Contributing to the SDGs - Material Issues and Targets
The future made possible by Takeuchi
Looking to the future and bearing in mind the UN's Sustainable Development Goals, we intend to help create an ecofriendly, affluent society. Above all, SDG goal 11, "Make cities and human settlements inclusive, safe, resilient and sustainable" is at the heart of our Group business. We can contribute widely to society by developing, manufacturing, selling, and maintaining safer, more efficient, and cleaner construction machines. Here are some examples of our contributions to the SDGs.
Freeing workers from the hard labor of construction sites
Before the compact excavator was introduced, construction workers in residential areas used picks and shovels, which was hard work. Our compact excavator was developed to free people from physically taxing work at construction sites, and this delighted many people. In addition to reducing the workload, compact excavators helped to solve the labor shortage by significantly shortening the construction period, in some cases from a week to a day.
Construction machinery plays a different role depending on its size. Our specialty is compact construction machinery, which is mainly used on tight construction sites in residential areas, especially in cities; in other words, work in narrow, densely populated areas where large construction machinery cannot go. The necessities of life are food, clothing, and housing, and our construction machinery is deeply involved in housing, including foundation work for residential buildings; building up the infrastructure, such as water and gas pipes; constructing factories and commercial buildings; as well as public and private investment in construction for gymnasiums, etc. In this way, we continue to contribute to peoples' daily lives.
According to estimates released by the United Nations, the concentration of populations in urban areas is growing worldwide, and the urban population is expected to increase at a faster pace than the general population. Because our compact excavators and compact track loaders were designed to be highly versatile, people now can handle a range of operations aside from excavation by adding attachments. We expect that the need for our products will increase more and more for urban development into the future.
Improving disaster preparedness (flexible yet resilient)
Natural disasters continue to increase due to climate change. Their scars are deep and the damage they cause is growing worse and worse. An important issue is how to prepare and respond quickly to these disasters. Given this situation, compact construction machinery is attracting attention as being indispensable because it can work in tough and tight spaces and can play a key role in quick recovery and reconstruction. In fact, this type of equipment is often used to remove debris and mud in disaster-stricken areas, such as those hit by typhoons and earthquakes, and they were used in Australia and the US to help prevent massive forest fires from spreading. Compact construction machinery also helps prevent natural disasters. For example, compact track loaders are used to gather up dead leaves and branches in forests, leveraging their off-road performance and attachments to help prevent forest fires.
Developing products that are friendly to the global environment and people
We recognize that reducing CO2 emissions from our products is an important issue for us and our customers, so we are working to help resolve this issue by developing battery-powered compact excavators. If we can reduce emissions including CO2 to zero, this would not only be environmentally friendly but also far less hazardous to workers' health in enclosed spaces, such as inside buildings and underground. Moreover, another advantage of electrification is that it cuts noise to near zero, making this technology a perfect match for the compact construction machinery used in urban areas.
Our existing diesel engine machinery meets the strict environmental standards (emission regulations) and safety standards in Europe and the US. In addition to improving the performance of diesel engine machinery, we will develop better electrification, including on hybrid models, working to create products that are even more friendly to the environment and people.
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.
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.
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.
||CO2 emissions from product use
(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
||CO2 emissions at factories
(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
|Electricity used at factories
||By the end of FY2021
||Using 100% renewable electricity
||Occupational accidents resulting in absence from work for one day or more
||Occupational health and safety, employee health
#13 Health management at Takeuchi (nonconsolidated), Industrial Safety and Health
||Training hours per person
||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
||Ratio of employees taking childcare leave (by gender)
||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
||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
||Same as the ratio of male managers to male staff
|Ratio of local staff in management positions in subsidiaries
||Announce actual results
||Collection rate of agreement forms for our CSR procurement policy
||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.
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.