Kurita Water Industries : The Kurita Group Sustainability Report 2023

Pioneering "new value for water"

The Kurita Group

Sustainability Report 2023

Fiscal year ended March 31, 2023

Editorial Policy

Structure

Organizations covered

Period covered

Information Disclosure System on the Companyʼs Website

The Kurita Group	Sustainability Report 2023

Guidelines referred to

GRI Standards etc.

Supplementary information to the contents of the report

In the Report, "the Company" refers to Kurita Water Industries Ltd.; "the Company and its domestic Group companies" refers to Kurita Water Industries Ltd. and its Group companies in Japan; and "the Kurita Group" refers to all Group companies including those overseas. Information pertaining to specific companies is presented using the names of the companies.

CO2 emissions by companies integrated in recent M&As after the base year of targets based on the GHG Protocol have been incorporated into CO2 emissions. The calculation method for Scope 3 has been adjusted to allow for the effects of price and exchange rate fluctuations. The figures for fiscal 2021 and fiscal 2022 have been revised to reflect these changes.

Copyrights and trademarks

Our company or our licensers hold the copyrights for all the materials posted on this report. You may not use them beyond the range of use legally permitted for private use, etc.: you cannot, for example, copy, process, transfer, or distribute them without consent from the respective copyright holders.

Trademarks in the materials posted on this report (product names, service names and logos) belong to our company or our licensers, and you cannot use them without consent from the holders of the respective rights.

The Kurita Group

◀ 1 ▶

Sustainability Report 2023

Contents

Message from the President	03
Sustainability Initiatives (from FY2024)	05
Sustainability Management	05
The Kurita Group's Sustainability	05
The Kurita Groupʼs Materiality	06
Materiality Metrics and Targets	07
Management of materiality initiatives	09
Promotion of CSV Business	12
Initiatives to Address Climate Change	15
Participation in Water Resilience Coalition	21
CSR (Through FY2023)	24
Definition and Objectives of CSR	24
Identification of Materiality	25
CSR Policy, Targets, and Achievement Status	26
Stakeholder Engagement	27
Promotion System and PDCA	31
External Evaluation	32
Priority Themes: Basic Themes	35
Provide Highly Safe Services and Products	36
Conduct Fair Business Activities	42
Respect Human Rights	46
Priority Themes: Themes for Growth Opportunities (Environmental Improvement Activities)	63
Solve Issues Related to Water Resources	70
Realize Sustainable Energy Use	74
Reduce Waste	79
Advance Industrial Production Technologies	82
Building Good Relationships with Suppliers	86
Third-Party Opinion/Response to Third-Party Opinion	90

The Kurita Group	Sustainability Report 2021

Sustainability

Message from the President

Kuritaʼs approach to sustainability management

Kurita Water Industries Ltd.

President and Representative Executive Officer

Rising Awareness of Social Issues

The outlook for the global economy remains highly uncertain due to the protracted situation in Ukraine, economic reopening after the pandemic as vaccinations rates increase, rising interest rates worldwide to control inflation, and growing competition in semiconductor manufacturing as countries move to protect their national interests. Meanwhile, amid record-high average global temperatures, sustainability initiatives and rule formation are gaining momentum and becoming more widespread in response to demands from society. The International Sustainability Standards Board (ISSB) has released its latest sustainability disclosure standards, companies are now required to broaden assessments of climate change risks and opportunities to include the impact on nature itself, and there is growing emphasis on human rights due-diligence and the use of human capital based on respect for diversity.

The Kurita Groupʼs main business is the provision of solutions that address ever-changing issues related to water at various sites around the world. Following my appointment as Kuritaʼs president in April 2023, my main responsibility now is to ensure the Group continues to provide unique value and contributes to the creation of a sustainable society. This will mean accurately assessing risks and opportunities in our constantly changing operating environment and leveraging the Groupʼs "water knowledge" accumulated over more than 70 years in the water and environmental fields.

The Kurita Group

◀ 3 ▶

Sustainability Report 2023

From CSR to Sustainability

Under our Maximize Value Proposition 2022 (MVP-22)medium-term management plan, which ended in the fiscal year ended March 31, 2023, we put CSR at the core of management. This included establishing materiality as Kuritaʼs CSR Policy, setting materiality metrics and targets, and working to achieve these targets. We also enhanced information disclosure and stakeholder engagement with respect to these initiatives, using feedback from stakeholders to verify our approach and make improvements. These efforts were recognized by third parties, with Kurita being added to leading ESG indices.

One of the materiality initiatives - creating shared value with society by promoting the "CSV business*" approach Groupwide - has helped to raise awareness among our employees about the importance of creating value that is informed by social issues. We also developed a "Value Creation Story" that sets out the Groupʼs path to sustainable, long-term growth with society in order to realize our corporate philosophy, with every one of the Groupʼs employees expected to play their part. These initiatives helped the Kurita Group lay the foundations for sustainability management.

To coincide with the start of our new medium-term management plan, Pioneering Shared Value 2027 (PSV-27), which launched in April 2023, we overhauled the Kurita Group Philosophy System and updated our Corporate Vision to "Pioneering ʻnew value for waterʼ to contribute to the realization of a sustainable society." These changes have extended the concept at the core of Kuritaʼs management from CSR to sustainability. We define sustainability as corporate activities within the natural environment and social systems, and the pursuit of sustainable growth that takes into account the impact of these activities on the environment and social systems, and vice versa. We also revisited key issues for achieving our Corporate Vision, referencing the latest global challenges related to sustainability. We call these issues the "Kurita Groupʼs Materiality," which is divided into two broad categories ― "Shared value themes" that lead to the creation of shared value with society, and "Basic themes" that serve as the foundation for our management and business activities.

