Efforts towards ESG

Based on the corporate philosophy of "For the Children, By the Children," Select Corporation <5078> has adopted "Sustainable Stable Growth" as its management policy and is engaged in various activities related to ESG from three perspectives: "Environment," "Social," and "Governance."

(1) Environment

Regarding the company's environmental efforts, at the Chiba plant, a groundbreaking "zirconium conversion treatment" was introduced as a consideration for the global environment, reducing the generation of sludge (difficult-to-dissolve waste) by 95% compared to conventional methods. This has the capability of reducing environmental load substances while having corrosion resistance, adhesion performance, and degreasing performance as pretreatment for metal coating. Additionally, regarding measures for greenhouse gas emissions, the company promptly embarked on a "Nearly ZEH M" specification for single-person rental residences in line with the government-recommended "Zero Energy House (ZEH)" conversion. ZEH stands for "Net Zero Energy House," which is a housing concept that generally achieves net zero or below annual net energy consumption. The company is taking a pioneering step in the industry for preventing global warming by supporting Tokyo's aim to become the world's leading environmentally advanced city and promoting the spread of "Tokyo Zero Emission Homes." The latter has higher energy-saving performance standards than ZEH, aligning with the government and Tokyo's environmental policies. The company's proactive approach towards environmental initiatives is evident.

(2) Social

As part of its social initiatives, the company has been recognized as an outstanding corporation focusing on health management, receiving the certification of "Excellent Health Management Corporation" for 7 consecutive years (until March 2024) under the joint program by the Ministry of Economy, Trade and Industry and the Japan Health Council. Additionally, in the "Healthy Business Declaration Tokyo Promotion Council's 'Healthy Business Declaration' operation and certification, the company was awarded the 'Healthy Excellent Company Certification (Gold Certification)' for 6 consecutive years (until 2023). Furthermore, the company has implemented various measures to enhance the physical and mental well-being of its employees such as introducing medical support insurance to cover treatment if illness is detected, promoting work-life balance by enforcing mandatory shutdown of computers by 8 pm, implementing staggered working hours according to business needs, and actively focusing on maintaining a balance between work and personal life. The company declares that the collective happiness of each employee contributes to the company's value, emphasizing the continuous pursuit of creating an environment where employees can work happily.

(3) Governance

Regarding the company's governance efforts, a cooperative structure is established among the Internal Control Committee, Risk Compliance Committee, and Internal Audit Department. They have set the "Basic Internal Control Policy," with the Internal Control Committee monitoring and verifying its development and operation, reporting and confirming monthly progress at the board of directors meeting. Additionally, they distribute the 'Compliance Guidebook' to all employees and ensure thorough knowledge through training. Moreover, they have established an internal reporting system, clearly defining anonymous reporting reception and the exclusion of disadvantageous treatment in regulations to ensure effectiveness. Moreover, they comprehensively identify and evaluate various risks surrounding the company in the Internal Audit Department and each business unit, compile response strategies, and actively practice appropriate risk management towards prevention and mitigation. Currently, they are considering placing dedicated personnel within company units to enhance internal controls and risk management. Furthermore, effective May 30, 2024, the company has increased the number of outside directors from 2 to 3, ensuring approximately one-third of directors are from outside. They have also appointed two female executives. Companies listed on the Tokyo Stock Exchange Prime Market are required to have a female executive ratio of over 30% by 2030. The company is conscious of this long-term numerical target, displaying a commitment to promoting diversity within the organization.

(Author: FISCO Guest Analyst Ryoji Mogi)