Central Glass : Integrated Report 2023（5,206KB）

Integrated Report

2023

Central Glass Co., Ltd.

Kowa-Hitotsubashi Bldg., 7-1Kanda-Nishikicho3-chome,Chiyoda-ku, Tokyo, 101-0054 Japan

TEL. [phone] https://www.cgco.co.jp/

Basic Philosophy

"Creating a Better Future

Through Monozukuri*"

The Central Glass Group will contribute to the establishment of a truly

prosperous society through the spirit of Monozukuri.

• Monozukuri refers to all the business activities in which the Central Glass Group engages with a basic stance of integrity and sincerity, including R&D, quality-oriented manufacturing, and sales.

Basic Policies

• Create new value through innovative technologies.
• Strive toward harmony with the environment while contributing to the realization of a sustainable society.
• Endeavor to increase corporate value with global growth as our driving force.
• Aim to be a vibrant enterprise with a pioneering spirit and respect for diversity.
• 1. Take responsibility for one's own actions, and engage in honest corporate activities.
  2. Place our highest priority on the quality and safety of our products and continue to meet our customers' needs.

Code of	3.	Rene one's awareness, and constantly pursue original ideas and technologies.
Conduct	4.	Achieve the establishment of a society in which all people can live in comfort and good health, and protect the
		global environment.
	5.	Create products that satisfy customers all over the world by learning about different cultures and customs.
	6.	Respect the diversity of every individual, and never cease to embrace the challenges of the future.

Concept of Our Initiatives Toward Sustainability Based

on Corporate Philosophy

Based on the Basic Philosophy, the Central Glass Group has made efforts to solve environmental and social issues through the spirit of Monozukuri, and developed various businesses with the aim of contributing to the establishment of a truly prosperous society.

Believing that this Basic Philosophy is the very essence of what sustainability means, we will continue to tackle environmental and social issues more seriously than before, and take on challenges toward the realization of a sustainable society as an R&D-oriented type company.

Central Glass Co., Ltd. aims to improve enterprise value from a long-range viewpoint through business activities while taking the global environment, society and economy into consideration.

2 Central Glass Integrated Report 2023

Editorial Policy

We created the Integrated Report by integrating the CSR Report and the Annual Report from this year in order to convey our Group's medium- to long-term value creation in a more clarifying manner. This report consists primary of materiality, our value creation process and nancial information, in addition to our business outline, as well as information on E (Environment), S (Society) and G (Gover- nance).

We will continue to work on the improvement of the content of the report so that it will serve as a useful communication tool for our stakeholders to understand our Group's activities.

Report Period

This report covers the period from April 1, 2022 to March 31, 2023, including activities before and after the relevant period as necessary.

Scope of the Report

The scope of the report basically includes Central Glass Co., Ltd. and all consolidated subsidiary companies.

Notes Concerning Future Prospects

This report includes statements on expectations and prospects regarding strategies and achievements, and plans for the future.

Actual achievements can be different from these expectations and prospects due to various factors.

[Reference Guidelines]

・The International Integrated Reporting Framework by the International Financial Reporting Standards (IFRS) Foundation

・The Guidance for Collaborative Value Creation 2.0 by the Ministry of Economy, Trade and Industry

・The following was referred to identify materiality The Global Reporting Initiative (GRI) Standards

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Contents

Basic Philosophy and Concept of Our Initiatives Toward Sustainability

Value Creation by Central Glass Co., Ltd.

History of the Central Glass Group

To All of Our Stakeholders

President's Message

Central Glass Group Value Creation Process

Materiality

Financial and Non-Financial Highlights

Special Feature

1. Initiatives to Address Climate Change Issues
2. Research and Development
3. Business Restructuring:

Introduction to Our New Company

Central Glass Products Co., Ltd.

Business Outline

Glass Business

Glass Fiber Business

Applied Chemicals Business

Medi-Chemicals Business

Electronic Materials Business

Energy Materials Business

Fertilizers Business

Business Foundation Supporting Our Growth

Sustainability Management

Corporate Governance

Environment and Safety

Human Resource Strategy and Development

Improvement of Product Quality

Company's Circumstances Message from Outside Directors Director Introduction Financial Summary

Corporate Outline, Group Companies and Stock Information

Central Glass Integrated Report 2023 3

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

History of the Central Glass Group

After starting with manufacturing of soda products, we launched the Fertilizers business, Glass business and Glass Fiber business, and since 1980s, we have further advanced our business into the field of fine chemicals, which is now our key area. While integrating our basic materials and technology to put out a wide variety of products into the world multidirectionally, we have adapted ourselves to the changing business environment, and flexibly worked on the transformation and re-structuring of our business portfolio such as by withdrawing from the soda business, our founding business. Moving forward, considering the needs of the times, we will contribute to solving social and environmental issues through business activities while utilizing our accumulated know-how.

	Electronic Materials Research Center Taiwan	Fundamental Chemical Research Center and New-STEP
		Research Center
(Net sales: billion yen)	(Operating prot: billion yen)
250			25

												Net sales	Operating prot
200																20
150	1937 Ube Plant															15
100																10
50																5
		1964 Completion of Matsusaka Plant
0																0
1936	1950	1955	1960	1965	1970	1975	1980	1985	1990	1995	2000	2005	2010	2015	2020	(Year)
										* Results until 1982 are provided by the non-consolidated result, and those from 1983 by the consolidated result.

Social	World War II	High Economic Growth Period	First Oil Crisis	Second Oil Crisis
Trends
From 1936			From 1950		From 1970
Established as Ube Soda Industry		Launched the fertilizers and glass	Expanded the range of chemical products
Co., Ltd. in Ube City, Yamaguchi.		business and altered its corporate name.	and launched glass ber business.

