage our “manufacturing function” and “ R&D function” to offer manufacturing/processing and application proposals. We also engage in bio-related R&D and contribute to the agricultural business.Through these efforts, we aim to contribute to people's healthy and prosperous lives.
Achieve Sustainable supply chains	We are a trading company with about 18,000 business partners. We believe our mission is to contribute to solving social issues across the entire supply chain.Particularly given geopolitical risks and growing awareness of human rights, it is essential to properly understand issues and engage for improvement within the supply chain. We have formulated a Supply Chain Management Policy and are working to address these issues, in order to maintain a stable procurement and supply. Furthermore, we will actively work to solve various issues across the supply chain through partnerships, such as optimizing transportation efficiency by leveraging our expertise and network in chemical management.
Driving a Circular Economy	Regulations related to the circular economy, which aims to balance economic growth with reduced environmental impact, are emerging, particularly in Europe. As a supplier of materials across entire supply chains, contributing to a circular economy is a key issue for us. Especially, recycling and eco-friendly materials are themes we can address through our business. We will contribute to solving these challenges through our three core functions: “trading functions,” “manufacturing functions,” and “ R&D functions.”
Transparency in corporate governance	We aim to contribute to a sustainable world where people live with peace of mind. We will work to enhance our corporate value over the mid-to-long term. Furthermore, we believe that “swift decision-making and execution” and “ensuring transparency” are essential to implementing these initiatives, so we will work to strengthen our corporate governance.

Process for Identifying Materiality

We have identified our current materiality after approximately one and a half years of discussion since FY2023. This process was led by the Sustainability Committee.
To identify these material issues, we formed a project team within the Sustainability Committee, primarily composed of young employees, dedicated to reviewing materiality. This team worked on analyzing necessary information and exploring directions.

Internal Awareness Initiatives

We are working to ensure employee understanding and awareness, recognizing that this is crucial when addressing materiality.
To promote understanding and awareness of materiality across all Group companies globally, we produced animated videos in 9 languages.
These videos are available on the Group intranet and via digital signage at each location.

Video of NAGASE Group's Materiality

Our company aims to realize its ideal state for 2032 (its 200th anniversary): “Business Designer that Creates a Sustainable Future.”
To quantitatively evaluate and monitor our initiatives addressing Materiality (key issues), we have set non-financial targets (KPIs) for “ Improvement of Employee Engagement” and “Carbon Neutrality” in our Mid-Term Management Plan ACE 2.0 (FY2021–2025).

Improve Employee Engagement

• *1 This applies to consolidated subsidiaries. Companies that became consolidated subsidiaries during the Mid- Term Management Plan ACE 2.0 period are excluded.
• *2 The Engagement Survey Total Score of “60” is a deviation score calculated by Link and Motivation Inc. (based on data from over 10,000 companies). This organizational state is defined as “mutual trust exists.”
  To achieve this state, we have set the Survey Total Score of “60” as our target.

Carbon Neutral

* The current scope covers three companies: Nagase Industries, Nagase ChemteX, and Nagase Viita.

* For other environmental data, such as GHG emissions, please refer to the Sustainability Data Sheet .

Improve employee engagement

The NAGASE Group recognizes that employee engagement is the most important factor in achieving sustainable growth. In this context, the company defines engagement as the company (organization) and its employees have a mutual understanding and are looking in the same direction as equal partners.
In September 2021, the first year of the ACE 2.0 Medium-term Management Plan, NAGASE & CO., LTD. conducted an engagement survey across 16 categories: Eight related to the company, four related to supervisors, and four related to the workplace. The survey was designed to identify the state of employee engagement serve as a basis for developing measures to improve engagement.
The company established implementation guidelines, including the involvement of top management, independence, and transparency, and will implement these measures throughout the group in a steady and consistent manner.

Employee engagement survey

Employee Engagement Improvement Project (EEIP)

The NAGASE Group defines engagement as “the company (organization) and its employees having a mutual understanding and looking in the same direction as equal partners.”
EEIP is working to create opportunities for dialogue across the Group.In FY2024, we conducted various activities to promote understanding, permeate, and advance employee engagement. Additionally, we have started developing questions for a new, group-wide proprietary survey to measure the degree to which our definition of “looking in the same direction” is understood.
Starting in FY2025, we are also conducting activities related to harassment-free workplaces as part of our efforts to improve employee engagement.

＜FY2024 Initiatives and Achievements＞

• Dialogue with Overseas Group Companies
• Business division-led initiatives
• Awarded 9th place in the Large Enterprise Category (under 5,000 employees) at the “Best Motivation Company Award 2025” hosted by Link and Motivation Co., Ltd.

