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Sustainability > Materiality

Sustainability

Materiality

ESG Policy

PHC Group is committed to the long-term sustainability of our business. Our mission is to contribute to the health of society through our diligent efforts to create healthcare solutions that have a positive impact and improve the lives of people, and we recognize that this positive impact can be achieved through dedicating ourselves to high standards in ESG issues.

We have identified 11 key ESG issues (or materiality topics) where we believe we can make a direct impact as a global business, and corresponding key performance indicators (or KPIs) for each topic. PHC Group will link our ESG activities with the goals outlined in our mid-term plan, or “Value Creation Plan,” and report on how our businesses are contributing to the sustainable development of society.

ESG Policy figure
Mission Mid-Term Plan

Process for Identifying PHC Group Materiality Topics

In late 2022, PHC Group formed an internal committee, headed by our COO and CSO and including leaders from each of our global business divisions, regions, and corporate functions, to help shape our shared ESG strategy.

  1. STEP1

    Identification of materiality universe

    We developed a comprehensive list of potential ESG issues to consider addressing as a company, based on respected global sustainability standards and indices including the GRI (Global Reporting Initiative), SASB (Sustainability Accounting Standards Board), SDGs, and International Organization for Standardization (ISO26000).

  2. STEP2

    Materiality assessment

    We evaluated the list of potential materiality topics based on two factors: importance for society and external stakeholders, and importance for PHC Group to realize our mission and achieve our stated business goals. To weigh these factors, we surveyed and interviewed customers, suppliers, business partners, and employees to collect insights on which topics most resonated with our stakeholders.

    Materiality assessment figure

    We also held internal workshops in each business division and corporate function globally. We combined feedback from surveys, interviews, and workshops to narrow the list of potential materiality topics to a final short list of topics that are highly relevant to PHC Group’s business and on which we can make a direct impact.

  3. STEP3

    Target setting

    We conducted external research of industry trends and reviewed internal data from across our businesses to identify priority issues on our short list for which to set targets. We then collaborated closely with each of our business divisions and corporate functions to align on specific, measurable, time-bound targets.

  4. STEP4

    Adoption

    After approval by PHC Group’s Management Committee, we presented our ESG policy, materiality topics, KPIs, and targets to the Board of Directors for formal approval and adoption by PHC Group.