Plaza Accord

Bubble Collapse

From 1980

Expanded into the ne chemicals business by utilizing its uorination technology.

Collapse of Lehman Brothers	COVID-19
Pandemic

From 2000

Withdrawal of operations and growth in the chemicals business Structural improvement of the Glass business.

1936

Amid the increasing demand for the industrialization of chemical products in the country, Ube Soda Industry Co., Ltd., the predecessor of our Company, was established to start the soda business with regional development in mind.

The company worked on the production of soda ash used as the raw materials of glass, soap and detergent, and organic-inorganic chemical products used as basic materials in various industries.

4 Central Glass Integrated Report 2023

1953

Launched the fertilizers business by using ammonium chloride generated as a result of the conversion of the soda ash manufacturing process.

1958

Launched the at glass business using soda ash as a raw material. Constructed plants in Sakai City, Osaka, and Matsusaka City, Mie Prefecture.

1963

Altered its corporate name to Central Glass Co., Ltd.

1971

Launched the continuous glass ber business.

From 1974

Constructed a production plant for anhydrous hydrouoric acid using a rotary kiln at Ube Plant and expanded the production of uorinated chemical products and the hydrouoric acid business.

From 1980

Aimed at the development and commercialization of products by giving added value to hydrouoric acid amid the increased global attention on the functionality of uorine compounds.

Constructed a multi-plant, etc. for organic uorine compounds successively at the Ube Plant, and completed the foundation of the ne chemicals business.

Established a joint venture company for the automotive glass in the U.S.

1990

Started selling inhalation anesthesia using active pharmaceutical ingredients made by our Company. Greatly contributed to the enhancement of business performance.

Chemicals Business

	Business that	2003: PVC business
	withdrew from	2006: Caustic Soda business
	its operation	2018: Calcium Chloride and Soda Ash business
	Growing	Electronic materials for semiconductors,
	Business	electrolytes for lithium-ion batteries, etc.
Glass Business
	Structural	2021: Abolished or merged domestic glass business bases.
	Improvement	2022: Withdrew from the overseas glass business.
		2023: Integrated the Automotive and Architectural glass
		businesses and made an independent new company.
		Central Glass Integrated Report 2023 5

To All of Our Stakeholders

Tadashi Shimizu

Representative Director, Chairman

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

Top Message

We will address solutions of various social issues as an R&D-oriented company.

Kazuhiko Maeda

Representative Director, President & CEO

Central Glass, as our Corporate Philosophy shows, contributes to the establishment of a truly prosperous society through the spirit of Monozukuri. A truly prosperous society that I have in mind is not a society that only pursues near-term affluence and convenience, but a sustainable society that aims to solve various environmental and social issues, in addition to pursuing prosperity. Central Glass will further promote initiatives toward the sustainable society.

Currently, amid the pressing issue of global warming that cannot be procrastinated, we will contribute to solving the issue through the research and development of products to become solutions such as electrolytes for lithium -ion batteries and their commercialization.

Also, we have steadily advanced measures to reduce CO2

emissions from our Company itself. As part of the structural reform of the Glass business carried out two years ago, we reduced the number of furnaces by half, and decreased our CO2 emissions significantly.

At the same time, through facing up to various issues that need to be addressed for society including one related to Diversity & Inclusion, we aim to realize a work environment with a good work-life balance in which all employees can work more comfortably.

Furthermore, while pursuing efficient and rational man- agement, we have established a solid compliance structure to promote the enhancement of corporate governance.

Central Glass aims to make ourselves a sustainable company through these initiatives, and further improve our corporate value through contributing to society.

Resolution at the Appointment of the New President and My Vision Toward a "Specialty Materials Company"

Central Glass was founded in 1936 as a chemical manufacturer to manufacture and sell soda products. Then, we began producing fertilizers based on ammonium chloride produced along with the soda products, and launched into the Glass business, using soda ash as a raw material, and then into the Glass Fiber business. Since the 1980s, we have expanded our business into the field of fine chemi - cals, our current core business, in which our fluorination technology is applied.

Recently, however, as the Glass business fell into stagnation due to change in its business environment, we took decisive actions including the transfer of our Automotive glass business in Europe and the United States and the

fundamental structural reform of our domestic architectural glass business, in an effort to restore profitability. In addition, after integrating our domestic Architectural glass and Automotive glass businesses, we made a fresh start as Central Glass Products Co., Ltd. in April 2023.

In June 2023, when the Company was standing at the turning point, I took the position of Representative Director and President. Feeling tense with the weighty responsibility of taking over the history up until the present, I have reaffirmed my determination to pave a way toward the future for the Company.

Central Glass, which has the Basic Philosophy of "Creating a Better Future Through Monozukuri," aims to contribute to the establishment of a truly prosperous society through the spirit of Monozukuri. We have also clarified our intention of growing as an R&D-oriented company through the ongoing Medium-Term Management Plan (from FY2022 to FY2024).

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Central Glass Integrated Report 2023

Central Glass Integrated Report 2023 7

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

After joining Central Glass as a researcher in the field of chemicals, I myself have built my career mainly in the sales and planning department. During that time, I have led the expansion of businesses related to electronic materials for semiconductors and electrolytes for electric vehicle (EV) batteries through launching new businesses in the field of fine chemicals and establishing overseas affiliates.

Regarding the future corporate management, I will continue to move forward with our businesses to realize our Corporate Philosophy with my long experience in Monozukuri. First of all, we will endeavor to further develop our business through enhancing our research and development, particularly by addressing the full-grown three core pillars of chemicals (anesthetic agents, semiconductor materials and electrolytes).

