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 material ESG issues

Basic approach

The Fuji Oil Group is working to create social value, with the goal of creating our own sustainable growth and the sustainable development of greater society. Amid a variety of global issues, we identified the issues that take priority for the Group as material ESG issues, and strive to “create positive impact” or “reduce negative impact” on those through our business activities.

Material ESG issues for FY2023

Our material ESG issues for FY2023 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

There are growing concerns about shortages of protein sources, increase in environmental impacts and uneven food distribution due to population growth. We work on the development of plant-based proteins with low environmental impact in order to curb the environmental deterioration caused by increased food production. Moreover, we are increasing food choices and contributing to a healthy diet by responding to the diverse needs of each country and region, such as food traditions and values, preferences and allergies.

Creating positive impact

Provide an abundance of food settings with diverse food options
Help eliminate uneven distribution of food resources and improve health through a sustainable supply of protein sources
Reduce environmental impact by increasing consumption of plant-based food ingredients (reduce CO₂ emissions and water consumption)

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Creation of plant-based protein resources CTO	Increase dietary choices to help address food supply problems and other global issues by making plant-based proteins widely and readily available to the general public	Develop next-generation soy meat ingredients that provide new value Develop plant-based processed foods and their markets to help address issues for our customers and society	Marketed two soy meat ingredients developed to provide flavor, meat-like fibrous texture and mouthfeel Marketed ten processed food products (side dishes, noodle soup, confectionery, etc.) replacing meat, milk, and eggs with plant-based ingredients

Health and nutrition

Amid concerns about health issues increasing as people transition to new life stages or adopt different dietary and lifestyle habits, there is a need to create a society in which they can lead purposeful lives free from disability. We are helping extend healthy life expectancy by ensuring that health and well-being remain balanced with the enjoyment of food. We do this by promoting active intake of stabilized DHA/EPA, which shows promise in maintaining and improving health in older people, and through reducing excessive consumption of food ingredients such as sugars and trans fatty acids, which increase the risk of lifestyle diseases.

Creating positive impact

Achieve well-being for older people
Prevent lifestyle-related diseases
Achieve both good taste and good health

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Solutions for healthy aging and well-being CTO	In Japan, one of the world's most “super-aging” societies, contribute to creating a society where seniors can continue to lead better lives with a sense of purpose. Prevent senior health issues and contribute to their well-being by developing food ingredients, building a network of partners and working on bringing out these issues	Conduct a comparative study of PRORARE^® (fresh DHA) and general oil (general DHA) using easy-to-ingest soft capsules for an internal proof of concept Aim to identify one or more oxidation markers to bring out the effects of antioxidant treatment in human (establish differentiated advantages)	Carried out human studies in collaboration with Shimane University. Showed characteristic changes in biomarkers with intake of stabilized DHA/EPA Showed a significant increase in serum concentrations of DHA with a single intake of stabilized DHA/EPA Drafted action plans to collaborate with municipalities on building a network of partnerships for health. Did not lead to actual partnerships due to issues with ensuring impartiality on industry-government collaborations
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	Expand the market for low-sugar/protein-fortified foods	Developed a soy protein ingredient for low-sugar/high-protein rice and noodle dishes, and used this in 11 health-oriented products Established a recipe for sugar-free drinks to improve taste and satisfaction, and promoted this to customers
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)	Palmaju Edible Oil Sdn. Bhd. (Malaysia), Fuji Oil (Singapore) Pte. Ltd., Fuji Oil (Zhang Jia Gang) Co., Ltd. (China): Reduce TFA in all products subject to change (to less than 2 g/100 g of total fat or oil)	11 out of 14 relevant Group companies outside Japan have completed the switch to low-TFA products (as of March 2023)

Sustainable procurement

There are pressing issues that need to be addressed in the regions that produce the key and strategic raw materials used in our businesses. These are deforestation and destruction of natural ecosystems due to plantation developments, forced labor and child labor. We conduct our business activities based on our Supplier Code of Conduct and responsible sourcing policies as part of securing sustainable procurement for the future. Going forward, we will continue to work on reducing our environmental impact and addressing human rights issues in production regions.

