Material Issues

Guided by our CSR Charter and Corporate Code of Conduct, the Group is committed to fulfilling its social responsibilities and addressing societal challenges based on our Basic Sustainability Policy. Since our founding, we have placed “Creation” at the foundation of our business, identifying cutting-edge global technologies and delivering safe, secure, and comfortable solutions to our customers and society. Moving forward, we will focus on key sustainability issues (material issues) to help build a society that is kind to both people and the planet. As a Group, we strive to achieve our goals and become a company widely recognized and valued by our stakeholders.

Steps for Identifying Material Issues

In fiscal 2023, the Group undertook the following steps to identify material issues to prioritize through fiscal 2030.
The material issues identified by the Group are designed at contribute to building a society that is considerate to both people and the planet. To determine these issues, we analyzed societal challenges and assessed their significance from both our management and business perspectives, as well as from the priorities of our stakeholders. This enabled us to pinpoint the key issues to address.
We will establish targets, key goal indicators (KGIs) and key performance indicators (KPIs), for the identified key issues and work as a unified Group to achieve them.

Step 1: Identification of Societal Challenges

Identification of international societal challenges related to sustainability

We identified global societal challenges related to sustainability based on international standards such as ISO 26000, the Global Reporting Initiative (GRI), and the Sustainability Accounting Standards Board (SASB). These challenges, both domestic and global, were then categorized and organized from an Environmental, Social, and Governance (ESG) perspective.

Step 2: Organization of the Importance of Each Element

We evaluated the importance of each societal challenge from the perspective of the Group’s management and business operations, as well as stakeholder priorities.

We conducted surveys with employees from business divisions, corporate planning and administrative departments, and Group companies to gather input on societal challenges categorized from an ESG perspective. The results were analyzed using a matrix to assess the importance of these challenges to both stakeholders and the Group. This process allowed us to prioritize societal challenges and categorize them under ESG elements.

Step 3: Identification of Key ESG Issues

Identification of key sustainability issues for our Group by categorizing them under ESG elements

We conducted an impact assessment of the key societal challenges within each ESG element, identifying the key success factors (KSFs) the Group should address. Using these KSFs, we identified the Group’s material issues in the areas of the environment, socioeconomics, human resources, and governance.

Step 4: Establishment of Goals, KGIs, and KPIs

For each ESG element, we formulated specific initiatives (indicators and targets) and set KGIs and KPIs for each goal.

KSFs were identified for each material issue, and KGIs for fiscal 2030 were defined accordingly. To achieve these KGIs, specific initiatives were developed, and corresponding KPIs were established with targets for fiscal 2030.

Step 5: Approval by the Board of Directors

Approval of the identified material issues and corresponding goals by the Board of Directors

The Group’s identified material issues, along with the associated KSFs, KGIs, goals, and KPIs, were presented to the Board of Directors for review. Following a comprehensive examination of the formulation process and content, the Board approved the material issues, which have since been disclosed on our website.

Key Success Factors (KSFs) for Sustainability Material Issues

The Group has identified four material issues to be addressed by fiscal 2030, along with 19 KSFs, which are recognized and categorized by their level of importance. The Group will actively engage in efforts to meet stakeholders’ sustainability expectations.