As our vision for the future, we should set a target of transforming the Company into a "Specialty Materials Company" by 2030 based on the idea of materials including glass. The role of the ongoing Medium-Term Management Plan is to build a solid foundation for the next Medium -Term Management Plan (from FY2025 to FY2027), which will serve as a step toward the realization of a Specialty Materials Company, and we are working with our utmost energy toward achieving the goal.

Securing of a Profit Margin of 5% by the Glass Business for the First Time in 19 Years, and Steady Growth of the Chemicals Business

Looking back on the business environment of FY2022, we can see that there continued to be growing uncertainty about the world economy due to various factors including the soaring raw material and fuel prices due to the prolonged invasion of Ukraine by Russia and the effect of economic sanctions on Russia, concerns over U.S.-China conflict and the Taiwan issue, and the financial system instability caused by a tightening of monetary policy taken against the inflation pressure in European countries and the U.S. In Japan, the movement restrictions due to the COVID-19 pandemic were beginning to be relaxed and the economy started to show mild improvement with the recovery of economic activities and improvement in em- ployment. On the other hand, the domestic economy still found itself in an unstable situation with a rapid depreciation of yen, soaring raw material and fuel prices, and a continuous increase in consumer prices.

Under such circumstances, the sales of the Glass business declined to half compared with the previous fiscal year because of the rearrangement of sales and production

• Glass Business

(Billion yen)	150.7	144.2				(%)
150					20
120			112.4	111.8		15
90
						10
60					54.7
					4.9	5
30
	0.3	0			2.7
0	0.5	0	-3.0	-2.5		0
			-2.7	-2.2
					-5
-30
2018	2019	2020	2021	2022 (FY)

Net sales		Operating prot		Operating prot ratio
(left axis)		(left axis)		(right axis)

bases and the revision of product prices due to soaring raw material and fuel prices; however, the operating profit improved by 5.2 billion yen, resulting in securing an operating profit ratio of 5% for the first time in 19 years.

Regarding the Chemicals business, sales in the semiconductor market slowed down compared with those of the previous fiscal year, when electronic materials sold well, partly due to inventory adjustments by users, which resulted in a decrease in sales. On the other hand, the sales in the energy material business exceeded those in the previous fiscal year, thanks to the EV market growth followed by the rapid expansion of the sales of electrolytes for lithium-ion batteries. In the electrolyte market, where raw material prices and selling prices tend to fluctuate dramatically, the Central Glass Group has established production bases including joint venture companies in Japan, Asia and Europe to create a global supply chain, which enabled stable raw material procurement and in-house production of additives, key materials, leading to the securing of profits. In the field of applied material chemicals, we increased sales by expanding the sales of next-generation blowing agents, products made from hydrofluoroolefins (HFOs) as well as by revising prices of various products.

As a result, the sales of the Chemicals business greatly exceeded those of the previous fiscal year, with its operating profit reaching approximately 14 billion yen, with which the overall operating profit target for the final year (FY2024) of the Medium-Term Management Plan was almost achieved.

In terms of priority areas to be addressed in the future, in the Glass business, we will proceed with discussion and consideration on measures to continuously and stably secure the profit that turned positive by the structural reform as well as future investment policies on a company-wide basis. As for the Glass Fiber business, we will focus our efforts on securing profit by promoting a shift to high value-added products.

• Chemicals Business

(Billion yen)				(%)
150					20
120					114.6
					15
	12.2			94.4	12.3
90	79.2	78.2 10.2	78.3	10.4
			9.1		10
60
					5
30
	9.6	8.0	7.1	9.8	14.1
0					0
-30					-5
2018	2019	2020	2021	2022 (FY)

Net sales		Operating prot		Operating prot ratio
(left axis)		(left axis)		(right axis)

Regarding the Chemicals business, as mentioned earli- er, we will continue to grow the three core pillars of semiconductor materials, electrolytes for lithium-ion batteries, and fluorine-based general anesthetic Sevoflurane, in order to steadily make profits. As for the Fertilizers busi- ness, there are concerns about the environmental burden from coating agents used in a coated fertilizer, Cera-coatR, designed to contribute to the streamlining of agricultural work. In response to this, we will promote the research and development of environment-friendly materials and the commercialization of new fertilizers.

Research and Development Efforts in the Fields Expected to Develop in the Future

We are promoting research and development of new products based on the recognition that the business fields that we can expect in the future are semiconductors, energy, and life sciences not just for our group but for Japan as a whole.

In the field of semiconductors, we are working on the commercialization of materials for next-generation power semiconductors, silicon carbide (SiC) wafers, contributing to the performance increase of rapidly spreading EVs. As SiC power semiconductors can significantly reduce energy loss that occurs at the time of power conversion, we are presently working on their development with a view to establishing a technology to mass produce 6-inch ingots using the solution growth method. As our program to develop 8-inch ingots, ones with a wider diameter, has been adopted as one of the Green Innovation Fund Projects of the New Energy and Industrial Technology Development Organization (NEDO), we will advance their development while making good use of a subsidy.

In the energy material field, we are working on research and development of sodium ion batteries. Since lithium for lithium -ion batteries, which are now the mainstream of batteries

8

Central Glass Integrated Report 2023

Central Glass Integrated Report 2023 9

for EVs, is one of the rare metals, there is a concern that its supply conditions might become tight with the widespread of EVs. Accordingly, some companies are working toward the practical use of sodium ion batteries, low-cost ones using earth-abundant sodium, which can be used as a substitute for lithium. Having worked on the research and development of sodium ion batteries for years, we have patents related to materials for such batteries, and also have a plan to have our joint venture companies in China produce and supply sodium hexafluorophosphate serving as main material for electrolytes.

