Materiality and Indicators/Targets
1. Materiality Identification Process
We have defined the key issues (materiality) that our group should address in order to realize the sustainable society we aim for. We have held numerous discussions to determine what the key issues are that we should address throughout the entire supply chain, from the development, procurement, manufacturing, and sales of our main product, small construction machinery, to the civil engineering sites where our products are used, and even to product disposal.
To identify key issues based on both international trends and stakeholder expectations, as well as their importance to management, we compared them with global requirements and guidelines such as the SDGs, GRI, and ISO 26000. Through these discussions and considerations, we recognized what we are currently able to do, what we are not yet able to do, and new initiatives that we should focus on going forward, and extracted candidate key issues that our group should address now and in the medium to long term.
For the identified key issues, we prioritized them using two axes: importance from a management perspective for our group's medium- to long-term business (horizontal axis) and importance from a stakeholder perspective (vertical axis), incorporating opinions from external experts. Through repeated discussions within the project team, we identified them as key issues. The importance from a stakeholder perspective took into account the requests and expectations of our company from end-users, suppliers, customers, employees, the environment, local communities, local governments, investors, and others.
2. Identified Materiality
| # | Key Issues (Materiality) | ESG | ISO26000 Seven core issues | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Social issues to be solved | Themes of the initiative | overview | E | S | G | 1 | 2 | 3 | 4 | 5 | 6 | 7 | |
| 1 | Mitigating climate change | Development, manufacturing, and sales of battery-powered compact excavators | By developing, manufacturing, and selling battery-powered compact excavators, we aim to reduce environmental impact and minimize the disruption to the surrounding work area. | ○ | ○ | ||||||||
| 2 | Mitigating climate change | Reducing GHG emissions from factories | As a measure against climate change, we will work to reduce emissions of greenhouse gases, including CO2, from our factories. | ○ | ○ | ||||||||
| 3 | Mitigating climate change | Improving the energy efficiency of factories, Expanding the use of renewable energy | As a measure against climate change, we will work to improve the efficiency of energy sources such as electricity and gas used by factories, and promote the expansion of renewable energy use, such as solar power generation. | ○ | ○ | ||||||||
| 4 | Realizing a circular economy | Factory's 3R initiatives | We will contribute to a circular economy by working to reduce waste from our factories and promoting recycling and reuse. | ○ | ○ | ||||||||
| 5 | Reducing environmental impact Prevention of environmental pollution Chemical substance management | Develop, manufacture, & sales of construction machinery with reduced environmental impact | We will develop, manufacture, and sell construction machinery that not only reduces the burden on the global environment but also offers superior safety and comfort, thereby reducing the burden on workers. | ○ | ○ | ||||||||
| 6 | Reducing environmental impact Prevention of environmental pollution Chemical substance management | Reducing chemical emissions and wastewater from factories | For the sake of the environment and the health of our employees, we are committed to the proper management of chemicals handled at our factory, the prevention of pollution caused by their discharge, and the appropriate reduction of wastewater. | ○ | ○ | ||||||||
| 7 | Reducing environmental impact Prevention of environmental pollution Chemical substance management | Compliance with SDS, REACH regulations, and RoHS directive | We ensure proper management of chemical substances contained in our products by thoroughly using SDS (Safety Data Sheets). We comply with the REACH Regulation and the RoHS Directive. | ○ | ○ | ||||||||
| 8 | Sustainable urban development | Through product development that closely responds to market needs, Improving productivity and work efficiency at construction machinery sites. | By strengthening our connection with end-users and gathering feedback from more end-users, we strive to improve our products, services, and customer satisfaction. | ○ | ○ | ||||||||
