Material Issues｜Japan Pulp & Paper Company Limited

Process of Identifying Material Issues
Material Issues and SDG Targets

The Group has identified the four themes (environment, society, employees, and governance) and 12 material issues and classified them as “internal and external factors that have a significant impact on achieving sustainable business activities that realize both social and economic value.”

Process of Identifying Material Issues

Step 1

Based on the evaluation items of major ESG ratings agencies and industry-specific material issues provided by the US Sustainability Accounting Standards Board (SASB), we determined “ESG-related issues such as environmental and social issues that have a significant impact on the group’s sustainability and ability to create value” and looked at ways the group impacts stakeholders in the value chain. We then analyzed the degree of importance and identified possible material issues from the perspective of “priority items related to the group and its businesses that have a high level of impact on the environment and society.”

Step 2

After narrowing down the possible material issues uncovered in “Step 1” from the standpoints of their importance and frequency, external experts, executives, and employees performed another evaluation from the perspectives of “ESG-related issues such as environmental and social issues that have a significant impact on the group’s sustainability and ability to create value,” and “priority items related to the group and its businesses that have a high level of impact on the environment and society.”

Step 3

Based on the evaluation conducted in “Step 2,” and in order to realize sustainable business activities that realize social and economic value for the group, management held discussions 12 times to identify material issues based on the Charter of Corporate Behavior and Medium-term Business Plan 2023. As a result, we identified four themes and 12 material issues as internal and external factors that have a significant impact on achieving sustainable business activities that realize both social and economic value. After approval by the Executive Sustainability Committee, a resolution on material issues was passed by the Board of Directors.

The following presents material issues of the Japan Pulp & Paper Group, the reasons for their identification, our goals for the future and related initiatives, and SDGs to which the group contributes.

Environment

Material Issues	Reasons for Identification	Goals	Initiatives up to Fiscal 2022	Initiatives Planned from Fiscal 2023 Onward	SDGs to Which the Group Contributes
Climate Change	The depletion of forest resources, which are raw materials for paper, due to climate change will have a major impact on the group’s business. There are physical risks resulting from global warming, transition risks due to stricter regulations, and the possibility of increased financial burden associated with responding to these risks. It is our responsibility to minimize climate change impact by reducing greenhouse gas emissions throughout our group and the entire supply chain.	Achieve carbon neutrality	Participated in the TCFD (Task Force on Climate-related Financial Disclosures) Consortium Examined analysis methods such as conducting a quantitative analysis to enhance information disclosure based on TCFD recommendations Calculated Scope 1 and 2 emissions for the entire group from fiscal 2022 Calculated Scope 3 emissions (scope: Japan Pulp & Paper Co., Ltd.) Conducted third-party verification of greenhouse gas emissions (scope: Japan Pulp & Paper Co., Ltd.) Considered introducing green power Considered establishing a greenhouse gas emission calculation system Held joint study sessions on energy conservation with paper manufacturing companies in the group Considered measures to address climate change	Conduct quantitative risk analysis based on TCFD recommendations Calculate and disclose Scope 1 and 2 emissions of the entire group Expand calculation scope of Scope 3 emissions Set medium-to-long-term targets for reducing GHG emissions to contribute to carbon neutrality Expand the scope of third-party verification of greenhouse gas emissions Promote joint delivery to reduce CO2 emissions Promote electrification of freight vehicles Switch to renewable energy for electricity Consider introducing a greenhouse gas emission calculation system	9 1.2.3 4 4 1 2
Biodiversity	Increased efforts to conserve biodiversity may lead to stricter regulations and higher costs in the procurement of raw materials used in the production of paper. It is essential to sell paper made with wood from properly managed forests, so as to have minimal impact on animal life and the natural environment.	Promote nature positive initiatives for sustainable forest resources	Enhanced understanding of TNFD (Task Force on Nature-related Financial Disclosures) trends	Formulate a biodiversity policy and action plans	2 2.4
Resource Recycling	It is essential to promote initiatives to realize a circular economy, including through the wastepaper recycling, recycled paper manufacturing, and comprehensive recycling businesses. It is essential to reduce all of society’s waste and conserve the Earth’s forest resources. It is essential to provide environmentally friendly products.	Realize a circular economy by recycling waste in society	In Japan: Monitored industrial waste recycling rate Helped customers reduce plastic by proposing paper products Converted in-house supplies from plastic to paper in ways such as using paper filing folders Continued to propose recycling loops for wastepaper discharged by business partners Considered strengthening the recycling businesses to comply with the new Plastic Resource Circulation Act	In Japan: Promote initiatives to create a resource recycling society through the strengthening of wastepaper recycling, comprehensive recycling, and recycled paper manufacturing businesses Further strengthen recycling businesses to comply with the new Plastic Resource Circulation Act	9 3 4 6 1.2.4.5.7 1.2
Environmental Impact	It is essential to respond to stricter environmental regulations related to logistics and factory operations. It is our corporate responsibility to manage water intake/discharge and exhaust gas, as well as reduce waste.	Implement specific zero emission measures Minimize environmental impact throughout our supply chain	Implemented initiatives to reduce waste and promote recycling at business sites Confirmed whether business sites are in water-stressed areas	Initiatives to reduce waste and recycle at each business site Continue to confirm whether business sites are in water-stressed areas and formulate action plans	9 4.5 6 2.4

