Sysmex : P38 Environmental Consideration

MATERIALITY ENVIRONMENTALCONSIDERATION

WHY IT IS IMPORTANT

We recognize that mitigating climate change, preserving water, mineral and other resources, and protecting biodiversity are critical to the sustainability of the global environment. As the coming into force of the Paris Agreement and the Sustainable Development Goals (SDGs) demonstrate, a growing number of initiatives around the world make addressing environmental problems a priority issue, and companies are being called upon to play a greater role.

As a company developing its operations globally, Sysmex recognizes increasingly serious environmental issues as a high priority. We understand that large-scale environmental damage due to climate change is a significant business risk because it has the potential to halt our resource procurement and manufacturing functions. At the same time, we believe consideration for the environment is connected with local community coexistence and ensuring the trust of our stakeholders.

CSR Management	Society	Environment	Governance	External Evaluation /
				Performance Data

P40	Environmental Management

P43	Environmental Consideration
through Product Lifecycle

P47	Reduction in Environmental Burden
through Activities at Business Offices

POLICY

To guide the Group's environmental management over the long term, Sysmex has formulated the Sysmex Eco-Vision 2025 in accordance with our Environmental Policy. It specifies that, as a company in the healthcare domain, Sysmex will contribute to the creation of a fulfilling and healthy society through its global environmental conservation activities. This vision sets long-term environmental targets to be achieved by fiscal 2025. We are promoting environmental conservation throughout product and service lifecycles and across the value chain of our business activities.

• Environmental Policy

Targets (fiscal 2025)

Reduce CO2 emissions

Reduce water consumption

Recycle rate

FRAMEWORK

Under the supervision and management of the Environmental Management Officer (a senior executive officer) appointed by the CEO, the Environmental Management Committee leads the Group' s environmental management.

-15% -50% -15% -15% -15%	93%
instruments	activities	instruments	activities	In business activities ENVIRONMENT
When using	In business When shipping	When using	In business	or higher

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				Performance Data

Materiality

Environmental Consideration

Environmental Management

CSR Management	Society	Environment	Governance	External Evaluation /
				Performance Data

Sysmex Eco-Vision 2025

Formulating Sysmex Eco-Vision 2025

In May 2018, Sysmex formulated "Sysmex Eco-Vision 2025" in line with the established long-term management goals for the Sysmex Group. This sets forth the long-term environmental vision that Sysmex aims to attain by 2025 and requires us to promote environmental conservation more than ever throughout the product/service lifecycle and across the entire value chain of our business activities.

Long-Term Environmental Vision

Long-Term Environmental Objectives (Fiscal 2025)

Reduce CO2 emissions*

When using instruments	By 15％
In business activities	By 50％
When shipping	By 15％
Reduce water consumption*
When using instruments	By 15％

1. Governance
   ▶ Group Environmental Management System
2. Risk Management
   Every year, as part of our environmental management system we assess the impact of our business activities from two perspectives: "compliance with laws and regulations" and "impact on the environment". Taking the TCFD recommendations related to climate change into account, we assessed climate-related risks and opportunities and discussed these results at a meeting of the Environmental Management Committee and a management meeting that included the members of the Managing Board. In this manner, we are

working to reduce risks and create business opportunities. In addition, as part of our risk management system, we conduct an exhaustive risk assessment every two years that also incorporates risks other than those related to the environment and climate change.

▶ Risk Management Structure

3. Risks and Opportunities

Based on the framework outlined in the TCFD recommendations, we have identified climate change risks and opportunities at a management meeting that includes the members of the Managing Board. In December 2020, we revised these risks and opportunities.

Sysmex remains committed to protecting the global environment by setting environmental objectives for the product/service lifecycle and the value chain of its business activities through the fiscal year ending March 31, 2026.

1. We will reduce CO2 emissions to contribute to the prevention of climate change.
2. We will promote resource consumption reduction and resource circulation to help to enhance the sustainability of natural resources.
3. We will contribute to biodiversity protection under a full awareness of the impact of our business activities on the natural environment.