Moreover, regarding the life science business, we will reevaluate conventional pharmaceutical products, and will newly launch new business projects.

Through Monozukuri," the Central Glass Group has developed various businesses with the aim of contributing to the establishment of a truly prosperous society, while making efforts to solve environmental and social issues through the spirit of Monozukuri. Believing that this is the very essence of what sustainability means, we will continue to tackle global environmental issues and various social issues seriously, and work on the realization of a sustainable society as an R&D-oriented company, aiming to improve our corporate value.

As a means of developing a structure to address sus- tainability, we established the Sustainability Committee, which comprehensively grasps, analyzes and evaluates measures and promotion activities for sustainability, and make a report and a recommendation to the Board of Directors as necessary.

In addition, after identifying materiality that emphasizes sustainability, we established priority issues for 11 items in three areas as well as KPIs for initiatives to tackle them, and then we positioned the provision and development of products that solve social issues as the most important initiatives among them. Considering that many of our businesses leverage the strength of fluorine chemistry, we will contribute to solving social issues by means of fluorine chemicals.

One of the examples is electrolyte for lithium-ion batter- ies. We also declare in our Basic Policies that we will provide products that are friendly to society and the environment to support various industries, such as by developing hydrofluoroolefin-based foaming agents and solvents whose

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

Contributing to Solving Social Issues through Initiatives toward Sustainability and Monozukuri

Based on the Basic Philosophy of "Creating a Better Future

• Consolidated Sales Composition Ratio

Chemicals Segment		Others 3%	Glass Segment
	Total 68%		Total 32%
							Architectural
									glass
Fertilizers			13%
9%							Automotive
									glass
		169.3	14%
			billion yen			Glass Fiber
						5%
Energy
materials
21%						Applied material
							chemicals
	Electronic materials 11%			14%
	Medi-Chemicals10%

global warming potential (GWP) is close to one, as well as by promoting a shift from existing high-performance semiconductors with high GWP to products with low GWP.

On the other hand, regarding our attitude toward human capital, we have a systematic educational program to support the growth and self-realization of individual employees

• Consolidated Operating Profit

2.7 billion yen 16%			Glass Segment

16.8

billion yen

14.1 billion yen 84%	Chemicals Segment

while making good use of our corporate culture characterized by "amenableness and earnestness" based on the human resources development policy. Our Career Creation Center takes a lead in promoting this program while updating the content of the general education, the Monozukuri education and the career development education every year. As a personnel strategy, with a slogan of "Securing of the Four Things (securing of acceptability, securing of a place to stay, securing of equity, and securing of fairness)," while providing the opportunities and environments, we will contribute to the creation of human resources and corporate culture that always brings smile to all group members' fac- es, and promote psychological safety at work.

Efforts to Improve Our Corporate Value for the Stakeholders

Central Glass has allocated a certain portion of the total investment for improvement in the profitability of existing businesses. However, now that the fundamental structural reform of the Glass business is almost done and we find ourselves in a situation that we can make profits, we

will clarify our intention to allocate investments to growth areas that will bring an improvement in our corporate value based on a solid growth strategy as well as to return the obtained profits to our stakeholders.

From my personal perspective, I find the present target of the total return ratio of 30% is somewhat low as a target of a company making profits with high-valued added busi- nesses. We have maintained this level by restructuring our businesses while securing stable dividends; however, once making sure of reaching a situation that allows us to stably and continually make profits, we will pursue the idea of increasing the return ratio.

We would like to continue to make concerted efforts company-wide to go forward step-by-step as the newly born Central Glass Group under the key phrase of "Cre- ation and Challenge." Aiming at transforming ourselves into a "Specialty Materials Company" by 2030, we will unitedly apply ourselves to the accomplishment of the ongoing Medium-Term Management Plan, and lay groundwork for the next Medium-Term Management Plan.

We sincerely ask our stakeholders for continued support and would like you to look forward to the development of Central Glass Group.

10 Central Glass Integrated Report 2023

Central Glass Integrated Report 2023 11

Central Glass Group Value Creation Process

We will contribute to the realization of a sustainable society through our business activities as an R&D-oriented company under the slogan of "Creation and Challenge".

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

Input [FY2022]

Financial Capital

• Financial Base Supporting Value Creation

Consolidated Total Assets

	221.1 billion yen
Equity Ratio	46.8%

Rating (End of March, 2023) Aｰ (JCR)

Business Activities

Corporate Philosophy

"Creating a Better Future Through Monozukuri "

The Central Glass Group will contribute to the establishment of a truly prosperous society through the spirit of Monozukuri.

Long-Term Vision

■ Continuously Growing Company Driven by New

Technologies and New Products Created

Output and Outcome

Economic Value

(Target Indications and Final Fiscal Year-Targets

of Medium-Term Management Plan)

	FY2022	FY2024
	Results	Targets
Operating prot 16.8 billion yen	14.0 billion yen
Operating prot	9.9 %	8 %
ratio

Manufacturing Capital

■ Amount of Capital Investment

7.1 billion yen

■ Introduction of Energy Saving

Equipment

■ Introduction of Internal Carbon

Pricing (ICP) System

Glass Business	Glass Fiber
Business

through R&D

■ Basic Measures

(1) Strengthen R&D as a growth driver.

(2) Clarify roles of each business and optimize

the business portfolio.

