Material Issues | Sustainability Management | Sustainability

Process to Identify Materialities

Step 1Identifying and Categorizing Social Issues

We identified and categorized social issues relevant to the DJK Group under ESG categories based on the following:

Our Philosophy, Code of Conduct, and Long-Term Business Plan
Global megatrends
International guidelines such as the SDGs and ISO 26000

Step 2 Prioritization

We prioritized the identified issues using a matrix with two axes: “importance to stakeholders” and “importance to the DJK Group,” ranking them from highest importance.

Materiality matrix of the DJK Group

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Step 3 Defining Materiality and Identifying Risks and Opportunities

The identified key issues were grouped into five material themes. For each, we assessed both risks and opportunities:

Fostering New Value Creation within Manufacturing Operations

Risks	Opportunities
Loss of opportunities to enter new markets due to delays in responding to external changes Loss of business opportunities due to customer downsizing Mismatch with local business customs in global markets Technological obsolescence leading to failed strategies or investments	Launching new businesses that address social challenges Strengthening business portfolios Expanding the global network Leveraging existing technologies and networks to acquire new customers

Maximizing Value of Solutions through Enhanced Engineering Capabilities

Risks	Opportunities
Increase in labor cost burden Provision of a safe working environment Decline in profitability due to overreliance on product sales Loss of competitiveness due to delays in Digital Transformation Insufficient responsiveness to customer needs	Earning customer trust through operations that address market needs Gaining competitive advantage through unique services Improved profitability through increased orders for large-scale projects Creation of new businesses by leveraging engineering capabilities

Optimizing the Work Environment and Developing a Diverse Workforce

Risks	Opportunities
Chronic talent shortages due to turnover and hiring difficulties Internal friction due to increased diversity	Expanding business operations that incorporate diverse perspectives Boosting employee engagement Improving labor productivity through professional talent acquisition

Addressing Climate Change and Enhancing Supply Chain Resilience

Risks	Opportunities
Cost increases due to carbon pricing Business continuity risks from more frequent natural disasters Risk of being excluded from supply chains due to insufficient initiatives	Market expansion for environmentally friendly products Gaining stakeholder trust Improving supply chain resilience

Strengthening Corporate Governance

Risks	Opportunities
Decline in management quality due to weak internal controls Loss of public trust due to incidents or misconduct	Establishing a stable management foundation Enhancing profitability through transparent and agile decision-making Gaining stakeholder trust

Step 4 Integration into Business Plans

We aligned our materiality themes with V2030, our growth strategy, and set corresponding initiatives to achieve strategic goals.

Step 5 Board Approval

The materiality items were reviewed and validated through discussions at the Sustainability Committee, Management Committee, and the Board of Directors. Final approval was obtained at the Board level.

Fostering New Value Creation within Manufacturing Operations
Maximizing Value of Solutions through Enhanced Engineering Capabilities
Optimizing the Work Environment and Developing a Diverse Workforce
Addressing Climate Change and Enhancing Supply Chain Resilience
Strengthening Corporate Governance

Materiality, Vision, and Related SDGs

Fostering New Value Creation within Manufacturing Operations

Vision for V2030	Initiative themes	Indicators (KPIs)
Through an unwavering commitment to hands-on engagement, we uncover customer needs and deliver innovative solutions that address societal challenges.	Expansion of business domains	Order value from new customers Number of large-scale project orders through integrated proposals for manufacturing lines and processes
	Capturing global growth	Orders Received from Foreign Companies

Maximizing Value of Solutions through Enhanced Engineering Capabilities

Vision for V2030	Initiative themes	Indicators (KPIs)
We advance our core mission of integrating people and technology, earning recognition as an indispensable partner in our customers' manufacturing operations.	Strengthening project promotion structure	Enhancing management accuracy through the introduction of project management tools Increasing the number of supervising engineers Improving the working environment for technical staff Strengthening project review processes

Optimizing the Work Environment and Developing a Diverse Workforce

Vision for V2030	Initiative themes	Indicators (KPIs)
By fostering a corporate culture of diversity and inclusivity and creating a supportive work environment where all employees can thrive, we nurture individual strengths that drive our creative evolution and enhance our overall organizational strength.	Digital Transformation driving workstyle innovation for diverse ways of working	Reduction of working hours through generative AI Streamlining of back-office operations
	Promotion of women’s active participation leading to securing diverse talent	Increase in the ratio of female managers
	Talent development that improves the working environment and enhances job satisfaction	Maintenance and improvement of average annual training hours per employee Improvement in engagement survey scores

Addressing Climate Change and Enhancing Supply Chain Resilience

Vision for V2030	Initiative themes	Indicators (KPIs)
We advance initiatives to address various societal issues, with climate change as our primary focus, through collaborative efforts across our entire supply chain.	Reduction of GHG emissions	Reduction of Scope 1 and 2 emissions
	Analysis of climate-related risks and opportunities	Coverage rate of business divisions in scenario analysis
	Supplier engagement	Establishment of policies for sustainable procurement

Strengthening Corporate Governance

Vision for V2030	Initiative themes	Indicators (KPIs)
Building an agile group management system, we uphold and enhance a resilient, efficient, and transparent governance framework to respond to evolving business dynamics.	Strengthening internal controls at overseas bases	Expanding the whistleblower system to overseas Group companies
	Enhancing information security systems	Expanding and embedding the information security policy Number of incidents
	Ensuring diversity on the Board of Directors	Maintaining and increasing the ratio of outside directors