Material Issues and Targets

Takeuchi's material issues and contribution to the SDGs

As part of our efforts to help resolve global social issues, we will work conscientiously to achieve the UN's SDGs. At the same time, to build the sustainable society that the world should aim for, in February 2021, we determined the material issues that the Takeuchi Group needs to address.
We spent time deliberating on the material issues we need to address throughout our supply chain, from development, purchasing, manufacturing, and sales of our flagship Compact Construction Machinery to the construction sites where our products operate, right through to product disposal.

					Material	Issues
No.	E	S	G	The seven core subjects of ISO 26000 and Takeuchi's main initiatives.	Social issues to be resolved	Themes	Outline
1	●			The environment	Mitigate climate change	Develop, manufacture, and sell battery-powered compact excavators	By developing, manufacturing, and selling battery-powered compact excavators, we will reduce our environmental impact and minimize the impact around worksites.			3.9				7.3		9.4		11.6	12.4	13.2	14.3
2	●					Reducing GHG emissions at factories	To help mitigate the effects of climate change, we will work to reduce greenhouse gas emissions, such as CO₂, from factories.							7.3		9.4				13.2	14.3
3	●					Improving factory energy efficiency Expanding the use of renewable energy	As a countermeasure against climate change, we will work to improve the efficiency of the energy, such as electricity and gas, used by our factories, and we will take the initiative to increase the use of renewable energy provided by solar power generation and others.							7.2、7.3		9.4				13.2
4	●				Realizing a circular economy	3R factory initiatives	We will contribute to a circular economy by reducing, recycling, and reusing waste from factories.												12.3、12.4、12.5		14.1
5	●				Reducing our environmental impact Preventing pollution Managing chemical substances	Develop, manufacture and sell construction machinery with reduced environmental impact	We will develop, manufacture, and sell construction machinery with excellent safety and comfort that reduces the burden on workers in addition to reducing the burden on the global environment.			3.9				7.3		9.4		11.6	12.4	13.2
6	●					Reducing chemical emissions and wastewater from factories	For the environment and employee health, we will work to effectively manage chemical substances used in our factories, to prevent pollution from their discharge, and work to reduce wastewater.			3.9			6.1、6.3					11.6	12.2、12.4		14.1
7	●					Complying with SDSs, REACH regulations, and RoHS Directive	We will fully manage the chemical substances contained in our products by using safety data sheets (SDSs). We will comply with the REACH regulation and RoHS Directive.			3.9			6.3					11.6	12.4
8		●		Consumer issues (responsibility towards customers)	Sustainable urban development	Improving productivity and work efficiency at sites where construction machinery is operated, by developing products that precisely meet market needs.	We will strive to improve our products, services, and customer satisfaction by strengthening our connection with end users and by gathering more feedback from them.								8.2、8.8
9		●			Sustainable urban development	Developing , manufacturing, and selling construction machinery that contributes to building and maintaining resilient cities and infrastructure	This is the essential focus of our business, and the area where we excel. We will widely contribute to society by developing, manufacturing, selling, and servicing continually safer, more efficient, and cleaner construction machinery.	1.5	2.4	3.6	4.a		6.1、6.2、6.4			9.1 9.a		11.1、11.2、11.3、11.4、11.5、11.7、11.a、11.b		13.1	14.1、14.5、14.7	15.2
10		●			Dealing responsibly with customers	Strengthening connections with end users by increasing the amount of information on products and services	We will strengthen our connection with end users by providing them with the information they need, aggregating their requests, and implementing systems to use that information within our company.								8.2、8.5
11		●		Human rights Labor practices	Respect for human rights Effective labor practices	Eliminating employment discrimination	We will eliminate all discrimination in labor and employment. We will promote equal pay for equal work and the employment of people with disabilities.				4.3、4.4、4.5				8.5、8.8		10.2、10.3						16.3
12		●		Human rights Labor practices	Respect for human rights Effective labor practices	Prevention of harassment	We will respect human rights and work to prevent all forms of harassment.					5.1			8.5		10.3						16.1、16.3
13		●		Labor practices	Occupational health and safety Employees' health	Health management at Takeuchi (nonconsolidated)	We will promote employee health, mental health care, and occupational health and safety.			3.3、3.4、3.5、3.8、3.9
14		●			Human resources	Increase education and training programs	We will improve and increase our education and training programs for the growth of our employees and the development of their abilities.				4.3、4.4
15		●			Promoting work-life balance	Encouraging the use of internal systems, such as childcare and nursing care leave, and shorter working hours	To improve employees' work experience and to promote a better work-life balance, we will respect diverse workstyles and lifestyles, and we will improve employee benefits and strive to implement working-style reforms.			3.4		5.1、5.4			8.5
16		●	●	Human rights Organizational governance	Promoting female participation	Appointment of female directors, and development of female management candidates	We will promote the active participation of women and increase diversity in management by appointing female directors and developing female managerial candidates.				4.3	5.1、5.5			8.5		10.3						16.7
17		●		Community involvement and development	Developing the next generation in the community	Factory tours at Takeuchi (nonconsolidated), sending out lecturers, and cooperating with special needs schools	For regional and local community development, we will contribute to nurturing the next generation by opening up factories to social studies tours, sending lecturers to promote public learning programs, and cooperating with special needs schools.				4.1、4.5、4.7						10.2						16.1、16.3
18	●	●		Fair operating practices	Establishing an environmentally and socially conscious supply chain	Establishing and implementing a CSR procurement policy	To build a sustainable supply chain, we will set up and implement a CSR procurement policy that addresses the environment, human rights, labor issues, anticorruption, etc.								8.4、8.7				12.1、12.2、12.4				16.3
19	●	●				Asking suppliers to agree to our CSR procurement policy	To implement our CSR procurement policy, we will obtain the agreement of our suppliers.								8.4、8.7				12.1、12.2、12.4				16.3
20	●					Dismantling, collecting, and recycling at the stage of product disposal	To pass on the planet to the next generation, we will work to establish a system for disassembly, collection, and recycling at the product disposal stage.								8.4				12.1、12.2、12.5
21			●	Organizational governance	Compliance	Compliance with laws and regulations, and the exclusion of Organized Crime	We will comply with the letter and spirit of the law, such as anticorruption laws and the exclusion of organized crime, strive to operate with social ethics and good sense, and abide by our Action Guidelines.						6.3		8.5		10.2、10.3		12.4		14.1	15.1	16.3、16.4、16.5
22			●		Corporate Governance	Strengthening global governance	To ensure fair and transparent management, we will maintain a business management system for prompt and effective decision-making with consistent communication of management intentions, and work to strengthen global governance throughout the Takeuchi Group.												12.6				16.7
23			●		Risk management	Crisis management systems, BCPs, and information security	We will work on risk management to analyze, assess, and manage risks that may have a significant impact on our sustainable development.			3.9					8.5			11.5、11.b	12.4	13.1			16.3、16.10