ROE	37 %	12 %
Total Return	136 %	At least 30 %
Ratio
Dividend on	3.5 %	3.6 %
Equity (DOE)

Human Capital

• Various Human Resources

(For details, refer to Page 40)

Consolidated number 3,350 of employees

(End of FY2022)

Intellectual Capital

• Promotion of Open Innovation

Cost for R&D	5.6 billion yen
(For details, refer to Page 20)
Number of patents	2,213

held by the Company

Social Capital

• Emphasis on Dialogue with Stakeholders

Total number of	63
personal interviews

Natural Capital

	Medi-		Energy	Electronic
	Chemicals	Materials	Materials
	Business	Business	Business
	Applied		Fertilizers
	Chemicals
	Business
	Business
	R&D Supporting Our Growth
Focus	Energy saving, lowering of GWP, SiC,
Areas	and capture and utilization of CO2

Priority [Electronic Materials]

Research Environment-friendly semiconductor materials,

Areas next-generation materials (SiC), etc. [Energy Materials]

Development of electrolytes (for EVs and stationary use) and post-Li-ion batteries

[Medi-Chemicals]

Medium-Term Management Plan (Mid-Term Plan)

• Basic Policies
• 1. Achieve new growth by strengthening our business foundations and original technologies.
  2. Maintain a healthy nancial base.
  3. Contribute to the global environment

Priority issues to address (Materiality P14 )

"Solution of Social Issues Through

Business Activities"

"Measures for Environmental Protection"

"Enhancement of Our Business Foundations"

Social Value

Contributing to GHG reduction by providing

environmental contribution products

Strengthening R&D focusing on energy

saving and lowering of GWP

Aiming to reduce GHG emissions by 40 percent in 2030 compared with FY2013 emissions levels, and to achieve net zero by 2050

Promotion of D&I and enhancement

of human resource development

Improvement of quality management

• Reduction of Environmental Impact

Overall energy use	5,247 TJ
Water use	10,345 Thousand of m3

Promotion of medical materials development and pharmaceutical research with focus on life science

Enhancement compliance system

12 Central Glass Integrated Report 2023

Central Glass Integrated Report 2023 13

Materiality

• Materiality

(1) Materiality-Identifying Process

By taking the following process, we evaluate risks and opportunities in terms of both importance to our Company and importance to our stakeholders to identify Materiality and KPIs.

Step 1	Select candidate issues based on the international guidelines (GRI and ISO26000) and the investigation content
from the Sustainability Committee while considering requests from society.
Step 2	Comprehensively evaluate such issues at the Sustainability Committee from the two viewpoints of importance to
our Company and importance to our stakeholders, and formulate a tentative plan.
Step 3	Clarify their relationships with the management policies, the Midterm Plan, etc. and discuss them at the Board
of Directors to identify priority issues.

(2) Materiality Matrix

After taking this identifying process, we have identified on priority issues for eleven items in three areas as well as

KPIs for initiatives to tackle them. In particular, considering relationships with the business, "Solution of Social Issues Through Business Activities: Provision and Development of Products that Solve Social Issues" is positioned as a top-priority issue.

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

■ KPI

Fields

Materiality (ESG)

Initiatives/Key Performance Indicators (KPIs)

FY2022 Results

FY2023 Targets

FY2024 Targets

(final fiscal

year of

medium-term)

[Environment]

Provision and expansion of environmental contribution products

[Chemicals Business Department]

78.5 billion yen

84.0 billion yen

100.0 billion yen

(Total sales of low-GWP and energy-saving products)

Provision and expansion of environmental contribution products [Glass

I

Business Department] Sales volume ratio of eco-glass and heat-

98%

126%

156%

insulation automotive glass compared with FY2021

Solution of

Provision and expansion of coated fertilizers contributing to food issues

Provision and expansion of coated fertilizers contributing to food issues

Social Issues

A. Provision and Development

Through

[Fertilizers Business Department] (contributing to the expansion of yield

[Fertilizers Business Department] (contributing to the expansion of yield

of Products that Solve

Business

amount and energy saving)

amount and energy saving)

Social Issues

Activities

• Electronic materials area: Environment-friendly semiconductor materi-

Enhancement of R&D capability

als and next-generation materials (SiC)

• Battery Materials: Electrolyte (EV and stationary) and Post-Li-ion

(Focus areas: Energy saving, lowering of GWP, SiC, capture and

battery development

utilization of CO2, and PFAS response)

★ Promote medical materials development and pharmaceutical research

with focus on life science as a next-growth area

Reduction of GHG Emissions (Scope 1 and 2)

33.2 ten thousand tons CO2

36.0 ten thousand

35.0 ten thousand

(370 thousand tons CO2) *1

tons CO2

tons CO2

*1 In FY2022, withdrawal from the automotive glass businesses

100

in United States and Europe and the operational suspension of

96.7

95.0

Ｂ. Measures for Climate

some of the domestic glass melting furnaces led to significant

89.5

80.4

79.2

50

reduction. Short-term reduction goals for 2023 and 2024 were

Change Issues

GHG emissions (ten thousand tons)

II

determined based on the emissions of FY2022 (370 thousand

0

33.2

Measures for

tons CO2), which excluded special factors such as the large-scale

2013

2018

2019

2020

2021

2022

Environmental

periodic repair work conducted in the same year.

Protection

*2

5.3 million tons CO2

6.0 million tons CO2

6.8 million tons CO2

GHG avoided emissions by providing environmental contribution products

*2 Based on the CO2 emissions reduced at the use stage of the final products that

use our

Company's environmental contribution products, the avoided emissions

are estimated by using our Company's unique formula to calculate emissions to be reduced by a one-year use based on the sales volume of our Company.

