A Message from the CSO

Fiscal 2022 was a year of great progress.
Today, we’re moving resolutely
on new measures for ESG.

Tomoko Nakagawa
Executive Officer, Chief Sustainability (ESG) Officer

Strengthening ESG has been identified as an important management issue for HOYA’s new management structure. You’ve taken up the post of Chief Sustainability (ESG) Officer. What measures have you undertaken since your appointment?

The first thing I did after my nomination to the post of CSO in March 2022 was to set up a framework for advancing ESG. On the organizational level, I established a dedicated ESG department at the head office and appointed people in charge of ESG in each division. I established a sustainability policy to guide activities, having first obtained the approval of the Board of Directors. I report regularly to the Board of Directors about ESG matters. Executive directors conduct their evaluations according to ESG targets set by the Compensation Committee, but we’ve begun to incorporate ESG targets into evaluations by the managers of each division. With the head office and the divisions working closely together, HOYA can respond on ESG matters more rapidly than ever.

Can you provide a little more detail? There are a wide variety of ESG issues to be tackled. How did you deal with each issue?

Let’s talk about human capital first. The HR Department conducts a continuous series of surveys on employee engagement and improvement measures are implemented based on the results. In fiscal 2022, we introduced an evaluation system on the global level for the first time, creating measures in common for the entire HOYA Group. Measures such as these give us a ready snapshot of our human capital and enable us to provide detailed support for the growth of each individual employee.

We also advanced Group-wide activities for due diligence on human rights. In fiscal 2022, with support from outside experts, we identified a number of latent human rights risks. Going forward, we’re going to build a more robust human rights due diligence framework, incorporating existing efforts but also embracing suppliers and other stakeholders up and down the value chain, and then work to strengthen it.

The next agenda is reducing our environmental impact. We updated our platform for collecting and managing environmental data, constructing a system that can collect more accurate environmental data globally. We’ve also started third-party assessment of greenhouse gas emissions. Over 90% of our greenhouse gas emissions in Scope 1 and Scope 2 are caused by Scope 2 purchases of electrical power, so we joined RE100 in February 2023 and set a target of switching 100% of the energy we use to renewable sources by 2040. To reduce CO2 emissions, which were approximately 520,000 tons in fiscal 2021, we plan to switch Scope 2 energy consumption to renewables and to reduce Scope 1 energy consumption by 60% using electrification and carbon offsets, by 2030. By 2040, the centenary of the HOYA Group, we aim to achieve 100% elimination of CO2 emissions. Each division is preparing its own medium- to long-term roadmap for introducing renewable energy and reducing emissions of CO2. We hope to boost the effectiveness of these efforts by including degree of accomplishment of these goals in the evaluations of division managers.

With regards to disclosure, HOYA conducted and disclosed its first scenario analysis based on the TCFD Declaration. On ESG performance, our MSCI ESG rating was upgraded to AAA, MSCI Inc.’s highest rating. HOYA was acknowledged for its efforts on ESG and for the content of its Integrated Report.

We made progress on other fronts as well. HOYA moved ahead with participation in international initiatives, including signing the United Nations Global Compact. Also, as a corporate group engaged in multiple businesses related to eyesight, the HOYA Group partnered with Orbis International, an NGO that contributes to society on matters mainly related to eye health. Through this partnership, HOYA supports, and will continue to support, the provision of ophthalmic medical services to those in need, principally in the developing world.

Would you tell us a few observations and issues that you noticed in the course of actually improving the ESG performance?

Because HOYA grants considerable authority to each division, each division is effectively run as an independent company. This includes ESG. And since ESG efforts are handled on a division-by-division basis, the overall picture of Group ESG initiatives is hard to discern as the divisions do not share their ESG efforts with each other. To address this situation, we began by having our ESG Promotion Office aggregate issues and information from the people in charge of ESG at each division; we then created a portal site to disclose the information in-house, creating a framework for sharing information and knowledge in-house. Another issue I discovered was that in many cases our divisions, being focused on profitability, were placing low priority on installation of utilities, whose environmental performance is high but whose investment payback period is long. I persuaded divisions to draw up plans to improve their people’s understanding of the significance of ESG initiatives, in order to strike a balance between environmental performance and profitability and move toward reducing environmental impact over the medium to long term.

So, HOYA has issued TCFD Disclosure for the first time. Can you be specific about the kinds of information disclosed?

This was our first disclosure, as I mentioned, so we began with scenario analyses focused on our two divisions with the highest electricity consumption and therefore our highest CO2 emissions: our plants in Thailand and Vietnam. For our analysis of risks and opportunities associated with climate change, we followed the Task Force on Climate-related Financial Disclosures (TCFD) framework, selecting a medium-term time frame, to 2030.

Roughly 30 individuals, drawn from the head office and the departments related to the divisions in question, took part in our evaluation of risks and opportunities, conducting discussions in a workshop format. Highly knowledgeable views were shared in a lively exchange from each perspective. Participants included members from Europe and Southeast Asia as well as Japan, so the authentic voices of frontline team members were reflected in the scenario analyses.

For details on the risks and opportunities identified, please refer to the disclosure documents. I believe it’s important to conduct such exercises regularly, so that we can analyze the impact the external environment has on HOYA and the rest of the supply chain and respond to the identified risks and opportunities in our daily business activities.

You made a lot of progress in fiscal 2022. What efforts do you have in store going forward?

ESG covers a wide variety of items, so it’s really important to select items that have the greatest impact on HOYA, draft plans for them, and move forward. The items on which HOYA will place priority are calculation of Scope 3 emissions, broadening the range of businesses subject to TCFD analysis, expansion of human capital, due diligence on human rights in the supply chain, and so on. We will continue to make steady progress in these efforts.

We’re continuing to advance HOYA’s sustainability and ESG activities to the next level while deepening dialogue with all stakeholders, as we strive to improve the Company’s medium- to long-term corporate value while contributing to the achievement of a sustainable society. I ask for everyone’s continued support.