Nissui Corporation

Amid the declining birthrate, aging population, and population decline, securing management personnel, global personnel, DX personnel, and other talent is becoming increasingly difficult, and delays in building an environment where diverse personnel can thrive may lead to stagnation in productivity and business expansion. There is also a risk that failure in internal and external branding could lower employee engagement, further complicating talent acquisition. As countermeasures, the Company has established a Talent Acquisition Subcommittee and a Talent Development Committee to promote integrated recruitment, development, and placement, and to implement improvement activities based on engagement surveys.

The intensification of wind and flood damage from typhoons, heavy rain, and floods, as well as changes in the marine environment, may cause damage to production sites, logistics, and procurement networks, as well as a decline in catches of wild and farmed fish and increased procurement costs. The introduction of carbon pricing and stricter energy conservation regulations may also increase additional capital expenditure and response costs, putting pressure on profitability. The Company has set a target of reducing CO2 emissions by 30% by 2030 compared to FY2018 (fiscal year ended March 2019) levels, and is promoting energy conservation, the introduction of renewable energy, diversification of production areas, and the revision of BCPs.

Depletion of marine resources and changes in the marine environment may render fishing grounds and aquaculture sites unsuitable, reduce catches, and cause procurement difficulties, potentially leading to increased procurement costs, constraints on product supply, and deteriorating profitability. There are also concerns about reduced production due to catch restrictions, stricter environmental regulations, and fish disease outbreaks, as well as loss of stakeholder trust and sales opportunities due to delayed responses to biodiversity issues. The Company is addressing these risks by utilizing the TNFD's LEAP approach to understand dependencies and impacts on natural capital, setting a target of 100% sustainable procurement by 2030, and promoting complete aquaculture and land-based aquaculture.

If environmental or human rights issues in the supply chain become apparent, this could lead to litigation, administrative sanctions, boycotts, and damage to brand value, and the mandatory implementation of environmental and human rights due diligence is also expected to increase additional response costs. There is also a risk that stricter procurement standards from sales partners could lead to a review of existing suppliers, higher procurement costs, and procurement instability. The Company is responding by developing supplier guidelines, confirming compliance through SAQs (self-assessment questionnaires), establishing consultation desks for foreign workers, and continuously strengthening human rights due diligence.

In the expansion of the fisheries and food business in North America, Europe, and Asia, as well as the overseas expansion of the fine chemicals business, political changes in tax systems, fishing quotas, wages, and regulations in each country, as well as sharp exchange rate fluctuations, may affect business strategy and financial results. There is also a risk of misconduct arising from governance deficiencies and inadequate internal controls at overseas subsidiaries. While aiming for an overseas revenue ratio of 50% by 2030, the Company is developing a structure that balances granting discretion to local management with strengthening global governance.

If quality misconduct such as quality accidents or mislabeling occurs, in addition to economic losses from product liability, recalls, or voluntary recalls, there is a possibility of significant damage to brand value and loss of customer trust, which could have a material impact on business continuity. There are also concerns about expanding quality risks in new and expanding businesses such as health-oriented products, and insufficient quality assurance management for products not under the Nissui brand at domestic and overseas group companies. The Company has established a quality assurance system based on its proprietary

If system outages or data leaks occur due to external threats such as cyberattacks and phishing, or due to internal negligence or misconduct, this may cause delays or interruptions in product supply and service provision, decreased revenue, loss of trust, and damages claims, among other significant impacts. As the integration of production, logistics, and sales systems progresses, the impact of system outages on business activities is expected to expand further in the future. Since FY2024 (ending March 2024), the Company has introduced a vulnerability detection service covering the entire group, including overseas subsidiaries, and is responding through backup environment protection, network monitoring system construction, and continuous implementation of security education.

As the Company is subject to a wide range of laws and regulations both domestically and internationally, if group companies or officers and employees violate laws or deviate from social norms, this could lead to sanctions such as business suspension, damages claims, stock price declines, and reputational damage, potentially having a material impact on business continuity. Delayed or inadequate responses also risk causing stakeholders to lose trust. The Company is responding through the establishment of an Ethics Subcommittee, development of an internal reporting system, implementation of compliance workshops, and consideration of building a global compliance structure.

In the event of a large-scale disaster such as a Tokyo Metropolitan Area earthquake or a Nankai Trough earthquake, human and physical damage to employees and facilities, halted production equipment, disrupted logistics functions, and supply chain breakdowns may occur, potentially leading to significant impacts such as delayed product supply and decreased revenue. Natural disasters have tended to intensify and become more frequent in recent years, raising concerns about medium- to long-term impacts. The Company is strengthening its business continuity capabilities through updates to an all-hazard BCP, regular disaster response headquarters drills, quantitative assessment of natural disaster risk, and use of a safety confirmation system.

If geopolitical risks such as border closures, economic sanctions, import/export restrictions, or disruption of major transport routes materialize, this could result in delays, interruptions, or suspensions of product supply and service provision, causing loss of business opportunities and potentially having a significant impact on the execution of medium- to long-term management policies and business performance. There is a risk that global situational changes, including developments in the Middle East, could broadly affect supply chains, logistics networks, and energy prices. The Company is responding through impact assessments based on multiple risk scenarios, diversification of procurement sources, securing alternative suppliers, supply chain visualization, and review of inventory strategy.