C. Resource utilization

Improvement of GHG emissions intensity (GHG emissions/Net sales)

2.0t CO2/million yen

2.1t CO2/million yen

1.8t CO2/million yen

Reduction of Water Use (Improvement of water intake intensity per sales:

3

3

3

• Materiality Matrix

		important		H	I	A	B
StakeholdersOurtoImportance	ExtremelyimportantVery		C	F
				D	K		E
				G	J
		Important	Very important	Extremely important
				Importance to the Company

● Fields	● Materiality
I Solution of Social	[Environment]
Issues Through	A. Provision and Development of
Business Activities	Products that Solve Social Issues
II Measures for	B. Measures for Climate Change
Environmental
C. Improvement of Energy Use Efciency
Protection
	[Society]
	D. Diversity & Inclusion
	E. Enhancement of Human Resource
	Development
	F. Improvement of Quality Management
III Enhancement	G. Promotion of Industrial Health and
Safety, and Security and Disaster
of Business
Prevention
Foundations
H. Enhancement of Supply Chain
	Management
	I. Respect for Human Rights

[Governance]

1. Enhancement of Compliance System
2. Enhancement of Corporate Governance

	and the promotion of	Total water intake/Net sales)	61.1m /million yen	61.1m /million yen	55.6m /million yen
	streamlining
	Reduction of the Final Disposed Amount of Industrial Waste	15.6 thousand tons	10.0 thousand tons	8.8 thousand tons
	[Society]	Improvement of female employee ratio in career-track employees	13%				14%		15%
		Improvement of ratio of male employees utilizing parental leave	39.7%			50%		55%
		Improvement of employment rate of persons with disabilities	2.18%			2.5%		2.6%
	D. Diversity & Inclusion
	Promotion of Diversity & Inclusion management education	15% (cumulative		45%		60%
		(encouragement for managers to attend lectures)	attendance rate)
		Encouragement to take paid leave (including secondees)	67.5%				At least 80%	At least 80%
		Expansion of opportunities for employee education (training time per person)	18 hours			22 hours	25 hours
	E. Enhancement of Human
	Improvement and enhancement of education for employees including	Aim to improve the value of the Group's human capital by improving and support-
	Resource Development
	ing education for employees of our Group companies (domestic and overseas) to
	those of our Group companies
		further develop their skills.
		Initiatives/Key Performance Indicators (KPIs)	FY2022	FY2023			FY2024	Final Goals
		Results	Targets			Targets
		Reduction of the number of complaints (year-to-year reduction rate)	24%		Reduction of		Reduction of		Zero complaint
		reduction		25% or more		25% or more
	F. Improvement of Quality
	Maintenance/improvement of quality of audits implemented by
III	Management	83%		At least 90%		At least 90%		100%
contractors (year-round auditing executing rate)
Enhancement
of Business		Improvement of quality education	Improve workers' proficiency level by providing	group-wide quality educa-
Foundations		tion, enhancing the content of Monozukuri Education at production sites,
			and increasing the opportunities.
	G. Promotion of Industrial Health and	Promotion of industrial health and safety	6		0			0		0
	(number of accidents that require time off from work)
	Safety, and Security and Disaster
	Promotion of security and disaster prevention
	Prevention	0		0			0		0
	(number of serious accidents)
	H. Enhancement of Supply		Conduct investigation and evaluation concerning the CSR of business
	Promotion of CSR procurement	partners. Follow up the status of their CSR procurement as necessary.
	Chain Management	Conduct investigation and evaluation on 100% of the new business part-

[Background of the Top-Priority Issue and Its Concept]

The realization of a decarbonized society is a global challenge that cannot be procrastinated, and there remains much room in which our Group can make contribution in terms of sales and development in important areas, such as the reduction of greenhouse gas (GHG) emissions, the electrification of vehicles, energy saving, etc. We also believe that taking such initiatives will create business opportunities and meet the expectations and needs of our stakeholders.

		ners and increase investigation cover ratio.
I. Respect for Human Rights	Enhancement of initiatives for respect for human rights	Actively conduct enlightenment activities in-house while further clarifying
and disseminating our human rights policy.
[Governance]		Continue and further improve internal education (frequency and areas to
J. Enhancement compliance	Improvement/enhancement of compliance education
be covered)
system
		Further improve its effectiveness through performing a self-assessment
K. Enhancement of Corporate		questionnaire survey (on a five-point scale). The result of	FY2022 survey
Improvement of evaluation on the effectiveness of the Board of Directors was 4.1. Disclose the issues identified through the survey	and confirm
Governance
	how to respond to them to further enhance the governance of the Board
		of Directors.

14 Central Glass Integrated Report 2023

Central Glass Integrated Report 2023 15

Financial and Non-Financial Highlights

• Financial Highlights

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

■ Non-Financial Highlights

• Net Sales/Operating Prot/Operating Prot Ratio

(Billion yen)												(%)
250																12.0
229.9	222.5									9.9
										206.2
												10.0
200							190.7
						169.3
															8.0
150
														6.0
100			4.4
			3.6									4.0
										3.5
50
						2.1						2.0
	10.1									16.8
	8.0	4.1	7.3
0																0
	2018	2019	2020	2021		2022 (FY)

■ Total Assets/Net Assets/Equity Ratio
(Billion yen)					(%)
350						70.0
	307.1	296.4	284.958.1	290.7
300			60.0
250	53.8	54.3			221.1	50.0
200				43.4	46.8	40.0
168.9		169.1
	164.3
150				130.1		30.0
					107.9
100						20.0
50						10.0
0						0
	2018	2019	2020	2021	2022 (FY)

