Social Impact and Material ESG Issues

Fuji Oil in society

Fuji Oil Group’s value chain

The Fuji Oil Group is a food ingredient manufacturer that has four business segments: Vegetable Oils and Fats Business, Industrial Chocolate Business, Emulsified and Fermented Ingredients Business, and Soy-Based Ingredients Business. We develop, manufacture, and sell various food ingredients, including oils and fats for chocolate, industrial chocolate, whipping cream, margarine, and soy protein ingredients, mainly made from agricultural products, such as palm oil, cocoa and soybeans. Our customers range widely from food manufacturers to restaurants, convenience stores and retail stores.

Our positive impacts and negative impacts

The Fuji Oil Group recognizes the following positive and negative impacts of our business.

Positive impacts (examples)

Addressing food resource issues and supporting healthy lives with plant-based food ingredients
Improving sustainability in the supply chain of raw materials
Reducing impacts on the global environment by reducing consumption of energy, water, and other natural resources and the generation of CO₂, waste, and other emissions at Group companies, primarily in their manufacturing processes

Negative impacts (examples)

Environmental degradation and human rights violations in the value chain
Impact on the global environment through the consumption of energy, water and other natural resources and the generation of CO₂, waste, and other emissions by Group companies, primarily in their manufacturing processes

Four sustainability activity areas

The Fuji Oil Group classified the activities contributing to the promotion of sustainability management into the following four areas. Activity guidelines were set for each area.

Advancing the SDGs

At the Fuji Oil Group, we understand that private business has a vital role to play in advancing the Sustainable Development Goals (SDGs), the global goals adopted by the UN in 2015. We also recognize that our business activities can directly and indirectly impact the SDGs in positive and negative ways. We strive to co-create a sustainable future for food through plant-based ingredients that are both delicious and healthy, and to create a world where no one is left behind.

Our material ESG issues

Basic approach

The Fuji Oil Group identifies material ESG issues as areas where we can contribute, through our business activities, to the sustainable development of society, our own sustainable growth and the creation of value for society. Material ESG issues contribute to two of the four activity areas for promoting sustainability management: “Creation of positive impact” and “Reduction of negative impact.”

Material ESG issues for FY2022

Our material ESG issues for FY2022 are listed below. Please refer to the relevant webpages for details on our basic approach, goals and the status of initiatives concerning each issue.

Material ESG issues

Value creation

Creation of sustainable food resources

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Creation of plant-based protein resources CTO	Establish alternative technologies and disseminate environment-friendly plant-based food ingredients — a substitute for animal protein and dairy products — to address the concerning issue of food resource shortages in the future	Develop next-generation soy meat ingredients that provide new value through their delicious flavor, healthiness, or other characteristics Develop plant-based processed foods	Marketed 10 soy meat food products (e.g., plant-based nuggets) and ingredients that can replace animal meat ingredients or meat products Marketed 5 plant-based milk and cream products (e.g., Almond Whip)

Health and nutrition

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Solutions for healthy aging and well-being CTO	Contribute to well-being among older people by addressing health issues and removing lifestyle limitations	Establish differentiated advantages of the health functions of stabilized DHA /EPA Build a network of partnerships with external organizations that is dedicated to dementia prevention	Published research presenting new evidence on the health functions of stabilized DHA/EPA Registered a DHA-fortified milk beverage as a food with function claims (FFC) Made plans for building a network of partnerships dedicated to preventing dementia
Reduction of sugars intake CTO	Provide nutritionally balanced food products that help prevent lifestyle-related diseases by replacing certain sugars with plant-based protein ingredients	Develop protein food ingredients suitable for staple food applications Develop reduced-sugar food products and ingredients	Developed and commercialized food ingredients that increase the percentage of protein in staple foods Successfully developed protein-fortified staple food ingredients in the lab
Reduction of trans fatty acid content CSO	Reduce the amount of trans-fatty acids (TFA) contained in products in compliance with the WHO’s recommendations and the laws and regulations of each country (in regions where the TFA intake exceeds 1% of the total daily energy intake)	Reduce TFA in all products (to less than 2 g/100 g of total fat or oil) at PT. Freyabadi Indotama (Indonesia) At other Group companies, focus reduction efforts on products targeted for this fiscal year	10 out of 14 relevant Group companies outside Japan have completed the switch to low-TFA products (as of March 2022)