* Specific targets and KPIs for addressing material issues are currently being formulated.
* Click here to print out the list of material issues (PDF).

Process of identifying Material Issues

1. Understanding the issues to address and analyzing the current situation

We established a cross-departmental project team to work on addressing the SDGs. The team was chaired by Toshiya Takeuchi, President and Representative Director, and consisted of directors, general managers, section managers, and working-level personnel. The team members held discussions and reviews to understand and analyze the Company's business operations and to establish activity themes to address in the future.

To clearly identify material issues based on trends in the international community and the expectations of stakeholders and their importance to management, we reviewed the 169 targets of the SDGs as well as global requests and guidelines, such as GRI and ISO 26000, and incorporated the opinions of outside experts.

Through these discussions and reviews, we understood what we were already doing, what we were not doing, and new initiatives that we should focus on in the future. In this way, we identified candidates for Material Issues that Takeuchi should address today and over the medium to long term.

2. Assessing and prioritizing issues

We plotted, on two axes, the priorities for material issue candidates, measuring, on the horizontal axis, the importance from management perspectives for Takeuchi's medium- to long-term business and, on the vertical axis, the importance from stakeholders' perspectives, while integrating the opinions of outside experts . Then, through discussions within the project team, we identified our material issues. To gauge their importance from our stakeholders' perspective, we took into account requests from end users, suppliers, distributors, employees, environmental organizations, local communities, local governments, investors, etc., as well as expectations for the Company.

Outside expert's opinion on material issues

Takeuchi is a unique construction machinery manufacturer that has built an original business model where overseas sales account for more than 98% of sales.
Regarding the material issues, established for the first time, I think they are very good overall.

"Resilient urban development" is part of goal 11 in the SDGs. As compact construction machinery is important for the urban infrastructure, such as housing, electricity, water and sewage, and gas, I think this is a material issue that reflects company characteristics well. This is why I proposed that the "development, manufacture, and sale of construction machinery that contributes to the construction and maintenance of resilient cities and infrastructure" (No. 9) should be a high priority.