• Status of Sysmex Eco-Vision
• Environmental Data

In business activities

By 15％

Promote resource circulation

Increase the recycle rate	93％
in business activities	or higher

Protect biodiversity

Expand the line using alternatives

to animal-derived substances

* The per-unit target, taking fiscal 2016 as the base year

Risks	Scenario	Financial effect	Approach
2°C	4°C
	- Product supply will become difficult as a result of the	H	L	- RA/QA divisions have been set at each regional
	prohibition of certain substances and technologies due to	headquarters, and dedicated staff respond to the laws and
	regulatory changes.			regulations of each country.
	- Transition to materials and technologies with low			- Product and technology development based on hospital
	environmental impact, including reduction in use of	M	L	laboratory requirements as well as market and industry
Transition	plastics, will add to R&D costs and CapEx.			trends.
Risks
			- Energy saving measures and greater efficiency of
	- Energy and raw material costs will increase.	M	L	equipment have been introduced.
				- We have introduced renewable energy.
	- Changes in customers' environmental awareness will lead			- We have established a system that utilizes customer
	to criticism of the environmental impact of our products	L	L	feedback for product development and quality
	and reduce demand.			improvement (VOC: Voice of the Customer).
	- Large natural disasters will make it difficult to provide a			- We have formulated a business continuity plan (BCP) to
	M	H	disperse risks such as those associated with raw material
Physical	stable supply of products and services.
		supply, supply systems, and transportation routes.
Risks
- Regional shortages of water due to drought will disrupt	L	M	- We are reducing the risk by periodically monitoring
	stable supply of product.	water-related risks and establishing BCPs.
Opportunities	Scenario	Financial effect	Approach
2°C	4°C
	- Optimization of use of transportation methods and			- Review logistics processes and systems in response to
Resource			diversification of logistics and promote CO2 reduction
operations using IoT.
M	L	through remote services.

Response to TCFD Recommendations

In recent years, the impact of climate change has begun to present a major risk to financial markets. In December 2015, the Financial Stability Board, an international organization tasked with fostering the financial system's stability, introduced the Task Force on Climate-related Financial Disclosures (TCFD). In June 2017, the TCFD issued final recommendations for companies to disclose the impact on their corporate finances on climate-related risks and opportunities.

In January 2021, Sysmex expressed its support for the recommendations of the TCFD and disclosed the information below based on this framework.

Efficiency	- Review of packaging and product design will lower raw			- We will save resources by reviewing materials and
	materials costs and waste.
			packaging options.
Energy	- Reduction of energy costs through energy saving and			- Energy saving measures and greater efficiency of
shifting to low-carbon energy, which will improve social	M	L	equipment have been introduced.
Source
evaluation.			- We have introduced renewable energy.
	- Changes in customers' environmental awareness promote			- We continue to promote environmentally friendly product
Products	the purchasing of environmentally friendly products.			development.
- There will be creation of new testing opportunities and	M	M	- We undertake new product development, such as products
and Services
expansion of demand due to long-termdisease-trend			contributing to the eradication of malaria and other
	changes.			infectious diseases.
	- Our initiatives for climate change and disclosure will earn			- We support the TCFD and disclose environmental data via
Market	us a greater reputation and expectations in financial	M	L
the Sysmex Sustainability Data Book and other means.
	markets.
Resilience	- A stable supply of products and services in the event of a	L	M	- We implement a global supply system and backup system
natural disaster improves customer trust.	through multiple raw material procurement measures.

• For all businesses (including supply chain) within Sysmex Group, analysis was conducted for a 2-degree scenario that assumed strict measures were taken for climate change, and a 4-degree scenario that assumed no deliberate action exceeding the status quo would be taken for global warming. The financial effect from identified climate-related risks and opportunities were evaluated on a three-stage standard (H: High; M: Middle; L: Low) based on their impact on the operating profit in fiscal 2030.

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Materiality

Environmental Consideration

Environmental Consideration through Product Lifecycle

Environmental Management System

Group Environmental Management System

Sysmex has formulated Global Environmental Management Regulations to clarify the responsibilities and roles of each Group company. Under the oversight and management of the environmental management officer (a senior executive officer), appointed by the CEO, we are taking initiatives toward environmental management as a Group, centered on the Environmental Management Committee. We have integrated environmental objectives as part of the Group Management Plan and report on their progress as sustainability targets at Managing Board meetings semiannually.

Promoting the Acquisition of ISO 14001

Certification

Sysmex is working toward the acquisition of ISO 14001, the international standard for environmental management systems, for the Group's principal affiliated companies.

• For details, refer to ID 0910589004 on www.tuv.com/japan/en/.
  The applicable scope of activities and website vary according to the standard.

Conducting Environmental Auditing

In line with environmental management system requirements, we perform regular internal and external environmental audits at locations that have obtained ISO 14001 certification. In fiscal 2020, neither internal nor external environmental audits at our domestic Group locations (for which certification in Japan has been integrated) revealed any cases of nonconformity.

Environmental Education

Product Lifecycle and Initiatives at Each Stage

Sysmex undertakes a variety of initiatives at different stages of its business activities to reduce environmental impact throughout the product lifecycle.

