HOYA’s ESG Approach

ESG and Sustainability Governance Framework

Governance
HOYA is organized as a company with Nomination Committee, etc. As such, the Board of Directors functions as a monitoring board, supervising the executive side and deliberating and deciding on materialities in management policy Group-wide. To secure management supervisory functions and ensure their objectivity, in fiscal 2023 the Company established a framework in which five of seven directors are outside directors. In addition to individuals with a global mindset and a wealth of management experience, the outside directors are made up of individuals with backgrounds in personnel development and diversity from a sustainability and ESG standpoints, and with management experience of important decision making in climate change.

The Group's basic sustainability policies, including climate change countermeasures, materiality, and important measures such as TCFD and RE100 are disclosed through deliberation and decision-making procedures by the Board of Directors. In addition, the Board of Directors receives regular reports on issues related to sustainability, including responses to climate change, from the Chief Sustainability Officer (twice a year in fiscal 2023), and monitors progress. The Board of Directors receives reports on climate change responses in each business division during business reviews at Board of Directors meetings and provides advice from multiple perspectives. Similarly, the Group CHRO reports regularly to the Board of Directors regarding personnel measures across the HOYA Group, and the Group CCO reports regularly to the Board of Directors on compliance (once a year in fiscal 2023).

At HOYA, we conduct business operations through a divisional management approach facilitated by portfolio management. As such, each business division’s specific policies on responding to sustainability-related issues, including climate change and human capital, are reflected in the management strategy, management plan and annual budget of each business, to be approved and decided by the Board of Directors. Additionally, each business division’s head (division president) appoints a sustainability/ESG team within their division. Under the direction of the division head, the division’s KPIs, aligned with the Group’s goals, are set in consultation with the CSO. The division then implements measures to achieve these established KPIs.

In fiscal 2022, ESG indicators were incorporated into the Performance Share Unit (PSU), serving as a medium- to long-term incentive in executive officers’ remuneration. Targets are set according to evaluations by outside organizations and the status of efforts on key ESG themes, including climate change and human capital. In fiscal 2023, to enhance the effectiveness of these indicators, important KPIs among the key ESG-related targets set by each business division, such as renewable-energy usage rate, were added to the criteria for annual incentives of the presidents of each business division.

Risk management
The HOYA Group’s head office appoints persons responsible for functions considered a significant risk to the Company, including compliance, response to pharmaceutical regulations, cybersecurity, and safety/hygiene. The responsible persons in the head office regularly monitor the activities of the business divisions concerning their respective duties and report to the executive officers on the recognition and response status of significant risks. Based on these reports, the risks faced by our Group are presented to and deliberated by the Board of Directors.

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Sustainability Policy

For the purpose of clearly stipulating the HOYA Group’s basic stance and policy on sustainability and further promoting sustainability activities, we established the HOYA Group’s Sustainability Policy in May 2022.

HOYA Group is committed to contribute towards building a sustainable society and aims to enhance our long-term corporate value by implementing our management principles based on our corporate mission in our day-to-day work.

  • We will aim to help resolve global social issues through innovation in our businesses.

  • We will realize fair and highly transparent corporate management by building a relationship based on trust through consistent dialogue with key stakeholders.

  • We will aim to minimize environmental externalities in our business activities to ensure our future generations inherit a healthy global environment in future.

  • We respect the human rights of all people involved in our business activities, including those in our supply chain and will strive to prevent any abuse on human rights.

  • We will create a work environment to promote diversity and inclusion with an emphasis on the wellbeing of our employees in the aim of keeping high motivation and moral to create new value.

For HOYA’s Corporate Mission, Management Principles and Vision, click here.

Material Issues

Having internally discussed and examined matters that contribute to the HOYA Group’s medium- to long-term growth (i.e., material issues), we identified four material issues with the approval of the Board of Directors in September 2021.

Process of Identifying Material Issues

Get a grasp of the issues, Select candidate issues, Conduct evaluation, Identify mateial issures
  • Get a grasp of changes in society and issues related to HOYA’s businesses.

  • Analyze ESG rating agencies’ evaluation of HOYA and refer to international guidelines*1.

  • Interview the management of business divisions.

  • Use the industry-by-industry Materiality Map*2 by SASB*3 that matches HOYA’s businesses and select the candidate issues based on evaluation on two axes, i.e., by mapping stakeholders’ interest on the vertical axis and the impact on HOYA’s businesses on the horizontal axis.

  • Conduct an evaluation comprehensively by deepening internal discussions while referring to opinions and feedback obtained from investors in and outside Japan who are key stakeholders.