I proposed that other material issues should also be given high priority, including "strengthening connections with end users by increasing the amount of information on products and services" (No. 10); "dismantling, collecting, and recycling at the stage of product disposal" (No. 20); and the "appointment of female directors, and development of female management candidates" (No. 16). First of all, No. 10 and 20 will take some time for the Company to complete, and while Takeuchi's strength is in working with distributors and dealers, they have not been so good at communicating with end users (individuals and general contractors). However, when considering the entire supply chain, there are requests from stakeholders that cannot be avoided, such as environmental impact, including waste generated by end users, as well as labor practices, safety, and the comfort of the end users.

The promotion of female participation (under goal 16) is another issue that will take time. The construction machinery industry and construction sites tends to be male dominated, but of course, there are female construction machinery operators, and there will be a strong need for product development that considers female operators. This is why it is essential to have a comfortable working environment where female employees can fully participate. Obviously, the Company's main sales areas are North America and Europe, so it would be a good idea to make this a high priority as well.

Other material issues that the Company needs to address as a construction machinery manufacturer are firmly established, such as the development of battery-operated compact excavators with zero emissions and machinery with low environmental impact as well as initiatives for manufacturing infrastructure, such as eco factories, and for a supply chain that fully considers the environment and society.

I have heard that the Company took my proposals seriously and adopted the above Material Issues, as they tackle this issue for the first time.

Moreover, I think that my proposals contain points that the company can draw on when it considers material issues next time and the time after that.

I look forward to Takeuchi achieving sustainable growth through sustainable management.

Takashi Nawa

Professor, Graduate School of International Corporate Strategy (ICS), Hitotsubashi University
Prof. Nawa graduated from the Tokyo University Faculty of Law and received his MBA from Harvard Business School. He worked in the Industrial Machinery Division of Mitsubishi Corporation for about 10 years. He also worked in consulting at McKinsey & Company for nearly two decades (until 2010). At McKinsey, he was a practice leader for the Asia-Pacific region in the automotive and manufacturing sector and a practice leader in the Japan office for the high-tech and telecom sectors. He is now engaged in a wide range of projects such as next-generation growth strategies and company-wide structural reforms in diverse industries around the globe, including Japan, other parts of Asia, and the US.

Targets for material issues

We have sharpened our focus to 12 major issues of the 23 material issues we reported on March 1, 2021, and have set seven targets in relation to these issues. We will disclose our achievements against these targets every year to monitor the progress in relation to the material issues. As for the material issues for which targets have not yet been set, we will continue to consider targets as we push forward with efforts to address these issues.

#	What	By when	What level	Materiality issues
1	CO₂ emissions from product use	FY2030 (compared with FY2010)	Reduce by 30%	Mitigating climate change, Reducing our environmental impact, Preventing pollution, and Managing chemical substances #01 Develop, manufacture, and sell battery-powered compact excavators #05 Develop, manufacture, and sell construction machinery with reduced environmental impact
2	CO₂ emissions at factories	FY2030 (compared with FY2015)	Reduce by 50%	Mitigate climate chang #02 Reducing GHG emissions at factories #03 Improving the energy efficiency of factories, Expanding use of renewable energy
2	Electricity used at factories	By the end of FY2021	Using 100% renewable electricity
3	Occupational accidents resulting in absence from work for one day or more	Every year	Zero	Occupational health and safety, employee health #13 Health management at Takeuchi (nonconsolidated), Industrial Safety and Health
4	Training hours per person	Every year	Announce actual results	Human resource development, Respect for human rights, Proper labor practices, and Compliance #12 Prevention of harassment #14 Improve education and training programs #21 Compliance with laws and regulations, and the exclusion of Organized Crime
5	Ratio of employees taking childcare leave (by gender)	Every year	Announce actual results	Promoting work-life balance #15 Encouraging the use of support systems, such as childcare and nursing care leave, and shorter working hours
6	Female Directors	FY2023	Appoint one Director	Diversity, Promoting female participation #16 Appointment of female directors, and development of female management candidates
	Ratio of female managers to female staff	FY2030	Same as the ratio of male managers to male staff
	Ratio of local staff in management positions in subsidiaries	Every year	Announce actual results
7	Collection rate of agreement forms for our CSR procurement policy	Every year	95% or more	Establishing an environmentally and socially conscious supply chain #18 Establishing and implementing the CSR procurement policy #19 Asking suppliers to agree to our CSR procurement policy