| 9 | Sustainable urban development | Contributing to the construction and development of resilient cities and infrastructure. Development, manufacturing, and sales of construction machinery | This is the very essence of our business, and the area in which we excel. We will contribute broadly to society through the development, manufacturing, sales, and service of safer, more efficient, and cleaner construction machinery. | ○ | ○ | ||||||||
| 10 | Responsible customer service | By expanding information about products and services, Strengthening connections with end users | We will strengthen the connection between our company and end-users by providing the information that end-users need, gathering requests from end-users, and introducing a system to utilize this information within our company. | ○ | ○ | ||||||||
| 11 | Respect for human rights Fair labor practices | Elimination of employment discrimination | We will eliminate all forms of discrimination in labor and employment. We will work to promote equal pay for equal work and the employment of people with disabilities. | ○ | ○ | ○ | |||||||
| 12 | Respect for human rights Fair labor practices | Prevention of harassment | We respect human rights and are committed to preventing all forms of harassment. | ○ | ○ | ○ | |||||||
| 13 | Occupational Safety and Health Employee Health | Health management at Takeuchi Manufacturing Co., Ltd. (non-consolidated) | We are committed to promoting employee health, mental health care, and occupational safety and health. | ○ | ○ | ||||||||
| 14 | Human resource development | Expansion of education and training systems | We will work to expand our education and training programs to support the growth and skill development of our employees. | ○ | ○ | ||||||||
| 15 | Promoting work-life balance | Promotion of childcare leave, family care leave, and reduced working hours | To promote a comfortable working environment and work-life balance for our employees, we respect diverse working styles and lifestyles, and are committed to improving employee benefits and implementing work-style reforms. | ○ | ○ | ||||||||
| 16 | Promotion of women's participation in the workforce | Appointment of female directors, development of female management candidates | We will promote women's empowerment and diversity in management by appointing female directors and developing female management candidates. | ○ | ○ | ○ | ○ | ||||||
| 17 | Nurturing the next generation in the region | Takeuchi Manufacturing Co., Ltd. (non-consolidated) Factory tours, lectures at school, & collaboration with schools for students with disabilities | To contribute to the development of local communities and regions, we provide opportunities for children to participate in social studies field trips to our factories, dispatch instructors for extracurricular activities, and cooperate with classes at schools for children with disabilities, thereby contributing to the upbringing of the next generation. | ○ | ○ | ||||||||
| 18 | Environmentally and socially responsible Building a supply chain | Formulation and implementation of CSR procurement policy | To ensure a sustainable supply chain, we have established and will implement a CSR procurement policy that addresses environmental issues, human rights, labor, and anti-corruption. | ○ | ○ | ○ | |||||||
| 19 | Environmentally and socially responsible Building a supply chain | Requesting suppliers to sign a CSR procurement policy agreement | To implement our CSR procurement policy, we will proceed with efforts to obtain consent forms from our suppliers. | ○ | ○ | ○ | |||||||
| 20 | Environmentally and socially responsible Building a supply chain | Dismantling, collection, and recycling of products upon disposal. | To pass on our irreplaceable planet to future generations, we are committed to establishing a system for dismantling, collecting, and recycling products when they are discarded. | ○ | ○ | ||||||||
| 21 | Compliance | Compliance with laws and regulations, exclusion of anti-social forces. | We will comply with laws and regulations and their spirit, including preventing corruption and excluding anti-social forces, and strive to conduct our business activities in accordance with social ethics and good sense, and we will adhere to our company's code of conduct. | ○ | ○ | ||||||||
| 22 | Corporate Governance | Strengthening global governance | To ensure fair and transparent management, we will establish a management control system that enables swift and appropriate decision-making and reliable communication of management's intentions, thereby strengthening global governance across the entire group. | ○ | ○ | ||||||||
| 23 | Risk Management | Crisis management system, BCP, information security | We are committed to risk management, which involves analyzing, evaluating, and addressing risks that could have a significant impact on our sustainable development. | ○ | ○ | ||||||||
