Taikisha's Materiality

Taikisha identifies material issues as important issues that should be prioritized in its management.
Based on the 10-Year Plan 2035, formulated in May 2025, Taikisha has updated material issues mainly by adding topics under the business strategy and DX strategy categories while maintaining the overall framework of the existing materiality system. Going forward, Taikisha will review its material issues on an ongoing basis, taking into account changes in the business environment, the emergence of new risks and opportunities, societal demands, and stakeholder expectations, with the aim of achieving sustainable value creation.

Materiality determination process

Taikisha specified the candidate material issues by broadly taking into consideration the International Integrated Reporting Framework, the viewpoint of Socially Responsible Investment (SRI), global risks, Sustainable Development Goals (SDGs) and other new issues surrounding sustainability, in addition to various conventional frameworks and guidelines related to social responsibility from an all-encompassing viewpoint. Taikisha quantified and visualized weighting from its clients’ perspectives based on material issues of its major clients, in addition to weighting as recognized by society in general based on external frameworks and guidelines in terms of weighting evaluation by external standards.

Formulation of a list of candidates (selection of issues)
Materiality assessment (at two levels, i.e., viewpoint of external stakeholders and viewpoint in terms of impact on business)
Confirmation of appropriateness and discussion
Determination (updating)

Materiality

Direction sought: Build a business model that enables the “realization of sustainable value creation”

	Materiality	Risk and opportunity	Vision
Business strategy	Active engagement with growth industries	Risk Loss of business opportunities due to low competitiveness in our five priority markets of semiconductors/electronic components, mobility, batteries, biotechnology and pharmaceuticals, and data centers Change in the outlook for the five priority markets Opportunity Acquisition of business opportunities in our five priority markets of semiconductors/electronic components, mobility, batteries, biotechnology and pharmaceuticals, and data centers	Establish presence in our five priority markets of semiconductors/electronic components, mobility, batteries, biotechnology and pharmaceuticals, and data centers
	Global regional strategies	Risk Global change in the industrial structure and supply chain Country risk (change in political or economic situation) Opportunity Maintenance and improvement of competitiveness in the Japanese market to secure stable revenue Based on this, the achievement of dramatic growth in overseas markets with high growth potential, such as Asia, North America, and Europe	Realize rapid growth in high-growth overseas markets while achieving robust results backed by stable profitability in the Japanese market
	Development of non-Japanese customers	Risk Lack of management resources and competitiveness necessary for developing non-Japanese customers (overseas customers) Opportunity Creation of new business opportunities by developing non-Japanese companies in Asia, North America, and Europe	Strengthen our customer base, targeting global industries (break free of the revenue structure dependent on Japanese companies and a higher ratio of non-Japanese companies in terms of performance)
Intellectual capital strategy	Advancement of GX/DX technologies	Risk Delayed advancement of digital GX engineering technologies, leading to the churn of existing customers and fewer opportunities to acquire new customers Opportunity Creation of business opportunities with excellent GX/DX solutions that meet the needs for introducing green and smart technologies in all industries	Evolve into an advanced engineering company that supports the shift to green & smart factories in the global high-tech industries
Human capital strategy	Quantitative/qualitative human capital enhancement (recruitment and training) and business process transformation	Risk Lack of human resources that support the global strategy Outflow of human resources due to intensifying competition for talent Lack of human resources that can create innovation Opportunity Quantitative/qualitative enhancement of human resources for responding to the expansion of business opportunities Expansion of human capital by securing and developing talented human resources Lead to the creation of new businesses and the provision of innovative services	Position human resources that support our growth strategies as a core source of competitiveness and expand and enhance them based on the human capital portfolio management.
Human capital strategy	Creation of a pleasant working environment	Risk Outflow of talented human resources due to the effect of the working environment Stagnation and a decrease in employee engagement, and a decline in labor productivity Violation of the Agreement 36 as a result of long working hours and the occurrence of health disorders Occurrence of employee turnover for the reason of nursing care or childcare Opportunity Creation of exciting working environments that generate innovation Creation of a working environment where diverse human resources can take on challenges and demonstrate their abilities Improvement of labor productivity, health and motivation	Continuously create new value through the fusion of diverse human resources and knowledge under the corporate culture of open-mindedness, a challenging spirit, and a commitment to quick responses
Natural capital/Environmental strategies	Climate change mitigation and adaptation	Risk Loss of business opportunities due to delays in responding to changes in customer behavior due to climate change Increased costs and strategic review associated with implementing and changing policies and laws and regulations, including the introduction of a carbon tax Opportunity Increasing business opportunities due to the growing need for low carbon and decarbonization Creation of new businesses by contributing to climate change issues	To address the challenges of climate change, a global common theme, tackle the provision of solutions from the two points of “mitigation,” to reduce and absorb greenhouse gas emissions, and “adaptation,” to prepare for damage from climate change, thereby enhancing corporate value in both economic and social value
Natural capital/Environmental strategies	Adaptation to resource recycling	Risk Missed business opportunities due to an insufficient response to social needs, and a higher reputation risk Opportunity Response to air pollution prevention and environmental impact reduction needs	Work to reduce and remove VOCs and other air pollutants and make them harmless by using unique exhaust treatment technology, thereby contributing to resolving the social issue of coexistence with nature to enhance corporate value in both economic and social value
Strengthening of the management base	Improvement of the Board effectiveness	Risk Decline in management quality due to low Board effectiveness (resulting in the occurrence of misconduct; deterioration in the quality of management decisions; loss of trust from shareholders, investors, and other stakeholders; organizational rigidity; and stagnation in transformation, etc.) Opportunity Sustainable enhancement of corporate value (the strengthening of risk management, qualitative improvement of management deciions, enhancement of the trust relationships between shareholders, investors, and other stakeholders, and flexible and swift corporate management)	Improve the Board effectiveness to achieve both sustainable growth and proper corporate governance
	Enhancement of business execution/monitoring structures	Risk Lack of continuity of growth strategy and higher corporate risks Opportunity Realization of our growth strategy by taking risks appropriately	Enhance organizational structures for promoting strategic measures to achieve targets of long-term strategies and Medium-Term Business Plans, and monitor how it is practiced
	Enhancement of global group management infrastructure	Risk Stagnant global growth strategy and a higher risk of affiliated companies Opportunity Establishment of global management infrastructure and development of systems in overseas markets serving as a medium- to long-term growth driver	Establish global group management infrastructure befitting a true global engineering company
DX strategy	Improvement of operational efficiency and development of high-profit structure	Risk Sluggish productivity and lower profitability due to stagnant business process reforms driven by DX Opportunity Improvement of operational efficiency and development of high-profit structures through business process reforms centered on digital infrastructure	Dramatically improve operational efficiency and realize significantly high-profit structure
	Creation and provision of new value	Risk Lagging value creation using digital technology Opportunity Leveraging of data analytics and simulations to create new value	Provide valuable engineering by strengthening R&D and making full use of advanced digital technologies
	Global DX infrastructure	Risk Stagnant global growth strategy due to the delayed development of global digital governance Opportunity Accelerated global collaboration and co-creation	Develop a global digital governance infrastructure

Sustainability at Taikisha

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