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Sustainability > Materiality

Sustainability

Materiality

ESG Policy

PHC Group is committed to the long-term sustainability of our business. Our mission is to contribute to the health of society through our diligent efforts to create healthcare solutions that have a positive impact and improve the lives of people, and we recognize that this positive impact can be achieved through dedicating ourselves to high standards in ESG issues.

We have identified 11 key ESG issues (or materiality topics) where we believe we can make a direct impact as a global business, and corresponding key performance indicators (or KPIs) for each topic. PHC Group will link our ESG activities with the goals outlined in our mid-term plan, or “Value Creation Plan,” and report on how our businesses are contributing to the sustainable development of society.

ESG Policy figure
Mission Mid-Term Plan

Process for Identifying PHC Group Materiality Topics

In late 2022, PHC Group formed an internal committee, headed by our COO and CSO and including leaders from each of our global business divisions, regions, and corporate functions, to help shape our shared ESG strategy.

  1. STEP1

    Identification of materiality universe

    We developed a comprehensive list of potential ESG issues to consider addressing as a company, based on respected global sustainability standards and indices including the GRI (Global Reporting Initiative), SASB (Sustainability Accounting Standards Board), SDGs, and International Organization for Standardization (ISO26000).

  2. STEP2

    Materiality assessment

    We evaluated the list of potential materiality topics based on two factors: importance for society and external stakeholders, and importance for PHC Group to realize our mission and achieve our stated business goals. To weigh these factors, we surveyed and interviewed customers, suppliers, business partners, and employees to collect insights on which topics most resonated with our stakeholders.

    Materiality assessment figure

    We also held internal workshops in each business division and corporate function globally. We combined feedback from surveys, interviews, and workshops to narrow the list of potential materiality topics to a final short list of topics that are highly relevant to PHC Group’s business and on which we can make a direct impact.

  3. STEP3

    Target setting

    We conducted external research of industry trends and reviewed internal data from across our businesses to identify priority issues on our short list for which to set targets. We then collaborated closely with each of our business divisions and corporate functions to align on specific, measurable, time-bound targets.

  4. STEP4

    Adoption

    After approval by PHC Group’s Management Committee, we presented our ESG policy, materiality topics, KPIs, and targets to the Board of Directors for formal approval and adoption by PHC Group.

ESG Materiality KPI Target
Environment Climate Change Scope 1&2 CO2 emission reduction Carbon neutral by 2040
Scope 3 CO2 emission reduction TBD (set after identifying current scope 3 emission)
Preservation of Natural Resources Percentage of reduction of water withdrawal at production sites / labs on a per revenue basis 15% reduction(vs. 2022) by 2030
Percentage of reduction of packaging material on a per revenue basis 10% reduction (vs. 2022) by 2030
Percentage of reduction of waste generated at production sites / labs on a per revenue basis 20% reduction (vs. 2022) by 2030
Circularity Percentage of total waste recycled at production sites / labs1 90% by 2030
Percentage of recycled content in plastic packaging materials 10% by 2030
Social Healthcare Innovation Number of new patent applications2 -
Number of registered patents2 -
Number of new products/services launched -
Revenue from the “Growth Areas” (Advanced Therapy Development, Digital Health, Personalized Testing and Diagnostic) 86.0B yen by 2025 (VCP)
Product Excellence Number of warning letters issued (e.g. FDA warning letter) 0
Number of recalls issued -
Supply Chain Percentage of response rate to PHC Group supplier survey 95%
Expanded Access Consolidated sales in emerging and developing markets -
People & Culture Ratio of gender diversity at manager level or above Non-male ratio:30% by 2030
Employee Engagement Score: increase from the previous year 1 point+ improvement vs. PY
Enhancing employee learning and skills development -
Governance Corporate Governance Percentage of nationality diversity of the board of directors -
Board effective assessment 1/year
Number of meetings with institutional investors and securities analysts -
Risk Management Number of Enterprise Risk Management Committee Meetings 2+/year
Percentage of employees taking compliance training (e.g. code of conduct, insider trading) 100%
Cybersecurity Percentage of employees who participate in information security and data protection training 100%
Biannual vendor security reviews - percentage of critical vendors reviewed 100%
Number of PHC Group Cybersecurity Committee Meetings 4/year

*KPIs that are difficult to identify are shown with hyphen symbols. Other key performance indicators still in discussion will be disclosed when ready.
1The recycling percentage does not include thermal recycling. 2Include design and utility.

SDGs Matrix

The matrix shows how the materiality topics that PHC Group has chosen are related to the 169 goals of SDGs, a widely adopted global framework of sustainability targets.

SDGs Matrix (PDF)

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Performance Data

Materiality

PHC GROUP Integrated Report