■ Costs for R&D/Ratio of R&D Costs to Sales

(Billion yen)						(%)
10						3.6	4.0
9					3.3
8			3.0
	2.6			2.6			3.0
7				6.5
6		5.9	5.7	5.4	5.6
5							2.0
4
3
							1.0
2
1
0							0
	2019		2020	2021	2022	2023	(FY)
						(Forecast)

• GHG Emissions (Scope 1 and 2)

(10 thousand tons-CO2)

(tons-CO2/million yen)

140 5.0

							5.0
120				4.2
		4.1	4.0
			3.8
100	96.7	95.0				4.0
89.5
80				80.4	79.2		3.0
60						2.0
						2.0
40						33.2
20							1.0

0							0.0
2013	2018	2019	2020	2021	2022 (FY)

Net sales		Operating prot		Operating prot ratio		Total Assets		Net Assets		Equity Ratio
(left axis)		(left axis)		(right axis)		(left axis)		(left axis)		(right axis)

Costs for R&D (left axis)		Ratio of R&D Costs to Sales (right axis)

Scope 1 (left axis)		Scope 2 (left axis)		Intensity (right axis)

■ Prot Attributable to Owners of Parent/Return on Equity (ROE)	■ Interest-BearingDebt/Debt-to-Equity Ratio
(Billion yen)		(%)	(Billion yen)			(Times)
60			80		0.63	0.7
		40.0	73.4	72.1
	37.0
	42.5	70			0.6
40		62.7
	30.0			65.1

■ Full-Time Employees/Ratio of Full-Time Female Employees	■ Final Disposed Amount of Industrial Waste
(people)			(%)	(Thousand tons)
1,700				14.0	30
		1,671
1,633	1,631	1,630	13.0

												20.0	60
20																0.45		53.8	0.5
															50
	7.6		6.4							10.0			0.44						0.43
0								1.2								40							0.38		0.4
4.5		3.9		0.8				0												0.3
												-10.0
-20												30
																								0.2
											-20.0	20
-40											-39.8				-30.0												0.1
								-	27.3				10
												-40.0
-60																0										0
2018	2019	2020	2021	2022 (FY)
	2018	2019	2020	2021	2022 (FY)

Prot Attributable to Owners of Parent		ROE		Interest-bearing debt		Debt-to-equity ratio
(left axis)		(right axis)		(left axis)		(right axis)

1,600

1,570 12.0

10.4	10.9	10.8	10.6	11.0	11.0
1,500											10.0
1,400											9.0
										8.0
1,300											7.0
2018	2019	2020		2021	2022 (FY)
			Number of full-time employees			Ratio of full-time female employees
			(left axis)				(right axis)

20.8
20
		17.3
	14.1			15.6
		12.6
10
0
2018	2019	2020	2021	2022	(FY)

Central Glass Co., Ltd.		Domestic Afliates		Overseas Afliates

• Dividend per Share/Total Return Ratio

(Yen)									(%)
140									300
						115
120				247			250
100									200
80	75	75	75		75	136		150
60
								100
40
			47					50
20
		40
0									0
2018	2019	2020		2021	2022 (FY)
			Dividend per share (left axis)		Total return ratio (right axis)

• In 2021, we posted a prot attributable to owners of patent, but conducted a distribution according to the stable dividend policy from a long-term perspective.

• EBITDA (Operating Prot + Depreciation)

(Billion yen)
30
				25.8
25
22.7
	20.9		19.4
20
		16.9
15
10
5
0
2018	2019	2020	2021	2022	(FY)
		EBITDA

■ Average Overtime Work per Month/Ratio of Employees Taking Annual Paid Leave	■ Lost-Time Incident Rate
(hours)					(%)	(%)
10.0	9.1	9.5			100.0	2.5
				8.6
				7.9
8.0				80.0	2.0
		7.4	70.2
			69.2	67.5
6.0	59.6			60.6	60.0	1.5
4.0					40.0	1.0
2.0					20.0	0.5
0					0.0	0
	2018	2019	2020	2021	2022 (FY)	2018	2019	2020	2021	2022 (FY)
	Average Overtime work per month	Ratio of employees taking annual	Central Glass Co., Ltd.	Domestic afliates/	Chemical industry
	(left axis)			paid leave (right axis)				business partners

* The number of casualties due to workplace accidents that result in lost work hours per million actual working hours

16 Central Glass Integrated Report 2023

Central Glass Integrated Report 2023 17

Special Feature 1Initiatives to Address Climate Change Issues

Challenge to the Reduction of GHG Emissions/Carbon Neutrality

｜ Value Creation by Central Glass ｜ Special Feature ｜ Business Outline ｜ Business Foundation Supporting Our Growth ｜ Company's Circumstances ｜

Information Disclosure Based on TCFD Recommendations

Our Group declared its resolve to "take on the challenge of achieving net-zero GHG emissions in 2050" in May 2022, and has been vigorously promoting activities to steadily reduce GHG emissions (Scope 1 and 2) at the manufacturing stage.

We also direct our efforts to the development and sale of environmental contribution products contributing to the reduction of GHG emissions by the entire society with the objective of reducing GHG emissions during the entire product life cycle. In addition, to accelerate initiatives for emission reduction, we will introduce the internal carbon pricing (ICP) system in FY2023, and promote investment for the reduction of emissions by reflecting environmental value in investment decisions.

• GHG Emission Reduction During the Entire Life Cycle

Products Contributing at Use Stage

(Not Subject to the Reduction of Our Emissions)

・Battery electrolytes for EVs

・Low GWP products (next-generationuorine-based blowing agents, etc.)