Society

Material Issues	Reasons for Identification	Goals	Initiatives up to Fiscal 2022	Initiatives Planned from Fiscal 2023 Onward	SDGs to Which the Group Contributes
Supply Chain	It is essential to ensure sustainability throughout the group and the entire supply chain in order to maintain the stable supply of paper and other products. We will accomplish this by strengthening sustainable supply chains.	Ensure a stable supply of raw materials and products and responsible procurement	Established guidelines for sustainable procurement as a group, including those related to human rights issues	Formulate guidelines for sustainable procurement and establish monitoring systems Implement in-house training on business and human rights Conduct due diligence on new business partners concerning human rights and manage existing business partners	9 1.2 1.5.8 1.3 1.2 1 2.4 1.2 3.7
Communities	It is essential to reduce the environmental impact on communities and to achieve coexistence and co-prosperity through economic and social contributions.	Create new value through coexistence and co-prosperity with local communities	Designated disaster evacuation sites Contributed to waste reduction and recycling	Continue to designate disaster evacuation sites Continue to contribute to waste reduction and recycling	9 1 3 6 4 1 1.2.4
Digitalization	Declining demand for paper due to the progress of digitization will have a significant impact on the group’s business. It is essential to improve productivity and the use of energy by promoting digital transformation (DX).	Create new demand for paper by proposing the value and enhancing the role of paper in a digital society Leverage digital technology as a new business strength	Formulated basic policies for promoting ICT use	Set goals for improving productivity with business reforms that employ ICT Launch of group IT control promotion activities	1.2 1.4

Employees

Material Issues	Reasons for Identification	Goals	Initiatives up to Fiscal 2022	Initiatives Planned from Fiscal 2023 Onward	SDGs to Which the Group Contributes
Work Environment	It is essential to provide stable employment, opportunities to develop skills, fair evaluations and equitable treatment, and to create a comfortable working environment. It is essential to strengthen our human capital by improving labor productivity and employee engagement.	Achieve zero workplace accidents in safe, secure, and healthy working environments Creating innovation ahead of the times in a work environment that offers new challenges and excitement through personal growth Achieve well-being through a high level of engagement	Japan Pulp & Paper Co., Ltd.: Set targets for human capital development and occupational health and safety Conducted employee engagement surveys Promoted health management Worked to earn certification as a Health & Productivity Management Outstanding Organization Regularly implemented occupational safety and health training Conducted environmental and safety compliance surveys Japan Pulp & Paper Group: Participated in the Human Capital Management Consortium Established a project team for conducting human capital management	Japan Pulp & Paper Co., Ltd.: Continue to conduct employee engagement surveys Japan Pulp & Paper Group: Set targets for human capital development and occupational health and safety Identify key HR data	6.8 2.4.5.7 2.4.5.6 2.5.6.8 2 1.2.3
Diversity and Inclusion	By properly addressing diversity and inclusion, we will be able to promote the active participation of diverse human resources, strengthen our corporate competitiveness by adopting diverse values and ideas, revitalize our corporate culture, and improve employee engagement.	Create a corporate culture where all executives and employees, regardless of gender, nationality, experience, or other factors, acknowledge and respect each other’s diversity. In this culture, diverse talent and ideas can flourish, contributing to the strength and competitiveness of the group.	Japan Pulp & Paper Co., Ltd.: Reduced overtime work and improved the percentage of paid leave taken based on the Action Plan for Promoting Female Participation and Advancement in the Workplace Set targets for diversity, such as the percentage of female managers Provided education through means including harassment training and posting the Compliance Letter in the group’s magazine Promoted employment for people with disabilities Japan Pulp & Paper Group: Disseminated and monitored compliance with the Japan Pulp & Paper Group Human Rights Policy	Japan Pulp & Paper Group: Set targets for diversity, such as the percentage of female managers Track diversity and inclusion (D&I) data Determine whether human rights violations are an issue	2 5.8 1.3 2

Governance

Material Issues	Reasons for Identification	Goals	Initiatives up to Fiscal 2022	Initiatives Planned from Fiscal 2023 Onward	SDGs to Which the Group Contributes
Corporate Governance	It is essential to build a transparent and effective management system from the perspective of sustainable and medium-to-long-term improvement of corporate value.	Achieve sustainable medium-to-long-term improvement of corporate value through honest and fair governance	Used self-assessments to evaluate the effectiveness of the Board of Directors and formulated initiatives based on the results Formulated an action plan to reduce cross-shareholdings	Use self-assessments to evaluate the effectiveness of the Board of Directors and formulated initiatives based on the results Formulate an action plan to reduce cross-shareholdings	6 5 1 3.5
Compliance	Our corporate value may be significantly impaired in the event of compliance-related issues.	Ensure all executives and employees conduct business activities with a strong sense of ethics and feeling of responsibility	Conducted on-site verification of environmental and safety management systems for group companies in Japan Tracked awareness of the whistleblowing system Held antitrust law seminars	Build and operate an environment and safety management and supervision system Revise our compliance handbook Regularly implement employee compliance training and related initiatives Implement e-learning Hold antitrust law seminars	6 5 1 3.5
Stakeholder Engagement	It is our responsibility as a company to understand the expectations and demands that society has for the group. We will accomplish this through dialogue with stakeholders and by reflecting feedback in management operations.	Reflect the expectations and requests of stakeholders in management by engaging in dialogue	Enhanced IR and SR activities Tracked dialogue with external experts, including NPOs and NGOs	Continue to enhance IR and SR activities Consider holding briefings for individual investors Continue to engage with stakeholders other than investors	6