Negative impacts to be reduced

Human rights violations due to outdated labor practices
Poverty of farmers
Child labor, forced labor
Exploitation of indigenous peoples, local residents and workers
Destruction or loss of natural ecosystems
Land use conversion
Pollution from improper waste disposal

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 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% Continue constant monitoring using satellite images to identify, observe, verify and eliminate deforestation in the supply chain Implement LTP at suppliers of Palmaju Edible Oil Sdn. Bhd. (Malaysia): 70%	TTM：100% TTP：93% Continued constant monitoring using satellite images LTP implementation at suppliers of Palmaju Edible Oil Sdn. Bhd. (Malaysia): 61%
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	Complete GPS mapping of 90% of farms to improve direct procurement and traceability system Continue introducing the Child Labour Monitoring and Remediation System (CLMRS) in farming communities across our direct supply chain Provide support for women's empowerment in 173 communities across our direct supply chain (Côte d'Ivoire, Ghana, and Ecuador) Continue GAP^*1 training to farms across our direct supply chain Plant 130,000 trees across our direct supply chain (Côte d'Ivoire) Assess deforestation related to the supply chain using data provided by Satelligence and conduct deforestation risk assessment for over 140,000 hectares of land	89% of farm plots mapped within direct supply chain (Côte d'Ivoire, Ghana and Ecuador) Support programs in Ghana: Conducted GPS mapping of target farms Monitored target farms using CLMRS 30,846 farmers participated in the GAP training program (Côte d'Ivoire, Ghana and Ecuador) Finished selecting partners for continuing initiative to plant one million trees 60,000 trees planted
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	Better engagement with suppliers through self-assessment feedback Carry out initiatives to achieve traceability goals	70% traceability Completed supplier self-assessments Formulated improvement plan for FY2023
Sustainable procurement of shea kernels CSO	Deforestation prevention and parkland protection: Plant 6,000 trees/year until 2030 Traceability to the regional 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 Traceability to the regional level: 50% Direct procurement rate of shea kernels from Tebma-Kandu cooperatives: 15%	6,107 trees planted Direct procurement of shea kernels from Tebma-Kandu cooperatives: 3.4% Permanent, direct employees at Fuji Oil Ghana Ltd.: 60% increase (base year: 2017)

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

Environment

Climate change

Global warming is an urgent issue for the sustainability of our businesses, which rely on agricultural products for most of our raw materials. We contribute to mitigating climate change by cutting CO₂ emissions not only within our business operations but also throughout our supply chain.

Negative impacts to be reduced

CO₂ emissions across the supply chain

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
CO₂ emissions reduction ESG Division Officer	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)	Promote energy conservation efforts, renewable energy use and other initiatives Engage with key suppliers	Scope 1 and 2 (total): 26% reduction (base year:2016) Scope 3 (Category 1): 12% increase (base year:2016)
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	Put the test cultivation environment in place and collect the data required for selecting soybean varieties, with the aim of building a soybean plant production site that effectively utilizes CO₂ emissions Study the reduction in environmental impact (CO₂ emissions reduction) achieved by streamlining the production process using new oils and fats from new plant breeds developed by breeding technology	Established a new enzyme-based oil and fat processing technology which uses less chemicals than the conventional technique Started development of a soybean plant production site using the waste heat and CO₂ generated by a waste incineration facility, working with Saga City, Saga University, and ITOCHU ENEX Co., Ltd. Regarding the practical use of new raw materials for oils and fats developed by breeding, some components were confirmed to affect product quality

Water resources

Water is widely used as a raw material as well as in the manufacturing process. We enhance the sustainability of limited water resources by reducing the amount of water used and proper water management at each process in our business operations.

Negative impacts to be reduced

Water resource depletion
Water resource pollution

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Water use reduction ESG Division Officer	Environmental Vision 2030 20% reduction in water use (intensity) by 2030 (base year: 2016)	Make preparations for setting new water use reduction targets Promote continuous reduction and raise awareness levels	27% reduction (base year: 2016)

Circular economy

Effectively using food resources without generating waste is essential to achieving a circular economy. The entire Group is committed to reducing waste and developing upcycling technologies.

Negative impacts to be reduced

Consumption of excess energy and food resources

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Waste reduction ESG Division Officer	Environmental Vision 2030 10% reduction in waste (intensity) by 2030 (base year: 2016)	Promote continuous reduction and raise awareness levels	4.7% reduction (base year: 2016)
Reduction and upcycling of food loss and waste CTO	Contribute to reducing food loss and waste throughout the value chain through technology innovation and reuse/upcycling of byproducts	Develop technologies and products to maintain food quality longer and expand the market Add new functions and seek value through effective use of byproducts	Established technologies to improve longevity and resistance to degradation over time, and brought seven products to market Confirmed effectiveness of soluble pea fiber as a stabilizer for acidic plant protein drinks

Biodiversity

While benefitting from rich natural ecosystems, the business activities of the Fuji Oil Group affect biodiversity as well as climate change. We are working to conserve and restore biodiversity, in order to help create a society in harmony with nature.