Sustainable procurement

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Sustainable procurement of palm oil CSO	Achieve “No Deforestation, No Peatland Development, No Exploitation (NDPE)” throughout the supply chain Achieve 100% traceability to plantation (TTP) by 2030 Implement the Labour Transformation Programme (LTP) at all direct suppliers by 2030	Traceability to mill (TTM): 100% Traceability to plantation (TTP): 85% No deforestation: Conduct constant monitoring using satellite images and make improvements Implement Labour Transformation Programme (LTP) at suppliers of Palmaju Edible Oil Sdn. Bhd. (Malaysia): 100% by 2025	TTM：100% TTP：85% No deforestation: Conducted routine monitoring of the palm oil supply chain using satellite images (Malaysia, Indonesia, Papua New Guinea) LTP implementation at all suppliers of Palmaju Edible Oil Sdn. Bhd. (Malaysia): 27%
Sustainable procurement of cocoa CSO	End child labor by 2030 End the “worst forms of child labor” defined by ILO Convention by 2025 Improve living conditions of farmers Prevent deforestation and conserve forest: Plant one million trees on cocoa-growing regions by 2030	GPS mapping: Complete mapping of 90% of farms for direct procurement Support program in Ghana: Implement at 2,350 farms Conduct household surveys of farms covering more than 90% of the supply chain Carry out comprehensive community development efforts targeting women at 1,000 farms in 39 communities Provide GAP^*1 training or coaching to farms for direct procurement Select partners for continuing initiative to plant one million trees	GPS mapping: Mapped 87% of farms that are direct suppliers of Blommer Chocolate Company (U.S.) Support program in Ghana: Implemented at 1,250 farmers Conducted surveys of 1,200 households in the supply chain Provided education against hazardous child labor and the worst forms of child labor Provided GAP instruction to farms that are direct suppliers 100,000 trees planted in western Ghana
Sustainable procurement of soybeans CSO	No deforestation, no exploitation, and ensure compliance in the supply chain Traceability achieved to primary collection points by 2025 and to the community level by 2030, or 100% procurement of RTRS^*2-certified products or products certified to equivalent standards	Carry out initiatives to achieve traceability goals Formulate plans to improve traceability through supplier self-assessment and better supplier engagement	Set medium-term goals and KPIs Created a self-assessment tool for suppliers and began assessing conditions at each supplier Identified and sorted the different definitions of “community” for each supplier country
Sustainable procurement of shea kernels CSO	Deforestation prevention and parkland protection: Plant 6,000 trees/year until 2030 Traceability to the village level: 50% by 2025, 75% by 2030 Direct procurement of shea kernels from Tebma-Kandu cooperatives: 30% by 2025, 50% by 2030 Create value in local communities: Increase permanent, direct employees at Fuji Oil Ghana Ltd. by 50% (base year: 2017)	Plant 6,000 trees/year Direct procurement of shea kernels from Tebma-Kandu cooperatives: 10% Permanent, direct employees at Fuji Oil Ghana Ltd.: Increase by 50% by 2025 (base year: 2017)	6,000 trees planted Direct procurement of shea kernels from Tebma-Kandu cooperatives: 2.5% Permanent, direct employees at Fuji Oil Ghana Ltd.: Increased by 42% (base year: 2017)

*1 Good Agricultural Practices
*2 Round Table on Responsible Soy Association

Safety, quality, and the environment

Product safety and quality

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Ensuring product safety and quality ESG Representative	Ensure that the Fuji Oil Group is never a cause for complaints for any of the products it manufactures	Zero serious quality-related complaints	Serious quality-related complaints: 0

Occupational health and safety

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Promoting occupational health and safety ESG Representative	Place top priority on safety and respect for humanity. Keep all Group companies accident free by creating safe and comfortable workplaces	Eliminate the occurrence of serious accidents and serious property damage accidents	Zero cases of serious accidents and serious property damage accidents