3. Indicators and Targets
| # | social issues | What | By when | What to do | FY2025 (Achievements) |
|---|---|---|---|---|---|
| 1 | Climate Change | CO2 emissions from products | FY2030 (Compared to fiscal year 2010) | 30% reduction (per unit) | 13.5% reduction |
| 2 | CO2 emissions from factories (in Japan) | FY2030 (Compared to fiscal year 2015) | 50% reduction (per unit) | 81.7% reduction | |
| 3 | Occupational Safety and Health | Work-related injury resulting in more than one day of absence from work | Every fiscal year | Zero incident | 8 incidents |
| 4 | Talent Development | Training time per person | Every fiscal year | Disclose result | 25.1 hours |
| 5 | Work-Life Balance | Parental leave utilization rate (by gender) | Every fiscal year | Disclose result | 79.3% of men 100.0% female |
| 6 | Child Labor | CSR Procurement Policy Agreement Collection Rate | Every fiscal year | Over 95% | 96.6％ |
| 7 | DE&I | Ratio of female managers | FY2030 | Equal ratio for men and women | 9.2% of men 10.1% are women |
| 8 | Employment rate for people with disabilities | Every fiscal year | Disclose result | 2.7% | |
| 9 | Percentage of local managers in subsidiaries | Every fiscal year | Disclose result | 93.7％ |
*1 CO2 emissions from the product are calculated based on Scope 3 Category 11 (use of sold products).
*2 CO2 emissions from the factory are calculated by combining the submitting company's Scope 1 and Scope 2 emissions.
*3 The CO2 emission reduction targets from products and factories are based on consolidated sales-based unit consumption targets.
*4 ②④⑥⑧ are figures for companies that submitted the report only.
② Regarding CO2 emissions from our factories, our group also has factories in Qingdao, Shandong Province, China, and Moore, South Carolina, USA. Since the US factory began operations in September 2022, we will work towards disclosing consolidated figures that include both our domestic and overseas factories, including changing the base year for setting targets.
④ Regarding the training hours per person, the definition of training differs between the submitting company and its consolidated subsidiaries, so we have decided to omit consolidated disclosure this time. In the next fiscal year's securities report, we will clarify the definition and work towards consolidated disclosure.
⑥ Regarding the collection of consent forms for the CSR procurement policy, this is currently being carried out only by the submitting company. In our group's overall parts procurement, the majority is handled by the submitting company. We will work towards consolidated disclosure in the future.
⑧ Regarding the employment of persons with disabilities, some overseas consolidated subsidiaries do not know whether their employees qualify as persons with disabilities from the perspective of protecting personal information, therefore, disclosure is limited to the submitting company only.
Climate Change
1. CO2 emissions from products: Reduce by 30% by FY2030 (compared to FY2010).
We recognize that addressing climate change, specifically reducing CO2 emissions, is one of our top priorities. The goals we have set cannot be achieved solely through improvements in the performance and fuel efficiency of conventional diesel-engine construction machinery; the widespread adoption of battery-powered construction machinery is a prerequisite. In July 2021, we launched a 2-ton lithium-ion battery-powered compact excavators, but the electrification of the construction machinery market is progressing at a pace significantly slower than initially anticipated.
On the other hand, increased environmental awareness may lead to changes in customer perception, or stricter government subsidies or regulations, potentially accelerating the adoption of these products. We see this "transition risk" as an opportunity for business development and are working on product development to expand our lineup of battery-powered construction machinery. Following our currently available 2-ton class machine, we are testing prototypes of 1.5-ton and 3.5-ton class machines in the market. CO2 emissions from our products will be calculated based on Scope 3 Category 11 (use of sold products).
2. CO2 emissions from factories: Reduce by 50% by FY2030 (compared to FY2015).
Reducing CO2 emissions from our factories is a fundamental responsibility for a manufacturing company. At our factories, electricity consumption accounts for the vast majority of CO2 emissions, and we will address this issue through the following three pillars.
- Energy conservation: Activities by the Energy Conservation Promotion Committee, established in 2010, to improve electricity usage efficiency.