Negative impacts to be reduced

Loss of natural ecosystems

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Biodiversity conservation and restoration ESG Division Officer	Build a nature positive value chain	Study dependence and impact on biodiversity	Established and announced the Fuji Oil Group Policy on Biodiversity

Safety and quality

Product safety and quality

Providing safe, quality food products is a social responsibility of food manufacturers. With food safety as our top priority, the Fuji Oil Group provides safe, quality products to all its customers as well as better food choices to consumers.

Negative impacts to be reduced

Health damage, violation of food laws and regulations

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Ensuring product safety and quality ESG Division Officer	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

Employee safety is the foundation of our business activities. If a serious accident or serious property damage accident occurs, it will have a huge impact on employees, their families, local communities and on greater society, and will also affect production activities. We create a safe and secure workplace by ensuring the health and safety of our employees, based on the idea that safety comes first.

Negative impacts to be reduced

Serious accidents or serious property damage accidents
Work-related injury, illness, or poor physical health
Outbreak of infectious disease in the workplace

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Promoting occupational health and safety ESG Division Officer	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	One serious accident and zero serious property damage accidents One fatal accident at Fuji Vegetable Oil (U.S.)

Business foundations

DE&I^*1

Creating a workplace that accepts diverse values and encourages individuality is crucial for innovation and for responding to diversifying customer needs and values. We respect the diversity of our employees and practice our Fuji Oil Group Management Philosophy to "Work for people" so that all our human resources can make the most of their abilities.

Creating positive impact

Provide equitable opportunities and fair evaluations
Promote decent work
Leverage the creativity of diverse and highly specialized teams

Negative impacts to be reduced

Discrimination based on nationality, gender, race, age, sexual orientation, character, or disability

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
DE&I management^*2 Human Resource and Administration Division Head	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 Outside Japan Embed DE&I into company culture Promote cultural reforms	Group-wide Increased diversity of the Management Committee Meeting (with foreign nationals and women) to 45% (as of April 1, 2023) Selected candidates for the next generation of executive talents from across the entire Group and expanded the pool of human resources Sent two trainees from Japan on international assignments Japan Increased work-style options by revising our contracted reemployment program, expanding our telework system, etc. Provided self-development opportunities to all employees, regardless of employment arrangement Established a support system for long-term employment of people with disabilities Outside Japan Blommer Chocolate Company (U.S.) Recruited volunteers throughout the organization and established a DE&I Committee for undertaking activities Harald Indústria e Comércio de Alimentos Ltda (Brazil) Has been undertaking long-term DE&I actions to create a workplace with inclusive leadership, equality, and equitable opportunities free of prejudice and discrimination China Held workshops for all employees across all regions to raise awareness of the company's vision Established a new communication channel for employees to enable whistleblowing or consultation Achieved the target of 50% female or locally based executives Fuji Vegetable Oil, Inc. (U.S.) Held leadership training for supervisors Built relationships with vocational schools in target areas and started full-scale recruitment activities Southeast Asia Carried out work style reforms Europe Held regular council meetings composed of employee representatives and management executives

*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.

Securing and developing human resources

Securing the human resources that create new value and developing the skills and competence expected of each individual are the keys to growth of both the Group and its employees and to enhancing our business competitiveness. We will continue to carry out measures and foster an organizational culture that encourages employee independence and engagement.

Creating positive impact

Improve employee engagement
Leverage the creativity of diverse and highly specialized teams

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Securing and developing human resources Human Resource and Administration Division Head	Increase number of specialists in every field compared to the status quo, with many of our talents contributing to maintaining and expanding our market share in the face of changes in and outside Japan Have successor candidates ready to take over for key positions (executive officers, general managers, section managers)	Securing human resources Review hiring methods for new graduates Avoid skills mismatch by reviewing hiring methods for production workforce Developing human resources Launch a new education program Train key personnel for international assignments Develop succession plans	Not included in material ESG issues in FY2022

GRC^*

In a highly uncertain business environment, building resilience and conducting risk-proof business management is vital. We aim to enhance corporate value by strengthening Group governance through initiatives to minimize chance of risk occurrence and impact in case of occurrence, such as by strengthening the BCP, information security and compliance.