  • Obtain approval for the identified four material issues at the Board of Directors’ meeting.

*1. SASB, GRI, IIRC, ISO26000, TCFD, RBA, CDP

*2. Industries: Medical Equipment & Supplies, Hardware, Semiconductors

*3. Sustainability Accounting Standards Board

Identified Material Issues

Four material issues have been identified in HOYA as a result of the above process.

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Risks and Opportunities of Material Issues

In consideration of the social issues worldwide and HOYA’s business environment, we examined and discussed the following risks and opportunities in the process of selecting material issues.

Material issue

Risk

Opportunity

Greenhouse gas (CO2) emissions reduction

  • Laws, regulations and industry rules and/or demands from customers might become tougher, and if they are not addressed, it might diminish the competitiveness of HOYA’s products/services and/or HOYA’s social credibility

  • Carbon tax and/or carbon pricing (e.g., emissions trading scheme) might be introduced more widely

  • Electricity-saving production processes lead to cost reduction

Product quality and safety

  • If any inadequacy/defect in a product occurs, or if an incident involving noncompliance with laws, regulations or standards arises, it might give rise to costs of recall and/or diminish HOYA’s social credibility

  • Laws, regulations, standards, etc. related to product quality and safety might become tougher

  • Thorough compliance with laws, regulations, industry rules, etc. and execution of business activities in a sound manner help enhance corporate value

Employee engagement and diversity & inclusion

  • Competition to secure highly talented human resources might intensify on a global scale

  • Increase in opportunities for value creation and innovation brought about by securing and developing diverse human resources

Supply chain management

  • HOYA might be suspended from trading or its social credibility might be diminished by the impact of violation of laws and regulations and/or infringement of human rights, etc. in the supply chain

  • A stable supply of components being secured and a sustainable production system being established by building a relationship based on trust with suppliers

Approach to and Measures for Material Issues

Material issue

Approach

Measures

Relevant SDGs

Greenhouse gas (CO2) emissions reduction
Scope 1+2 reduction targets:
60% reduction by fiscal year 2030
100% reduction by fiscal year 2040
(compared to the base year of fiscal 2021)

Set a medium- and long-term target for CO2 emissions reduction and create a roadmap to achieve it
Set measures and KPIs to achieve the target and steadily implement the measures and monitor KPIs

  • Replace production equipment with units that have high energy efficiency

  • Consider and promote the introduction of renewable energy

  • Switch lighting to LEDs, promote eco-cars for company vehicles, etc.

  • Promote disclosures based on TCFD recommendations

7. Affordable and Clean Energy
12. Responsible Consumption and Production
13. Climate Action

Product quality and safety
Main future initiatives: In particular, the Life Care business will continue to strive to improve its management and in-house education systems as well as implement thorough quality control through product risk management, such as compliance with ISO 14971.

Review and improve the product safety and quality management system and operations on an ongoing basis—especially in the Life Care business, which deals in medical products—so that customers can use products more effectively and safely

  • Enhance the quality management system on an ongoing basis in response to changes in regulations

  • Maintain ISO9001/13485 certification by enhancing internal QMS audit

12. Responsible Consumption and Production

Employee engagement and diversity & inclusion
Targets:
Domestic ratio of female employees—Achieve 32% by fiscal 2025
Domestic ratio of female managers—Achieve 18% by fiscal 2025

Aim at creating a workplace environment in which diverse employees can fully demonstrate their capabilities with a sense of fulfillment from work so that employees’ growth also translates into HOYA’s growth

  • Conduct employee engagement surveys and implement measures in response to analyses of survey results

  • Promote the “Minkatsu” diversity project to create a work environment in which everyone can play an active role (mainly targeted at workplaces in Japan)

5. Gender Equality
8. Decent Work and Economic Growth
10. Reduced Inequalities

Supply chain management
Major future initiatives: Update the HOYA Supplier Code of Conduct in fiscal 2024. Going forward, establish a due diligence policy and survey/encourage suppliers from the perspectives of human rights and the environment.

Properly manage the supply chain based on the HOYA Supplier Code of Conduct, from the viewpoint of complying with laws and regulations and protecting human rights not only internally but also in the supply chain

  • Encourage suppliers to abide by the HOYA Supplier Code of Conduct and obtain their signatures

  • Conflict minerals survey

8. Decent Work and Economic Growth
16. Peace, Justice and Strong Institutions

・Measures and targets/indexes for material issues will be additionally set and reviewed in the process of holding discussions and carrying out initiatives in-house.

・As HOYA’s businesses are wide-ranging, we will also set targets and implement measures for individual sustainability/ESG issues in each business division on top of the common material issues.