- Renewable energy: Power generation using solar panels installed on the factory roof.
- Renewable Energy: Switching 100% of the electricity used in the factory to renewable energy.
Our head office factory has been procuring 100% renewable energy since November 2021, and Aoki Factory has been doing so since June 2023 (at the time of building handover).
Occupational Safety and Health
3. Work-related accidents resulting in one or more days of absence from work: Zero incident every year.
Our company's code of conduct states that "safety takes precedence over everything," and we have always strived to maintain and improve a safe and healthy work environment by working in cooperation with our safety and health committee and employees to prevent occupational accidents and injuries. Now, recognizing this as one of the global ESG issues, we have set a goal of zero occupational accidents. We believe that creating a workplace environment where every employee can work with peace of mind is essential for the sustainable growth of our company.
Talent Development
4. Training hours per person: Disclosed annually
Our company upholds "respect for human beings" as its code of conduct, recognizing human resources as our greatest management resource and human capital. Businesses develop with people at their core, and employee growth is directly linked to company growth. This time, we have reaffirmed the importance of human resource development and have selected training hours as an indicator for employee education and training. Training themes include "harassment prevention," listed as key issue number 12, and "compliance," listed as key issue number 21. Going forward, we will continue to provide employees with high-quality learning opportunities and actively invest in human capital.
Work-Life Balance
5. Parental leave utilization rate (by gender): Disclosed annually
Childcare leave is a system in which companies support employees during the important life event of raising children, and there is a growing social need to create a workplace environment that makes it easy for both men and women to take childcare leave. Taking childcare leave is an opportunity to reaffirm the bond between parents and children at home and to re-examine one's own work-life balance, so the need for men to take childcare leave as well as women is gaining attention. At the same time, it can also lead to strengthening management capabilities in the workplace, such as job rotation. Our company will support diverse working styles for our employees by promoting work-life balance.
Child Labor
6. CSR procurement policy agreement collection rate: Over 95% every year
To achieve the greatest impact on our sustainability efforts, partnerships with our suppliers, who are key stakeholders in our production activities, are essential, not just within our own company. We strongly recognize the need to consider and address our environmental and social impact and responsibilities throughout our entire supply chain, and have therefore established a CSR procurement policy. We aim to work together with our suppliers to contribute to solving global ESG challenges.
DE&I
7. Percentage of female managers: To Equal to the percentage of male managers by FY2030.
8. Employment rate for persons with disabilities: Disclosed annually.
9. Percentage of managers in subsidiaries located locally: Disclosed annually
For our company, DE&I (Diversity, Equity & Inclusion) is a crucial issue, and we strongly recognize the need to prevent homogenization and rigidity, and to incorporate diverse values and potential for growth, both in management and on the front lines of our operations. Aiming to create a workplace where employees with diverse backgrounds, such as women, employees with foreign roots, and employees with disabilities, can work comfortably, we are promoting initiatives to reflect diverse voices, starting with increasing the percentage of female employees and developing female managers. Based on the past reality and reflection that "the number of women wishing to join the construction machinery industry is very low, resulting in a male-dominated company," we are promoting initiatives to expand the recruitment of women as an entry point, and to realize a factory that is easy for everyone to work in, safer and more efficient, by introducing labor-saving and automated equipment into the production site and improving production processes. We intend to steadily work on human resource development so that women who join the company as new graduates or mid-career hires can be promoted to management positions in the future, and to correct the balance in the medium to long term. Furthermore, as part of our efforts to promote gender diversity on the Board of Directors, we elected female directors at the general shareholders' meetings held in May 2023 and May 2024, bringing the total number of directors to seven men and two women.
In addition, given that overseas sales account for over 95% of our total sales, we have decided to include the percentage of local managers in our overseas subsidiaries as an indicator, with the aim of incorporating local perspectives into our management and expanding local employment.