Negative impacts to be reduced

Suspension of operations due to emergency
Information leaks
Corruption, bribery, anti-competitive behavior, and other violations of laws and regulations

Action theme/Person in charge/SDGs we aim to support	Our vision	FY2023 Goals	FY2022 Results
Risk management system ESG Division Officer	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 for appropriate information disclosure regarding biodiversity based on the TNFD framework	Conducted Group-wide discussion of risks at the Subcommittee on Group Significant Risks (four times in total) Performed risk assessments at regional headquarters and Group companies with new tools, and held risk management meetings based on the results Compiled the latest information for FY2023 changes to TCFD disclosure in annual securities reports Discussed the information to be disclosed at the Subcommittee on Group Significant Risks to add objectivity and validity Gathered the latest information on TNFD, investigated biodiversity issues connected to Group operations, and conducted a qualitative assessment of their impact on our business
Information security management CFO	Reform business processes and create corporate value through the use of information and communications technology (ICT) Facilitate the achievement of Group governance through the use of safe and secure ICT	Prevent serious security incidents across the entire Group Continue conducting measure evaluations by CSIRT, which include internal security audits (FY2023 plan: IT evaluation for six companies, OT evaluation for four companies)	Serious security incidents: 0 Revised the Group's Information Security Regulations to follow cyber risk trends and carried out onsite evaluations of measures taken by companies in accordance with the revised regulations (five companies in total)
Strengthening compliance Legal Division Head	Earn the trust of all stakeholders by conducting business fairly, transparently, and with integrity	No serious violations of laws and regulations Conduct a compliance program including training for the entire Group Raise employee awareness of compliance	No serious violations of laws and regulations affecting Fuji Oil Group business operations Conducted risk assessments of cartel at Group companies and relevant individual interviews at sites assessed as high risk. Introduced measures in response to the results Received a 93.2% positive response rate to the question, “Does your workplace have a culture in which compliance is given priority when business and compliance are in conflict?” (2.6% increase over previous year)
Group governance CSO	Enhance corporate value through the establishment of an effective Group governance system	Disseminate our revised vision and enhance awareness of the Fuji Oil Group Management Philosophy Monitor management execution from the standpoint of our business segments and regional headquarters, in order to strengthen our global management	In April 2023, as a preliminary step toward enhancing awareness of the Group Management Philosophy, we provided guidance on the revision of our vision to all Group companies. The revision of our vision began with management-level interviews, followed by two deliberations at the Fuji Oil Holdings Inc. Management Committee Meeting and a resolution by the Board of Directors Transitioned to a company with an Audit and Supervisory Committee, with the Board of Directors conducting oversight focused on monitoring management execution
Corporate governance CSO	Improve corporate value through appropriate functioning of the Board of Directors	Establish a Board of Directors with a focus on supervising (monitoring) corporate management	Board of Directors with a focus on supervising (monitoring) corporate management resulting from the transition to a company with an Audit and Supervisory Committee

* Governance, risk, and compliance

Process of selecting material ESG issues for FY2023

Each year, the Fuji Oil Group selects material ESG issues for the following fiscal year based on its assessment of new global issues and input received from internal and external stakeholders, and formulates action themes for each material issue as well as manages progress. In FY2022, we assessed the materiality of the 15 material ESG issues identified out of a list of global issues on two axes: (1) Fuji Oil Group's impact on society or the environment and (2) social or environmental issue's impact on the Fuji Oil Group. The draft ESG materiality map for FY2023 was created following discussions involving Group chief officers in charge of specific material ESG issues, the presidents of regional headquarters, relevant departments, and internal and external experts, and was reviewed and passed by the Sustainability Committee. This was then recommended to and approved by the Fuji Oil Holdings Inc. Board of Directors.
Taking into account the GRI Standards^*1 and ESRS,^*2 the material ESG issues for FY2023 were updated from the FY2022 version as follows.

Changed the axes of the ESG materiality map to a range of levels from medium to highest
Carried out a comprehensive evaluation of “Fuji Oil Group's impact on society or the environment” in the ESG materiality map based on the scale, scope, severity, and likelihood of occurrence of positive/negative impacts
Identified global issues with highest impact on either of the two axes of the ESG materiality map as material ESG issues
Added “securing and developing human resources” as a new material ESG issue
Divided material ESG issues into four categories: value creation, safety and quality, environment, and business foundations

*1 Global Reporting Initiative
*2 European Sustainability Reporting Standards

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

FY2023 ESG materiality map

*1 Diversity, equity and inclusion
*2 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.