Climate change

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
CO₂ emissions reduction ESG Representative	Environmental Vision 2030 Scope 1 and 2: 40% reduction (absolute) Scope 3 (Category 1): 18% reduction (absolute) Achieve both by 2030 (based year:2016) Note: Approved by the Science Based Targets initiative (SBTi)	Start collecting environmental data in a timely manner using environmental data collection systems Embed Environmental Vision 2030 (employee relations (ER)) Promote reduction efforts and pursue innovations Determine method of supplier engagement for reducing Scope 3 Category 1 emissions and start engaging several suppliers	Scope 1 and 2 (total): 21% reduction Scope 3 (Category 1): 0.1% increase
Environmentally responsible production CTO	Technologies developed for eliminating chemicals, capturing and utilizing carbon (CCU), and other applications reduce the Group's global environmental impact across its value chain	Develop manufacturing methods for the application of a new enzyme-based oil and fat processing technology in commercial production Launch initiatives to effectively utilize the CO₂ emissions in our soybean production and select suitable soybean varieties Use breeding technology to create new plant breeds for raw material that can lead to more efficient production of oils and fats, study the commercialization of oil and fat materials, and estimate their effect on reducing environmental impact	Environmental impact reduction assessment of new enzyme-based oil and fat processing technology: Estimated 20% reduction of CO₂ emissions. Enzyme reaction rates at the actual production plant did not reach the target Began CCU project in soybean production

Water resources

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Water use reduction ESG Representative	Environmental Vision 2030 20% reduction in water use (intensity) by 2030 (base year: 2016)	Start collecting environmental data in a timely manner using environmental data collection systems Deliberate and decide on new reduction targets Promote reduction efforts and pursue innovations	25% reduction

Circular economy

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Waste reduction ESG Representative	Environmental Vision 2030 10% reduction in waste (intensity) by 2030 (base year: 2016)	Start collecting environmental data in a timely manner using environmental data collection systems Promote reduction efforts and pursue innovations	6.1% reduction
Reduction and upcycling of food waste CTO	Contribute to reducing food loss and waste throughout the value chain through technology innovation and reuse/upcycling of byproducts	Develop technologies and ingredients that prevent deterioration when food products are stored for long periods Develop technologies for using byproducts effectively	Developed and pitched new ingredients that maintain product quality and increased customer adoption

Biodiversity

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Biodiversity conservation and restoration ESG Representative	Become nature positive in key raw material producing regions	Formulate Group policy on biodiversity conservation	It is not included in the ESG materiality in FY2021

* Follow the links below to learn more about our biodiversity initiatives.
Sustainable Procurement of Palm Oil

https://www.fujioilholdings.com/en/sustainability/palm_oil/
Sustainable Procurement of Cocoa

https://www.fujioilholdings.com/en/sustainability/cocoa/
Sustainable Procurement of Soybeans

https://www.fujioilholdings.com/en/sustainability/soy/
Sustainable Procurement of Shea Kernels

https://www.fujioilholdings.com/en/sustainability/shea_kernel/

Business foundations

DE&I^*1

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
DE&I management^*2 Division Head of Global HR Group	Equity: Remove barriers experienced by people from disadvantaged communities, provide equitable opportunities and conduct fair evaluations Inclusion: Build a corporate culture that fosters feelings of belonging among all employees Diversity: Harness diversity for business model and value creation	Group-wide Increase diversity on executive teams Develop the next generation of executive talent Develop global talent through our global trainee program Japan Encourage diverse work styles Ensure equity Support long-term, meaningful employment of people with disabilities Other countries Embed DE&I into company culture Promote cultural reforms	Group-wide Conducted e-learning on the Group Management Philosophy Documented the qualities required of executive managers and implemented measures based on those requirements Japan Increased work-style options by revising our contracted reemployment program, expanding our telework system, etc. Percentage of eligible men who took parental leave: 73% Provided self-development opportunities to all employees, regardless of employment arrangement Opened up a new workplace and provided follow-up support to support people with disabilities in achieving long-term work Other countries Interviewed Group companies outside Japan on DE&I issues Identified positions that require dispatching employees from Japan and made efforts to localize positions that do not require them

*1 Diversity, equity and inclusion.
*2 A term encapsulating the concepts and practices of providing equitable opportunities and evaluations and developing and leveraging diverse teams through inclusive management.