• Key Initiatives

Develop products that help reduce

Reduce the environmental burden of

Reduce CO2 emissions from sales,

environmental burden

production activities

service and support activities

• Power savings, reduced reagent

• Use of renewable energy

• Utilize online methods

consumption, etc.

• Lower CO2 emissions and water consumption

(Remote training, webinars, etc.)

through better production efficiency

Sales,

Medical

R&D

Procurement

Production

Distribution

Service and

Support

institutions

Formulate Green Procurement Standards

CO2 emissions associated with the

Achieve lower

and promote green procurement

shipment of products

environmental burden

• Procurement of raw materials and parts that have

• Shift from transport by air to ship

for medical institutions

a lower environmental burden

• Promote reagent production transfer to

• Reduce electricity used

• Conducting CSR surveys

factories overseas

by products

(including survey items about environmental consideration)

• Penetration of concentrated reagents

• Decrease waste

As of March 31, 2021, 17 Group companies had acquired ISO 14001 certification, and these companies account for 67％ of the net sales of the Group.

By centralizing the environmental activities of certain Group companies, we are working to ascertain the state of progress on activities and issues as well as reinforcing management activities, and four companies (Sysmex Corporation, Sysmex International Reagents, Sysmex RA, and Sysmex Medica), accounting for nine locations, have obtained integrated certification. As a result, we are now able to systematically share information related to environmental management.

Status of ISO 14001 Certification

Region	Company
Japan	Sysmex Corporation, Sysmex International
Reagents, Sysmex Medica, Sysmex RA
Americas	Sysmex America, Sysmex Reagents America,
Sysmex Brazil
EMEA	Sysmex Europe, Sysmex Germany, Sysmex
France, Sysmex Spain
China	Sysmex Wuxi, Jinan Sysmex
AP	Sysmex Asia Pacific, Sysmex India, Sysmex
New Zealand, Sysmex Australia

Conducting Environmental Education and Training

Sysmex conducts general education for all employees to foster an awareness of the impact of the Group's environmental activities and individual operations. We conduct specialized training for individuals designated by their divisions as personnel responsible for environmental management system promotion. We also conduct specialized and emergency response training for each division, as necessary.

In fiscal 2020, we provided general environmental e-learning training for all employees at our business offices with integrated ISO certification, and for staff members in charge of environmental matters at our overseas offices. We also held seminars on laws and regulations for staff members in charge of business offices and those in the product lifecycle department.

Environmental Friendliness in Product Design

In our global regulations concerning product lifecycle management, Sysmex specifies its efforts to protect the environment that it believes appropriate in terms of its business at each stage of the product lifecycle in order to help reduce the energy needed for our customers to use our products and cut down waste from their use. Accordingly, we strive to develop products designed to save electricity necessary for IVD instruments and reduce reagent usage. The Automated Hematology Analyzer that was released for sale in 2021 achieved 30％ less volume than conventional equipment, consumed 25％ less electricity, and its reagent consumption was reduced by approximately 30％.

Weight

	％ reduction
30
Electricity consumption
	％ reduction
25
Reagent consumption
Up to	％ decline	Automated Hematology Analyzer
	30

• Comparisons with conventional equipment

Fiscal 2020 Results

The sales of large, high-power-consumption hematology analyzers including newly launched models increased, but with the reduction in CO2 emission factors, CO2 emissions per device from the use of our equipment products fell 8％ from fiscal 2016 (the base year specified in Sysmex Eco-Vision 2025). Water consumption of equipment products in use decreased by 6％ as sales of products requiring less reagent consumption increased.

Going forward, we will continue to promote reductions in CO2 emission and water consumption by developing and selling new products requiring less power and water usage, among other measures.

• Status of Sustainability Targets

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Biodiversity Consideration in the Production of Raw Materials

To reduce the use of natural resources, Sysmex has established a production method using recombinant silkworms as an alternative to animal-derived proteins in its reagents. In the past, producing these substances required substantial amounts of energy. However, as silkworms can be cultivated at room temperature, simply by using shelves and breeding containers and providing them with food, we anticipate a stable supply as well as energy savings and waste reduction.

We use proteins produced by silkworms in the reagent for hemostasis tests we launched in fiscal 2017. This is the first reagent using proteins from silkworms to receive manufacturing and marketing approval in Japan. We also offer protein production contracting services using this technology and provide raw material substances to pharmaceutical companies, universities, research institutions, and other entities.