ESG
Matrix		 Materiality KPI Targets*1 Fiscal Year 2023 Actual, Progress Fiscal Year 2024 Actual, Progress Fiscal Year 2025 Actual, Progress*2
Environment Climate Change*3 Scope 1 & 2 CO2 emission reduction Carbon neutral by 2040
42% reduction (vs. 2023) by 2030		 Scope 1: 15,861 tCO2e (base value)
Scope 2: 35,304 tCO2 (base value)		 Scope 1 & 2: 50,259 tCO₂e
vs. base year: -1.8% (-906 tCO₂e)		 Statistics being compiled
Second half disclosure planned
Scope 3 CO2 emission reduction 25% reduction (vs. 2023) by 2030 Scope 3: 793,687 tCO2 (base value) Scope 3: 804,771 tCO2e
vs. base year: +1.4％（+11,084 tCO2e）		 Statistics being compiled
Second half disclosure planned
Preservation of Natural Resources Percentage of reduction of water withdrawal at production sites / labs on a per revenue basis 15% reduction
(vs. 2023) by 2030		 1.2 m³/million JPY (base value) 1.1 m³/million JPY
vs. base year: -8% (-0.1 m³/million JPY)		 Statistics being compiled
Second half disclosure planned
Percentage of reduction of packaging material on a per revenue basis 10% reduction
(vs. 2023) by 2030		 12.8 kg/million JPY (base value) 10.4 kg/million JPY
vs. base year: -19% (-2.4 kg/million JPY)		 Statistics being compiled
Second half disclosure planned
Percentage of reduction of waste generated at production sites / labs on a per revenue basis 20% reduction
(vs. 2023) by 2030		 17.0 kg/million JPY (base value) 16.6 kg/million JPY
vs. base year: -2% (-0.4 kg/million JPY)		 Statistics being compiled
Second half disclosure planned
Circularity Percentage of total waste recycled at production sites / labs
(excluding thermal recycling)		 90% by 2030 46% 50% Statistics being compiled
Second half disclosure planned
Percentage of recycled content in plastic packaging materials 10% by 2030 0% 2.2% Statistics being compiled
Second half disclosure planned
Social Creating Healthcare Innovation that Supports Business Development Number of new patent applications (including design and utility models) - 155 164 108
Number of registered patents (including design and utility models) - 4,306 4,160 4,162
Number of new products and services launched - 93 55 63
Product Excellence Number of warning letters issued (e.g., FDA warning letter) 0 0 (achieved) 0 (achieved) 0 (achieved)
Number of recalls issued - 2 3 3
Enhancement of Supply Chain Management Percentage of response rate to PHC Group supplier survey*4 95% 95% (achieved) 95% (achieved) 97% (achieved)
People & Culture Ratio of gender diversity at manager level or above Female ratio: 30% or higher by 2030 -*5 24.3% 21.6%
Employee Engagement Score: increase from the previous year 1 point+ improvement vs. PY 62
YoY -1pt		 67
YoY +5pt (achieved)		 68
YoY +1pt (achieved)*6
Enhanced employee learning and skill development - PHC Academy Skill Database PHC Academy (Next Generation) Sikill Databese PHC Academy (Next Generation)
Group Leadership Training
Governance Trengthening Corporate Governance Percentage of nationality diversity of the Board of Directors - 25.0％ 30.0% 18.2%
Board Effectiveness Evaluation 1/year 1 (achieved) 1 (achieved) 1 (achieved)
Number of meetings with institutional investors and securities analysts - 95 106 123
Risk Management Number of Enterprise Risk Management Committee meetings 2/year Kick-off held 4 (achieved) 4 (achieved)
Percentage of employees taking compliance training
(e.g., code of conduct, insider trading)		 100% 100% (achieved) 100% (achieved) 100% (achieved)
Cybersecurity Percentage of employees who participate in information security and data protection training 100% 100% (achieved) 100% (achieved) 100% (achieved)
Biannual vendor security reviews - percentage of critical vendors reviewed*7 100% 100% (achieved) 100% (achieved) 100% (achieved)
Number of PHC Group Cybersecurity Committee meetings 4+/year 4 (achieved) 4 (achieved) 4 (achieved)
  • *1KPIs for which it is difficult to set appropriate targets are displayed as “-”. Targets for items under discussion will be disclosed as soon as they are set.
  • *2Actual values for the materiality topics of Climate Change, Preservation of Natural Resources, and Circularity for fiscal year 2025 are currently under calculation. We plan to disclose this information on our website in the fall.
  • *3Greenhouse gas (GHG) emissions categories are based on the GHG Protocol as outlined below:
    Scope 1: Direct emissions from the company through the combustion of fuel, etc.
    Scope 2: Indirect emissions as a byproduct of energy generation such as the above or purchased electricity
    Scope 3: Indirect emissions other than under Scope 2 (purchased products or services, transportation, disposal of sold products, etc.)
  • *4This covers the major suppliers for materials procurement in each business unit.
  • *5The ratio of female managers (on a consolidated basis) for fiscal year 2023 has not yet been compiled, so it is omitted from this chart.
  • *6Starting from FY2025, the scope of the survey has been expanded to cover the entire PHC Group. As a result, the value is 64 points.
  • *7All vendors were reviewed over a two-year period. From an information security perspective, the FY2023 review covered entities within the scope of ISMS certification in Japan. From FY2024 onward, the scope has been expanded to include the entire PHC Group.

SDGs Matrix

The matrix shows how the materiality topics that PHC Group has chosen are related to the 169 goals of SDGs, a widely adopted global framework of sustainability targets.

SDGs Matrix (PDF)

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