This has resulted in changes to the Groupʼs materiality. "Reduce waste" was updated to "Contribute to building a circular economy society," reflecting changing conditions in society, and "Strategic development and utilization of human resources" was added. Compared with MVP-22, the number of metrics and targets for each of the eight material issues has doubled, and we have launched a raft of initiatives to back up our vision of becoming a "pioneer" in providing greater value to society, such as measures to mitigate the trade-off between CO2 emissions and water conservation. In June 2023, Kurita transitioned to a "Company with a Nominating Committee, etc." Under this new corporate governance structure, we will work to address the Groupʼs materiality using a supervisory framework that takes into account the views of diverse stakeholders.

Weaving the Kurita Groupʼs Vision with Warp and Weft

The Kurita Groupʼs Corporate Philosophy ― "Study the properties of water, master them, and we will create an environment in which nature and humanity are in harmony" ― is supported by the Kurita Group Corporate Philosophy System. These elements are like the warp in a textile. What color of weft should be added to bring this textile to life? We want every member in the Group to become pioneers, weaving their individual weft into our vision by finding their own mission and acting in the best interests of society. In this way, we hope to show a vibrant vision to stakeholders though initiatives that tackle the Kurita Groupʼs Materiality.

• Products, technologies, and business models that are highly effective in saving water, reducing CO2 emissions and reducing waste, helping to achieve the objectives and targets in the sustainable development goals (SDGs). (Definition in MVP-22 plan)

The Kurita Group

◀ 4 ▶

Sustainability Report 2023

Sustainability

Sustainability Initiatives (from FY2024)

Sustainability Management

The Kurita Groupʼs Sustainability

The Kurita Group views sustainability as corporate activities within the natural environment and social systems, and the pursuit of sustainable growth taking into account the impact of corporate activities on the environment and social systems, and vice versa. It positions sustainability at the core of business management.

The Kurita Group

◀ 5 ▶

Sustainability Report 2023

The Kurita Groupʼs Materiality

The Kurita Groupʼs corporate vision is "Pioneering ʻnew value for waterʼ to contribute to the realization of a sustainable society." To achieve this vision, we will identify key issues for each medium-term management plan based on global challenges related to sustainability, define them as the "Kurita Group's Materiality," and set metrics and targets to address it. These efforts are led by the Sustainability Committee and are overseen by the Board of Directors. The materiality identification process is as follows:

Step 1: Identification of Sustainability Issues

Kurita comprehensively selects sustainability issues across 37 themes as materiality candidates, referencing international rules*1, laws and regulations, disclosure standards*2, and issues identified through stakeholder engagement*3.

*1 International rules: SDGs, Ten Principles of the UN Global Compact, OECD Guidelines for Multinational Enterprises, World Economic Forum's Global Risks Report

*2 Laws, regulations and disclosure standards: GRI Standards, GHG Protocol, SASB Standards, EU Taxonomy, SFDR, CSRD, TCFD, TNFD, etc.

*3 Stakeholder engagement: Responses to CSR procurement surveys, results of supplier surveys, results of employee engagement surveys, information meetings for shareholders and investors, responses to ESG surveys, social contribution activities, etc.

Step 2: Creation of Materiality Matrix

E&S Committee*4 members, External Directors, Audit & Supervisory Board members, and the E&S Committee*4 Secretariat were surveyed to assess the degree of positive and negative impact (probability and scale of impact) from two perspectives:

1. Impact of sustainability issues on the Kurita Group's corporate value
2. Social and environmental impact of the Kurita Group's initiatives in response to sustainability issues

The results of the survey were organized in a matrix along two axes: (1) above on the X-axis/horizontal axis, and (2) above on the Y-axis/vertical axis. Themes with a significant impact in both the X and Y axes were selected as materiality candidates. The candidates were grouped into seven main themes and five sub-themes covering common issues in multiple areas of materiality.

*4 E&S Committee is the former name of the current Sustainability Committee.

The Kurita Group

◀ 6 ▶

Sustainability Report 2023

Step 3: Confirmation of Adequacy and Selection of Materiality

Materiality candidates selected in Step 2 were submitted to the Executive Committee and then to the Board of Directors for input. The committee responsible for reviewing the medium-term management plan, which is mainly comprised of members of the Executive Committee, then confirmed the adequacy of the materiality candidates in parallel with the formulation of the medium-term management plan, finalized the Groupʼs eight material issues and categorized them into two: "basic themes" that should serve as the foundation for management and business activities, and "shared value themes" that lead to the creation of shared value with society. These material issues were then approved by the Board of Directors as the "Kurita Groupʼs Materiality," replacing the Groupʼs existing "CSR Policy."

Materiality Metrics and Targets

The Group has set metrics and targets tied to the "Kurita Groupʼs Materiality" and will work to achieve them. The metrics and targets in the Medium-term Management Plan PSV-27 (Pioneering Shared Value 2027) were formulated by the organization responsible for the activity under each metric ("Responsible Organizations"), discussed and decided by the E&S Committee and the committee responsible for reviewing the medium-term management plan, before being approved by the Board of Directors.

The Kurita Group

◀ 7 ▶

Sustainability Report 2023

The Kurita Group

◀ 8 ▶

Sustainability Report 2023