• Contributing to Biodiversity Preservation through the"Sysmex Forest"

Production of raw materials using silkworms

Comparison of Method Using Silkworms and

Water Resources

（(m3/Lot)×102）

10（(m3/Lot)×102）

1

8										0.8
6
									0.6
4
									0.4
2
									0.2
0										0
Conventional method Silkworm	Silkworm
	(animal-derived)	method
											method
	Reagent		Ingredient			Breeding
	production		production

• Comparison of in-house product (through joint research with Tokyo City University)

Environmentally Conscious Procurement (Green Procurement)

Cooperating with Business Partners to Promote Environmentally Conscious Procurement

Sysmex has established Green Procurement Standards, which set out the company's fundamental stance on environmental considerations in procurement activities. To that end, we promote the procurement of raw materials and parts that have low environmental impact and are expanding our business with suppliers who are impacts to protect the environment. We also conduct annual CSR surveys of our business partners to confirm that they have environmental management policies in place, as well as targets and plans for CO2 reduction and energy conservation.

• Procurement Policy
• Green Procurement Standards
• Supply Chain Management

Furthermore, based on its Green Procurement Standards,

Environmentally Conscious

Transportation

Efforts to Lower CO2 Emissions in Domestic and Inter-regional Transportation of Products

As Sysmex's global business continues to expand, we are working to curb CO2 emissions by reviewing our logistics processes and systems designed to handle diversified logistics, packaging materials, and inventory management.

Fiscal 2020 Results

By switching from air shipments to shipments by sea even more proactively, we succeeded in reducing CO2 emissions for logistics by 25％ from fiscal 2016 (the base year specified in Sysmex Eco-Vision 2025) and continuing on from the previous fiscal year, we achieved the fiscal 2025 target reduction of 15％ early. We will work to promote a modal shift toward transportation methods that have a lower impact on the environment, such as utilizing railways.

• Status of Sustainability Targets

CO2 emissions and CO2 emissions per sales from logistics

（t-CO2）			（t-CO2/100 million yen）
25,000				15
20,000				12
15,000				9
10,000				6
5,000				3
0				0
2016	2017	2018	2019	2020 (Fiscal year)

CO2 emissions				CO2 emissions per sales (Sysmex Corporarion)

eliminate the use of dry ice in transportation in the frozen temperature range (negative 20 degrees C or below) and reduced the use of dry ice by half for ultra-low temperature transportation (negative 65 degrees C or below). Additionally, now that it is possible to load and transport together with regular transportation, we are able to reduce CO2 emissions from the dedicated trucks.

Moving forward, we will jointly conduct demonstration experiments to enable the long-distance transportation of items in the ultra-low temperature range without dry ice.

* Merged with Yamato Transport Co., Ltd. since April, 2021

Environmental Considerations for Distribution Packaging

With growing exports from Japan of bio-diagnostic reagents, we began the global reuse of cold storage materials necessary for transportation, and we are working toward reducing the disposal of plastic cold storage materials. In fiscal 2020, we implemented such reuse between Japan and China, Singapore, and Europe, which led to the reduction of approximately 2.0 tons of waste.

Sysmex International Reagents works with its suppliers to promote a switchover from cardboard to returnable boxes (plastic containers) for transporting materials, and the company reduced all packing material waste by 20％.

Conventional Method the Reagent for Hemostasis Tests

CO2 Emissions

（(kg-C02eq/Lot)×103） 10

8

6

4

2

0

Conventional method Silkworm
	(animal-derived)	method
	Reagent		Ingredient		Breeding
	production		production

Sysmex discloses prohibited substances and substances to be reduced with regards to chemical substances (substances with environmental impacts) contained in the products we manufacture and sell, as well as their constituent parts, devices, and materials.

• Prohibited Substances
• Substances to be Reduced

Realized Ultra-Low Temperature Transportation That Uses Less Dry Ice

Sysmex, in a joint effort with Yamato Logistics Co., Ltd.* has succeeded in ultra-low temperature transportation while cutting down the use of dry ice.

In transporting reagents to be used for gene testing, the use of a dedicated truck and dry ice was required regardless of quantity, to fulfill advanced quality requirements, and this created a burden on the environment. To tackle this, we jointly conducted demonstration experiments with Yamato Logistics, and by using a specially designed carrier box, we were able

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Materiality

Environmental Consideration

Reduction in Environmental Burden through Activities at Business Offices

Saving Resources by Revising Packaging Materials

Sysmex is continuing to work on reducing packing materials to conserve natural resources. We downsized our package boxes for optimization and switched our packing method from bag-shaped cushioning materials to plastic film, thereby reducing the amount of petroleum-based cushioning materials used in fiscal 2020 by approximately 50％ from fiscal 2017.