Carbon neutrality

The NAGASE Group has identified “Contributing to a Decarbonized Society” as a material issue.
We recognize that addressing climate change is a key issue for the globally operating NAGASE Group. In our “NAGASE Group Carbon Neutral Declaration(pdf:298 KB),” we have set the goal of achieving carbon neutrality (Scope 1 and 2) by reducing GHG emissions to net zero by 2050.

GHG Emissions Results and Targets (Scope 1, 2)

Carbon Neutral Project

NAGASE Group has manufacturing /processing functions in addition to its trading functions. Therefore, we classify initiatives into two axes and four quadrants—“Trading / Manufacturing” and “Visualization / Reduction”—and are working to achieve our carbon neutral target. We are focusing on planning and executing specific individual measures, centered around our Carbon Neutral Project.

＜FY2024 Initiatives and Achievements＞

• Implementation of Commitments for SBT Certification
• Utilization of Virtual PPAs and Non-Fossil Certificates

In each NAGASE Group manufacturing company, the Group Manufacturing Industry Cooperation Committee was established in 2019 and operates with the aim of strengthening each company’s foundation as a manufacturer. By sharing and utilizing non-financial information, such as safety, quality, and the environment, and working together to resolve various issues, we aim to enhance the corporate value of the entire Group and achieve sustainable growth.

The NAGASE Group is promoting the following DX initiatives at Nagase and the Group Manufacturing Cooperation Committee.

NAGASE & Co., Ltd

NAGASE & Co., Ltd will further strengthen its existing strengths of “wide-area network,” “technical knowledge,” and “ability to solve problems and human resources” through the utilization of DX to promote transformation. We are currently strengthening our digital marketing function as a means of responding to changes in the external environment and customer behavior. We have begun building a digital infrastructure and developing human resources so that we can utilize the latest digital technologies in response to situations such as adding digital customer contact points, attracting customers, and responding to their needs. (Goal: to develop 100 DX human resources by FY2026)

Group Manufacturing Collaboration Committee

The Group Manufacturing Collaboration Committee has been conducting a “Digital Innovation Level Assessment” of manufacturing sites every other year since 2021. The “Digital Innovation Level Assessment” is a method to measure the maturity level of digitalization of such themes as visualization of manufacturing sites, improvement of quality and productivity, logistics reform, efficiency improvement of the entire supply chain, development of control networks, advancement of safety measures, advancement of maintenance operations, and reform of work styles. The method is also used to monitor the degree of achievement of the desired state in the implementation of measures in line with the strategy.

Nagase Bio-Innovation Center

We are working to create research themes that can contribute to society from a macro perspective on issues related to social sustainability, such as climate change, population growth and resource depletion. We are mainly engaged in the development of material production technologies using genetic engineering, enzyme engineering, metabolic engineering, and bioinformatics. In particular, we have a number of proprietary technologies in the production of substances using actinomycetes as hosts and have made presentations outside the Company and applied for patents.

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Nagase Application Workshop

In the field of plastic and coating materials, we evaluate and analyze raw materials, develop applications, and develop formulations for end products using those raw materials. In recent years, we have been working on the development of sustainable products such as bioplastics, recycled materials, and environmentally friendly paints. NAW will continue to pursue decorativeness and functionality in the field of plastic and coating materials.

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Future Co-creation Office

It was established in April 2017 with the aim of creating the core of future business by promoting innovation and creating new value for the NAGASE Group. We are developing original products such as materials informatics, blockchain, sensors, and system ultra-low dielectric materials, as well as developing markets in the medical and energy fields, which are expected to grow in the future. In addition, we are investing in startups using CVC to acquire information in new fields and managing new business promotion activities across the company.

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NAGASE Biotech Office

The NAGASE Group's elemental technologies related to research, development, and production of microorganisms, fermentation products, enzymes, and enzyme reactants are brought together to provide unique technological value that only NAGASE can provide. In recent years, we have been working to commercialize ergothioneine, a rare natural amino acid that improves brain function and has high antioxidant properties, by using the strains we have developed to develop applications in the life science field, including health foods, cosmetics, and pharmaceuticals.

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NAGASE Group activities exist thanks to the Group's relationships with its diverse stakeholders, and it is extremely important to listen to the opinions and expectations of these stakeholders.

The NAGASE Group proactively incorporates the opinions and demands of its stakeholders in its corporate activities and conducts a variety of initiatives in order to connect these to sustainable societal development and increased corporate value.