Interview with Officer in Charge of Sustainability

Q．In April 2022, Nissui announced its mission, long-term vision, and the Mid-Term Business Plan, “Good Foods Recipe1,” and set mid- to long-term KPIs for sustainability. It has been a year and a half since these initiatives were launched. Could you please share what you have noticed and what your current thoughts are?

A．The concept of sustainability management, which links social, human capital, and environmental values to enhancing corporate value, has been shared throughout the Company since sustainability was explicitly stated in our mission and long-term vision. The importance of whether something is “sustainable” or not has grown rapidly in discussions with customers, and we are finding more and more instances where strengthening sustainability leads to business opportunities. In addition, the establishment of specific KPIs for the mid- to long-term has fostered a sense of ownership among employees, which has led to increased communication about how to achieve these KPIs and to more experimentation across departments.

However, our current KPIs are based on the materiality set in 2016 as a starting point. We have seen the need to review materiality itself as the environment changes, and we have already begun to do so. We started formulating our next Mid-Term Business Plan this fall, and will incorporate the revised materiality into the plan to strengthen the integration of ustainability into our business. We aim to promote sustainability management more vigorously than ever before, to embody our mission, and to realize our long-term vision.

Q．Please share your thoughts on the progress of sustainability KPIs and your plans for linking sustainability to financial value.

A．Sustainability KPIs are established for each of the social, human capital, and environmental values. Detailed information about each KPI can be found on our sustainability website. Let me discuss how we can connect our sustainability initiatives to financial value, using examples such as the environmental value of “reducing CO₂ emissions” and the social value of “expanding health category products.”

With regard to CO₂ emissions, we have set the goal of achieving a “10% reduction by FY2024 (compared to FY2018).” In FY2022, we achieved a remarkable 12.1% reduction through a combination of energy conservation initiatives, the installation of solar power generation equipment, and the strategic procurement of electricity from renewable energy sources. While this progress is indeed promising, we recognize that future business expansion is expected to lead to an increase in CO₂ emissions. Therefore, we are committed to intensifying efforts to further reduce CO₂ emissions, including those associated with projected growth. The key objective is to establish a clear link between our sustainability initiatives and both business growth and financial value. For example, the use of solar power contribute to mitigate the risks associated with potential energy price increases and power supply limitations. In addition, within the Group’s aquaculture business, which has been identified as a key growth area, we recognize the need to embrace technological innovation to reduce CO₂ emissions from fishing vessels and land-based aquaculture operations. In its quest for greater competitiveness, we are fully committed to making strategic investments in decarbonization and are closely monitoring evolving technological trends. We are currently in the process of formulating a grand design for achieving carbon neutrality by FY2050 from a backcasting perspective, and aim to disclose it by the end of FY2024.

In the business of health category products, which is also positioned as a growth area, we set a target of “1.3 times sales in FY2024 (compared to FY2021).” However, in FY2022, progress toward this goal was delayed due in part to the suspension of exports of pharmaceutical raw materials (highly purified refined fish oil for pharmaceutical manufacturers) to North America, resulting in sales reaching only 1.0 times the previous year. While we aim to expand sales of fast-twitch skeletal muscle protein and high value-added products domestically, it is clear that achieving our targets depends significantly on overseas growth. We are preparing to submit applications to the European Medicines Agency (EMA) for pharmaceutical raw materials destined for Europe. In addition, we plan to introduce MSC-certified fish oil as a functional raw material (refined fish oil for health food and infant formula manufacturers) starting this fiscal year. The inclusion of MSC-certified fish oil is in response to requests from international infant formula manufacturers and reflects a growing trend among customers to prioritize sourcing based not only on quality, but also on environmental and human rights considerations. In light of these factors, we believe it's important to take a comprehensive approach to sustainability, including other KPIs such as verification of the sustainability of marine resources and responsible sourcing (human rights).

In addition, as the Group’s operations are dependent on natural capital, we recognize the need to take a broader perspective when considering our relationship with this invaluable resource. In addition to our traditional fishery resource surveys, we have undertaken a pilot initiative in the current fiscal year using the LEAP approach outlined in the Task Force on Nature-related Financial Disclosure (TNFD) framework. This approach enables us to comprehensively assess the interplay between our dependence on natural capital and its impacts, analyze risks and opportunities, and examined responses to address them. We remain committed to consistently integrating natural capital risk and opportunity considerations into our strategic planning, with the goal of generating financial value through risk mitigation and growth.

Q．Alongside the Mid-Term Business Plan and the newly introduced mission and branding activities, could you please share the direction of sustainability for Nissui in the future?

A．“Sustainability” is both our mission and our long-term vision. We believe that each and every one of our employees, who are the source of the Group's competitiveness, will embrace our mission and perform their duties with a sense of fulfillment, thereby contributing to increasing our corporate value. Starting in Japan, we will enhance employee engagement and foster an organizational culture in which employees are motivated to take proactive steps toward achieving their goals.

Looking ahead, we will further integrate sustainability into our business and align it with our branding activities to communicate our mission both internally and externally. Sustainability is a response to the inevitable environmental changes of the future, and we aim to evolve into “a leading company that delivers friendly foods for people and the earth” by anticipating and adapting to these changes.

October 2023