Air Water : Value Creation Story

About the	Air Water's Value	Growth Strategy	The Air Water	Basic
Air Water Group	Creation Story	for Value Creation	Group's Businesses	Environment	Social	Governance	Information

*Well-being is the state of being physically, mentally, and socially comfortable. In addition to being happy, it represents a condition in which employees live with a sense of purpose through a range of different workstyles and platforms to succeed.

In line with its purpose-Meeting Society's Needs with Nature's Blessings-the Air Water Group will utilize its diverse management resources to continue generating value. By providing solutions to society's problems through our businesses, we hope to work with local communities to create a global environment that promotes recycling. We will also aim to further health maintenance in today's aging society and promote social wellness in other ways.

Air Water's Value Creation Model

• • Protection of water resources and biodiversity

• • Thorough management of chemical substances and zero use of plastics

• • Provision of solutions to minimize natural disaster-related risks

• • Contributions to regional revitalization

• • Provision of products and services that contribute to improved social infrastructure and systems

• • Promotion of smart factories and agriculture

• • Provision of products and services that contribute to the advancement of medical care

• • Provision of products and services that facilitate self-medication

• • Provision of food products that are safe, reliable, and healthy

• • ICT-driven workstyle reform

  Achieve a recycling-oriented society through coexistence with society and the earth

  Sustainability Vision

  for 2050

  • • Continuously provide economic and social value by flexibly responding to environmental and social changes

  • • Achieve a resource recycling society, leave zero environmental impact, and revive the global environment through our corporate activities

  • • Continue to be chosen by our local communities and customers, and ensure the well-being* of our employees

About the	Air Water's Value	Growth Strategy	The Air Water	Basic
Air Water Group	Creation Story	for Value Creation	Group's Businesses	Environment	Social	Governance	Information

Pillars to Success (Materialities)

As our management environment continues to change at dizzying speeds, to ensure we can achieve sustainable growth and continue to generate value for society, we are working to improve our medium- to long-term corporate value based on our Sustainability Vision for 2050. We have defined the seven key challenges essential to achieving this vision as Pillars to Success (Materialities), and we are analyzing the risks they might bring and the opportunities they might provide in our diverse business activities.

Selecting the Pillars to Success (Materialities)

In selecting our materialities, following thorough investigation of the environments surrounding society and our business, examination of the relevant risks and opportunities, and consideration of our stakeholders, we looked at their importance in building a sustainable society and raising corporate value.

We identified challenges by looking at our external environment from a long-term perspective and by linking the 17 SDGs with our business activities.

Identifying challenges

Utilizing the Future-Fit Business Benchmark, we specified the challenges most important to society, our stakeholders, and the Air Water Group as Pillars to Success (Materialities).

Selecting challenges

Designated Pillars to Success (Materialities)

*A KPI tool used to promote sustainable management developed and offered by the UK's Future-Fit Foundation.

Ultimately, we selected challenges with the greatest impact on business continuity (horizontal axis) and the greatest benefit for society and our stakeholders (vertical axis). In utilizing our diverse technologies to generate innovations, we will strive to make our ideal society a reality.

Materiality Map

High

Benefit for society and our stakeholders

High

Impact on business continuity

Utilization

Risks and Opportunities with Pillars to Success (Materialities)

Pillars to Success (Materialities)	Risks and Opportunities	Highly Relevant Business Domains
Fighting climate change	• Use of fossil fuels and tightening of CO2 emissions regulations • Shrinking of current energy markets and decline in demand due to energy conversions Risks • Negative impact on production activities and logistics functions caused by increasingly severe natural disasters (high waves, floods, etc.) • Creation of a local-production local-consumption energy supply system using biomass Opportunities • Conversion from petroleum-based energy to low-carbon energy, and provision of related devices • Provision of decarbonization solutions such as next-generation fuels (hydrogen and liquefied biomethane)
Realizing resource recycling	• Tightening of waste treatment restrictions and increasing treatment costs Risks • Spread of environmental issues and risks due to the depletion of resources and population increases • Provision of collection, refining, and purifying systems for industrial emissions (incl. collection and solidification of CO2) Opportunities • Reduction of waste through promotion of recycling and reuse • Creation of a waste-recycling supply chain (treatment systems, etc., for food waste and livestock manure)
Limiting environmentally hazardous substances	• Negative impact on material procurement and production activities due to droughts and worsening water quality Risks • Increase in costs in line with tightening of chemical substance restrictions • Tightening of plastic restrictions Opportunities • Provision of waste gas refining equipment, water treatment equipment, and purification and treatment products for waste gas, wastewater, and soil • Use of plastic alternatives in drinks containers and packaging materials
Coexisting with local communities in prosperity	• Deterioration of regional economies due to declining populations (decreasing birthrate and aging population) and urban concentration Risks • Increase in severity of damage from natural disasters • Increase in operation and maintenance costs due to aging social infrastructure • Provision of solutions to minimize risks from natural disasters Opportunities • Provision of products and services that contribute to improved sewage systems and other social infrastructure • Creation of businesses that increase regional employment and revitalize regional economies • Growing needs for smart factories and smart agriculture
Wellness (Healthy lifestyles)	• Increase in medical fees in line with extreme population aging and healthy longevity Risks • Changes in disease patterns, including chronic and complex lifestyle diseases • Provision of products and services that contribute to the advancement and remote control of medicine Opportunities • Provision of products and services that enable self-medication • Provision of delicious ingredients that are safe, reliable and healthy
Ensuring the well-being of employees	• Drop in labor productivity and loss of personnel without appropriate measures Risks • Drop in employee health • Diversification of employee values in line with globalization of business • Promotion of ICT-based workstyle reforms and work-life balance • Promotion of employee career development and diversity management Opportunities • Creation of a workplace environment where employees can work with peace of mind and good physical and mental health
Reinforcing Group governance	• Business continuity risks and unforeseen losses in line with insufficient internal controls Risks • Loss of social credibility through compliance violations • Insufficient risk management following M&As and business expansion Opportunities • Strengthening of internal control functions through integration and reorganization of subsidiaries (Countermeasures) • Thorough compliance and enhanced risk management • Improvement of stakeholder relations through better transparency

Other

Industrial Gas

Chemical

Medical

Energy

Agriculture and Food Products

Logistics

Seawater

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AIR WATER REPORT 2021 | 12