Identification of Materiality within Our Group

Material Issues	Key Success Factors (KSF)	Action for 2030 Targets
		Key Goal Indicators (KGI for 2030)	Initiatives	Consolidated	Key Performance Indicators (KPI for 2030)
Realize an environmentally sustainable society	Address climate change	Achieve carbon zero in 2030	Management conscious of GHG emission reduction (visualization of Scope 1 and 2)	✓	Reduce GHG emissions by 40% from FY 2021 level
			Use eco-friendly vehicles for sales (EV, HV)	✓	Use eco-friendly cars (next-generation vehicles such as EVs and FCVs): 100%
			Green procurement (active use of eco-products)		In-house procured products conforming to the Eco Mark and Act on Promoting Green Procurement: 100%
	Environmental protection and supply chain	Switch to eco-friendly products: 100%	Conduct investigations of contained chemical substances and declare non-use of conflict minerals	✓	Appropriately implement the Group's environmental protection policies and declarations
			Conduct environmental due diligence of suppliers	✓	Continuously manage group-wide environmental DD surveys
	Create green businesses and conserve biodiversity	Improve green business rate	Shift from selling products to providing services (service-based business model)	✓	Achieve a sales composition ratio of at least 50% for cloud services and support systems Achieve a sales composition ratio of at least 50% for energy-saving and regenerative E-field devices
			Provide energy-saving products (semiconductors, circuit design, and systems)
			Propose products for the renewable energy field
			Introduce environmentally conscious businesses (products and services)	✓	Reduce packaging materials by 30% by improving eco-packaging ratio (compared to fiscal 2023)
	Respond to natural disasters	Create BCP businesses	Provide useful services during disasters		Commercialize smart office solutions
			BCP measures		Formulate BCPs for each risk
Realize a society full of kindness	Provide a safe, secure, and comfortable business environment	Elevate customer trust	Propose a safe and comfortable office	✓	Sales from loyal customers: 80%%
			Launch products into new technology businesses
			Introduce businesses using AI
	Provide products useful for daily life	Provide safe and secure products and improve customer satisfaction	Offer products in pursuit of comfort	✓	Improve customer satisfaction scores
			Propose more efficient store management and safety
	Enhance value-added services	Increase the ratio of service businesses	Propose solutions for customer product development
			Provide high-quality products and services
	Build a framework of cooperation with government and industry associations	Cooperate with government and industry associations for a sustainable society (number of cases/year)	Partner with Japan Association of Electronic Article Surveillance Machines (JEAS) and National Shoplifting Prevention Organization		Continue support for JEAS and improve partnership
			Provide safety and security in local communities through partnerships with local governments		Promote initiatives with local governments
Employee self-realization and DEI promotion	Improve employee engagement	Continue to achieve an average employee awareness survey target of at least 4.5 points	Provide diverse working styles and places		Establish frameworks for a side job system and a four-day workweek Receive an HR Award
			Improve employee engagement		Continue to achieve an average employee awareness survey target of at least 4.5 points
	Promote in-house DX	Build in-house IT systems that incorporate new technologies	Promote the integration of the use of AI, RPA, and ERP, and formulate rules	✓	Implement and operate IT strategies incorporating new technologies
	Make use of reskilling	Create new business models	Acquire new knowledge through a wide variety of e-learning	✓	Implement new technology training Annual training expenses: 40M, target employee 40%
			Promote the creation and development of new technologies, products, and business models		Exchange rate of personnel with business partners, ventures, NPOs, research institutes, etc.: 5%; Use of side job system: 30%
	Improve (develop) the working environment	Creating a workplace where Employees employees can work healthily and with high motivation	Enhancing HR and Labor Systems	✓	Enhance employee motivation and provide a safe work environment
	Promote DEI	Raise the ratio of female, non-Japanese, and mid-career in managerial positions	Systematically increase the ratio of female, non-Japanese, and mid-career employees in managerial positions		Women: 30%, non-Japanese: 3%, mid-career: 30%
			Increase the rate of male employees taking childcare leave		Continuation by male employees: 100%
Strengthen the governance system and improve transparency	Raise awareness of compliance	Earn recognition as an honest company	Enhance compliance education	✓	Ensure the thoroughness of regular education and enhance operation management
			Strengthen the TK Group's governance system	✓	Robust group governance system and continuous management
	Strengthen risk response capabilities	Build an integrated risk management system for the TK Group	Strengthen the TK Group's risk management system	✓	Ensure comprehensive risk coverage and enhance group management
			Develop an understanding of overseas local risks, and educate and protect employees	✓	Formulate protection rules and enhance employee education
			Strengthen the cybersecurity management system (IT-BCP)	✓	Continuously operate a robust cybersecurity system that can respond to changes
			Establish a risk management system in the supply chain (especially supplier management)	✓	Appropriately operate the supply chain management system according to social conditions and trends
	Respect for human rights and supply chain	Achieve recognition as a company that values human rights through its supply chain	Supplier human rights due diligence	✓	Properly implement human rights policies in accordance with international standards
	Strengthen management transparency	Continue to issue integrated reports	Prepare and proactively disclose ESG data and integrated reports	✓	Enhance ESG data
	Diversify the management team	Strengthen diversity	Recruit female directors and allocate human resources with diverse capabilities		Female directors: 30%