Representative Director and President Hitoshi Kawahara Representative Director and President Hitoshi Kawahara

Companies today are increasingly being called into question about the kind of value they can provide to society. The Corporate Statements set forth Our Mission: We are committed to developing new fields of business using pioneering technology that improves the environment and enhances the quality of life throughout the world. “For people and the planet—to achieve what no one else can.” This expresses the significance of the Kuraray Group to society. Guided by this mission, we share a common spirit of originality and challenge across the entire Kuraray Group as we strive to provide value to society through our business activities.

The Kuraray Group has launched our five-year Medium-Term Management Plan, “PASSION 2026,” starting in February 2022. Under “PASSION 2026,” we have set three challenges to accomplish the “Kuraray Vision 2026” long-term vision.

The first is “sustainability as an opportunity.” Having indicated the direction the Kuraray Group should take in terms of materiality under the three “Ps” of Planet, Product, and People, we have set and will pursue performance indicators in the new Sustainability Medium-Term Plan. The second challenge is “innovations starting from networking.” We will create innovation as a new driver of growth by connecting people and technologies both inside and outside the Group. The third challenge is “transformation of people and organizations.” We will draw on digital technology to change our processes and on diversity to expand our thinking, to transform both people and our organizations. The three challenges build on one another, and we will pursue them in tandem by leveraging digital tools and organizations like the Innovation Networking Center (INC) established in January 2022.

Our challenges are not limited to the period of “PASSION 2026”―we are looking further ahead to 2030 and 2050 to our ongoing efforts to address social issues. For example, initiatives to achieve net-zero carbon emissions call for technological development and capital expenditures to cut greenhouse gas emissions. We plan to invest ¥80 billion by 2030, but first we must generate the resources needed for existing and new businesses. To this end as well, we will seek to reap the fruits of investments made during “PROUD 2020” and the Fiscal 2021 Management Plan in addition to reforming the business portfolio.

Picturing the overall direction of “PASSION 2026” like a car, the front wheels are growth in our businesses. We will first steadily generate resources and channel those resources back into further business growth. In this way, we will expand our businesses while also directing resources to areas such as sustainability, innovation, and digital transformation, which are the rear wheels. Ultimately, we foresee both the front and rear wheels turning together in a balanced way to propel the whole car forward.

We have set target fields for the business portfolio based on social issues indicated by macrotrends. In addition to conventional economic value, we will newly add social and environmental value to our evaluation criteria, seeking to build a more sophisticated portfolio.

Economic value is the quantitative assessment of each business’ and product’s earning power (operating cash flow) and efficiency (ROIC) in each fiscal year, compared against the current year’s plan and the previous year’s results.
In terms of social and environmental value, we have constructed a Kuraray Group Portfolio Sustainability Assessment (PSA) system based on the Chemical Industry Methodology for Portfolio Sustainability Assessments, which are guidelines offering a consistent methodology for assessing sustainability established by the World Business Council for Sustainable Development (WBCSD) to help chemical companies seeking to build sustainable product portfolios. We are using the system to evaluate our products with a high degree of objectivity and transparency. From the results of the assessments, we will identify PSA-contribution products that help improve environments and then prioritize resource allocations accordingly. Specifically, we will continue to transform the business portfolio by working to expand sales of PSA-contribution products to 60% of all sales in 2026, compared with 46% in 2020.

Since the 2000s, the Kuraray Group has been accelerating the overseas expansion of our priority businesses, including acquiring vinyl acetate-related businesses abroad and launching the production of SEPTON™ in the United States. Currently, the proportion of overseas sales and the size of the overseas workforce are increasing. Although the Kuraray Group is already working globally in many ways, our HR systems have not kept up with this global framework. I strongly believe that there is a great deal of untapped talent in our overseas bases. This stems from my own experience abroad and the process of formulating “PASSION 2026” I described above. In the past, we viewed employees’ fit for the company through a Japanese lens. As a global company, we should establish a standardized framework for HR development and recognition that aligns Japan and abroad. To harness our collective strengths as “One Kuraray” as we secure diverse, core human resources, we will actively promote the creation of global HR systems by building an overseas HR database, standardizing manager-level ranks in Japan and overseas, and rolling out new executive training and other educational programs.

“Safety is the cornerstone of everything we do” at our production bases, R&D bases, and offices around the world. Based on lessons learned from the 2018 fire incident at our EVAL™ plant in the United States, we aim to be a company where all employees keep safety at the top of their minds and where accidents do not occur.

In terms of safety measures going forward, we will build safer workplace environments, such as by automating tasks that carry high human risks, when possible. We will also further reinforce safety audits from an objective point of view. Specifically, we will establish a Global Process Safety Management Audit Team in 2022 to carry out safety audits focusing on our chemical and activated carbon plants. Proceeding according to plan at production sites often tends to take precedent, which makes safety concerns unintentionally secondary. However, ensuring safety is precisely what makes stable production possible, and this is ultimately what feeds into profits. I am convinced that our business continuity depends on all employees having the ingrained mindset that “safety is the cornerstone of everything we do” and acting from a “safety first, production second” perspective.

There are three words in particular that I value: dreams, resolve, and tenacity. Having a dream comes first, and then ambitiously making it happen. But most important is to see it through with tenacity, without giving up. The Kuraray Group has set targets for net sales of \750 billion and operating income of \100 billion in 2026, marking the 100th anniversary of our company. We will move forward step-by-step with a firm resolve to meet the three challenges of “PASSION 2026.”

Based on our mission, we will strive to co-create value with society by addressing social issues through our business activities, doing our utmost to remain an “indispensable company” admired by and essential to society. I look forward to your continued understanding and support.