GRC^*

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2022 Goals	FY2021 Results
Risk management system ESG Representative	Earn the trust of society by demonstrating high reliability and risk management capability	Strengthen risk management in the Group Properly disclose information on the financial implications of climate-related risks based on the TCFD recommendations Prepare to comply with TNFD disclosures	Identified significant Group-wide risks and carried out appropriate risk management Prepared climate change scenarios based on the latest reliable, objective data Explored ways of quantifying financial impacts
Information security management CFO	Reform processes through the use of information and communications technology (ICT) and create corporate value Facilitate the achievement of Group governance through the use of safe and secure ICT	Achieve zero serious security incidents Review and update the Group’s Information Security Regulations to reflect the latest risk trends	Serious security incidents: 0 Added audit items to address new threats and conducted internal audits at 13 Group companies worldwide
Strong compliance Legal & General Affairs Division Head	Earn the trust of all stakeholders by conducting business fairly, transparently, and with integrity	No serious compliance violations Conduct a risk assessment and monitoring of Group compliance risks, such as those related to fair transactions Raise employee awareness of compliance	Appointed staff responsible for legal affairs at each Group company, and established communication lines between such staff and Fuji Oil Holdings Inc. Had Group companies conduct a self-assessment of public official bribery risk and a self-assessment of systems for preventing bribery at higher-risk workplaces Held anti-trust compliance group trainings in Japan, China, North America and Singapore Conducted global e-learning on bribery prevention
Group governance CSO	Enhance corporate value through the establishment of an effective Group governance system	Improve communication within the Fuji Oil Group to further enhance awareness of the Group Management Philosophy and execute Group strategy Revise our system for monitoring management execution to align with our recent transition to a company with an Audit and Supervisory Committee	Carried out an employee relations (ER) program to promote activation and mutual understanding within the Group Conducted training for employees preparing for an assignment at another Group company outside Japan Deepened partnership between the Internal Audit Group and the Corporate Planning Group
Corporate governance CSO	Improve corporate value through appropriate functioning of the Board of Directors	Establish the Board of Directors as a function focused on supervising (monitoring) corporate management	Carried out deliberations on the following at the board meetings in FY2021 Agenda items that should be adopted and deliberated on for monitoring purposes How to manage business execution to accommodate sufficient monitoring Separation of roles between the Board of Directors and the Management Committee Meeting (the highest decision-making body for business execution)

* Governance, risk, and compliance

Process of selecting material ESG issues for FY2022

The Fuji Oil Group reviews and selects our material ESG issues once a year based on new social issues and input received from stakeholder dialogue.
In FY2021, the secretariat of the Sustainability Committee updated its list of social issues based on the ESG materiality map created for FY2021 and taking into consideration the GRI^*1 and SASB^*2 disclosure items, the WBA^*3 benchmarks, the SDGs, ESG themes promoted by industry groups, the material issues of other companies in the same industry worldwide, and expert guidance. It then assessed the materiality of the resulting 15 social issues by plotting them on one of three levels on two axes (the Fuji Oil Group’s impact on society and the social issue’s impact on the Fuji Oil Group), creating a draft ESG materiality map for FY2022.
Following a multistakeholder discussion involving Group chief officers in charge of specific material ESG issues, the presidents of regional headquarters, relevant departments, and internal and external experts, the Sustainability Committee — which has around 30 members, including Group chief officers in charge of specific material ESG issues, the managers responsible for promoting ESG initiatives in FY2021 (selected from corporate, business, and R&D divisions), and internal and external experts — then reviewed the validity of the materiality map.
Based on the Sustainability Committee’s conclusions, the committee’s secretariat reported the materiality map and the 11 material ESG issues for FY2022 to the Fuji Oil Holdings Inc. Board of Directors for approval.
As a result of this process, the ESG materiality map and material ESG issues for FY2022 were updated from the FY2021 version based on the following main points.

Adopt language for the two axes of the ESG materiality map to emphasize the concept of double materiality, and focus the weight of the analysis on the Group’s impact on society.
Separate “health and nutrition” and “biodiversity” as discrete social issues, reflecting the rise in stakeholder interest in these issues since the analysis conducted in FY2020.
Adjust the names of some of the social issues to align with stakeholder interests (example: “creative food solutions” to “creation of sustainable food resources”)

*1 Global Reporting Initiative
*2 Sustainability Accounting Standards Board
*3 World Benchmarking Alliance

Identification and selection process

Examples of Stakeholder Advice

Providing healthy foods and preventing corruption are critical social issues

STEP 1

Comprehensive listing of social issues for evaluation

STEP 2

Evaluation with the use of the materiality map

STEP 3

Discussion by the Sustainability Committee

STEP 4

Approval from the Board of Directors

FY2022 ESG materiality map

*1 “Sustainable procurement” includes important issues such as respect for human rights, biodiversity conservation, and forest conservation.
*2 Diversity, equity and inclusion
*3 Governance, risk, and compliance. “GRC” includes corporate governance and internal control. The Sustainability Committee is in charge of monitoring internal control. The Board of Directors is in charge of monitoring corporate governance.