1. Reduce CO₂ emissions from product use by 30% from FY2010 levels by FY2030

We recognize that addressing climate change, namely reducing CO₂ emissions, is one of our highest priorities. The targets we set here cannot be achieved simply by improving the performance and fuel efficiency of conventional diesel engine construction machinery, and the widespread use of battery-powered construction machinery is a key factor. We launched a lithium-ion battery-powered compact excavator in July 2021, but we expect that it will take a certain amount of time for such machines to become commonplace. Therefore, we expect that the pace of achieving the 30% reduction target will accelerate in the late 2020s and as we approach 2030.
On the other hand, the spread of this kind of product may be accelerated by the change in customers' awareness due to the rise of environmental awareness, or by the strengthening of public subsidies or regulations. Recognizing this "transition risk" as an opportunity for business development, we will work on product development to expand our lineup of battery-powered construction machinery.
* CO₂ emissions from products are calculated based on Scope 3, Category 11 (Use of sold products).

2. Reduce CO₂ emissions from factories by 50% from FY2015 levels by FY2030
Use 100% renewable electricity in factories by the end of FY2021

Along with reducing CO₂ emissions from product use, we believe that our responsibility as a manufacturer to reduce CO₂ emissions from our factories is a given. In our factories, CO₂ emissions from electricity use are dominant, so we will work on the following three pillars.

Energy conservation: Improve the efficiency of electricity use, including activities by the Energy Conservation Promotion Committee established in 2010
Energy creation: Generate electricity using solar panels installed on the factory roof
Renewable energy: Switch to use 100% renewable electricity in factories by the end of FY2021
* We switched to 100% renewable electricity from November 2021.
(Certificate)

3. Reduce the number of occupational accidents, resulting in absence from work for one day or more, to zero each year

Our Code of Conduct states that "safety takes precedence over everything" and we have been working to maintain and improve a safe and healthy work environment by having the Health and Safety Committee and employees work together to prevent occupational accidents and incidents. This time, we have renewed our awareness that this is one of the global ESG issues and have set a target of zero occupational accidents. We believe that creating a work environment in which each and every employee can play an active role with peace of mind is essential for the sustainable growth of a company.

4. Disclose training hours per person annually

Our Code of Conduct includes "Respect for Humanity", and we recognize human capital as our greatest management resource. Human capital is essential to the development of a business, and the personal growth of employees is directly related to the growth of a company. We take this opportunity to reaffirm the importance of human capital development and have picked up training hours as an indicator for employee education and training. The theme of the training will include material issues #12 Prevention of harassment and #21 Compliance. We will continue to provide high quality learning opportunities to our employees and proactively invest in human capital.

5. Disclose the ratio of employees taking childcare leave (by gender) annually

Childcare leave is a system in which companies provide support for childcare, an important life event, and there is a social need to create a work environment where it is easy for both men and women to take childcare leave. There has been growing attention to the need for men as well as women to take childcare leave, as it provides an opportunity to reevaluate one's own work-life balance and to strengthen the bonds between father, mother, and child at home. At the same time, management skills will be strengthened through job rotation in the workplace. Through the promotion of work-life balance, we will continue to support a variety of work styles among our employees.

6. Appoint one female director by FY2023
Achieve the same management:staff ratio for females and males by FY2030
Disclose the ratio of local staff in management positions in subsidiaries annually

We believe that diversity is an important issue for our company, along with climate change. We are keenly aware of the need to prevent monoculturalism and inflexibility, and to incorporate diverse values and potential in both management and field operations. First, as part of our efforts to promote gender diversity, we will appoint a female director to our Board of Directors, which currently has nine members, all of whom are male, and we will also work to improve the ratio of females in management positions. In addition, in light of the fact that the ratio of overseas sales exceeds 97%, we decided to set the ratio of local managers in overseas subsidiaries as an indicator, with the aim of incorporating the perspective of local people into management and expanding local employment.

7. Achieve a 95% or higher collection rate of agreement forms for our CSR Procurement Policy each year

In order to maximize the impact of our sustainability efforts, it is essential that we work not only within the company, but also with our suppliers, who are important stakeholders in our production activities. We strongly recognize the need to consider and address the impact and responsibility we have on the environment and society throughout our supply chain, and have established a CSR procurement policy. We hope to contribute to solving global ESG issues in cooperation with our suppliers.

Sustainability