Volume of petroleum-based cushioning materials used (monthly average)

（kg）

100

80

60

40

20

Environmentally Conscious Use and Disposal of Products

Use of Concentrated Reagents

For some analysis devices in the hematology field, reagents that are 25 times more concentrated than traditional reagents can be used. Such concentrated reagents not only contribute significantly to improving usability by reducing the frequency of reagent replacement in laboratories and saving warehouse space, but also enable us to be considerate of the environment by reducing the amount of disposed containers and packing materials and reducing CO2 at time of transportation. Also, since fiscal 2021, we have set the rate of adoption of concentrated reagents and the rate of transfer of reagent production to local production as sustainability targets, and we will contribute further to reducing environmental burden.

Reducing Greenhouse Gas Emissions

Efforts to Reduce Greenhouse Gas Emissions at Business Offices

We are undertaking a variety of efforts to reduce direct and indirect greenhouse gas emissions from our business offices. Our bio-diagnostic reagent base, which opened in fiscal 2019, is working to conserve energy by introducing LED lighting, motion sensors, a demand control system for measuring and monitoring the amount of electricity needed, and highly efficient air conditioning. Furthermore, at Sysmex International Reagents, the production reform launched in fiscal 2013 has successfully improved our productivity and reduced burdens on the environment. We eliminated everything that led to inefficiency and integrated processes into a series, and we implemented Karakuri Kaizen* to use the weight of the products as a source of power in our manufacturing line. This resulted in the enhancement of productivity of some products

renewable energy for 50％ of the electricity used since fiscal 2019. They also reestablished a system that enables customer training and employee training to take place online so as to reduce the amounts of CO2 emissions that result from traveling.

Employee newsletter

Customer training on the Center for Learning

• Customer Training on the Center for Learning
• Employee Training at Sysmex University

0
	2017	2018	2019	2020 (Fiscal year)
Number of
materials for
	5			36			52			14
which packing
methods changed

* Applicable to packaging maintenance parts and consumable goods

Saving Resources by Promoting Review of Inventory Management

Sysmex promoted a company-wide review of its supply chains to reduce product waste, thereby cutting the proportion of waste to total sales in fiscal 2020 by approximately 10％ from fiscal 2018. Our instrument manufacturing factory i-Square densely houses dedicated containers and uses AutoStore, an automated warehouse picking system in which robots retrieve and store containers, for higher efficiency.

Our overseas Group companies also engage in various logistics measures.

• Activities at Other Group Companies

Reagent with 25 Times Concentration

Reagent volume (L)
100
	20L
	20L
50	20L
	20L
	20L
0	Conventional reagent

• Greater compactness, requiring fewer container and packaging materials (conservation of resources)
• Reduced laboratory waste
• Smaller and more lightweight, reducing CO2 emissions during transport
• Change of packaging material from polyethylene to paper packs (conservation of oil resources)

1/25

4L

Concentrated reagent

by about 12 times since the production reform began. Furthermore, we received the "33rd Nikkei New Office Award," which is given to offices that sufficiently take into consideration their co-existence with the global environment.

• Karakuri Kaizen: Improvements that divert power that already exists on site, and wherever possible, do not use man-made energy such as electric power but rather use gravity, natural energy, and other forms of power as sources of power (Source: Japan Institute of Plant Maintenance)

The "Helpful Pedal", which won the special award at the Karakuri Kaizen Exhibition (A tool that uses the principle of leverage to help transport a mobile one ton tank for reagent preparation)

At Sysmex Europe, 100％ of the electricity used is generated from renewable energy, and solar panels have also been installed at its factory. A group of employees promoting environmental action was also formed, and in addition to holding frequent discussions and making improvement proposals, the group issues a newsletter for employees three times a year to promote awareness.

Sysmex America and Sysmex Reagents America switched to

Fiscal 2020 Results

Energy-saving efforts such as business optimization and the impact of working from home led to a decline in electricity consumption, and CO2 emission factors for electric power were changed to the latest emission factors in fiscal 2020.* For these reasons, CO2 emissions from activities at business offices fell 35％ from fiscal 2016, the base year for Sysmex Eco-Vision 2025. We will continue promoting activities at our business sites to reduce CO2 emissions.

* For details, please refer to note #5 on P70.

CO2 emissions and CO2 emissions per sales at business locations

（t-CO2）	（t-CO2/100 million yen）
30,000	10
25,000	8
20,000	6
15,000
10,000	4
5,000	2
0	0

2016	2017	2018	2019	2020 (Fiscal year)
CO2 emissions				CO2 emissions per consolidated sales

• Major Initiatives at Business Offices

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