・Power semiconductor materials

・Architectural glass (high heat insulating and shielding performance)

・Automotive glass (automotive weight-reducing thin laminated at glass)

In the ICP system, we have set an internal carbon price of 10,000 yen /t-CO2 based on projections of future carbon prices, and we use this price in two ways: to incentiv- ize investors to invest in reducing carbon emissions, and to assess the financial impact.

Central Glass Group Medium- and Long-Term Targets for the Reduction of Greenhouse Gas (GHG) Emissions

2030 years 40% reduction from FY2013 level

2050 years Taking on the Challenge of Achieving Net-Zero GHG emissions

Technology Contributing to GHG Reduction in Manufacturing Process

・Fuel conversion (LNG, total oxygen combustion, hydrogen, and ammonia, etc.)

・Heat source conversion ・Waste heat recovery

・Various kinds of renewable energy

・Improvement of resource efciency by effective use of by-products

Governance

Strategy

In our Group, the Management Committee, a decision-making body concerning execution of business operations, discusses how to address environmental issues including climate change issues and social challenges, and makes decisions. We have also established the Sustainability Committee with the aim of analyzing and evaluating the progress of initiatives for each issue in a cross-sectoral manner while discussing each policy to deal with such issues as necessary. The committee also reports findings to the Board of Directors and makes recommendations as needed. In response to the matters discussed by the Management Committee and the Sustainability Committee, and their recommendations, the Board of Directors discuss what initiatives our Group should take to address environmental challenges and supervise their progress.

We assume that risks and opportunities related to climate change will have the following impacts on our business.

		Risks	Opportunities
Political		Increase in cost for energy and raw materials following the		Improvement of intensity by promoting the
Measures/Legal		introduction of a carbon tax and the tightening of targets		introduction of energy-saving technologies (cost
Restraints		for the reduction of CO2 emissions		reduction)
Technologies		Recovering of costs for technology development to develop		Expansion of revenue-generating opportunities
	technologies for decarbonization, etc		by the development and sale of products
				contributing to decarbonization (low GWP
		Sensitivity to consumption behavior/needs and timely
Market			products, products contributing to energy-
	response
		saving, etc.)
		Market valuation affected by a lack of appeal regarding		Increase in market valuation by appealing to the
Reputation			market with energy-saving technologies and
	the efforts made for decarbonization
			products contributing to decarbonization

Introduction of Internal Carbon Pricing System

Our Group has introduced the internal carbon pricing (ICP) system since June 2023, as part of our efforts for achieving targets for the reduction of GHG emissions (Scope 1 and Scope 2). This system uses in-house carbon prices to visualize carbon cost, which can be utilized in decision-making for capital investment. Our Group will promote investment for the reduction of emissions in response to

Progress of Concrete Initiatives Toward Emission Reduction

further increasing demands for the reduction of greenhouse gases in the future.

Reference: In-house carbon price (at the time of introduction) 10,000 yen/t-CO2

As one of the concrete initiatives toward the reduction of GHG emissions, our Group is moving ahead with the introduction of the best available technology (hereafter referred to as BAT) step by step. In the glass fiber field, in FY 2022, we introduced the oxygen combustion technology that had been introduced for a glass wool furnace, for a furnace to produce continuous glass fiber as well to reduce CO2 emissions derived from fuel usage. At the same time, we are proceeding with discussions on the introduction of electricity derived from renewable energy, which is included in the BAT technology, while effectively utilizing the ICP mechanism.

Moreover, in addition to the proactively introducing the BAT technology, we are promoting the development and introduc-

• GHG emissions (Scope 1 and 2)

(10 thousand tons-CO2)

(tons-CO2/million yen)

140 5.0

							5.0
120				4.2
		4.1	4.0
			3.8
100	96.7	95.0				4.0
89.5
80				80.4	79.2		3.0
60						2.0
						2.0
40						33.2
20							1.0

Risk

Management

Regarding risks involved with business operation, each department identifies risks and evaluate their impact and report them to management as needed. In addition, the Sustainability Committee shares business risks, opportunities and measures in a cross-sectoral manner, analyze and evaluate them as necessary and make reports and recommendations to the Board of Directors as needed.

Regarding GHG emissions (Scope 1 and Scope 2), in particular, we have operated the target management scheme for the reduction of GHG emissions relating to medium- to long-term targets since FY2023 toward achieving the 2030 targets and net-zero GHG emissions in 2050. In the operation of this scheme, as main measures, we estimate future emissions, evaluate the probability of achieving tar- gets, formulate action plans for emission reduction and revise the plans as necessary, which we position as the key process in our Group's activities for the reduction of GHG emissions.

tion of innovative technologies including the one for the shift to non-fossil fuels.

In FY2022, we implemented withdrawal from the Automotive glass businesses in United States and Europe, and suspended the operation of some of the domestic glass furnaces, which led to reducing GHG emissions to 332 thousand tons- CO2. (58% reduction from the previous fiscal year)

0											0.0
2013	2018	2019	2020	2021	2022 (FY)
			Scope 1 (left axis)		Scope 2 (left axis)		Intensity (right axis)

Since this fiscal year, the data on GHG emissions have been changed to represent the total emissions amount from our Company and the consolidated companies (in the past: the area within the reach of operational control), and the historic data have also been changed in the same manner.

Indicators and		・Aim to achieve 40% reduction of GHG emissions (Scope 1 and Scope 2) for the entire Group including
		overseas affiliates from FY2013 level in FY2030.
Targets
	・Aim to achieve net-zero GHG emissions in 2050.

18 Central Glass Integrated Report 2023

Central Glass Integrated Report 2023 19