Ajinomoto Co., Inc.

The progression of climate change and the increased frequency of extreme weather events and disasters raise the risk of damage to agricultural and livestock products, leading to higher procurement prices for raw materials and increased logistics costs. In addition, rising costs for agricultural and livestock producers to comply with decarbonization regulations could lead to reduced supply through price pass-through or production cutbacks. In response, the company has set targets of a 50.4% reduction in Scope 1+2 emissions (versus FY2018) and a 30% reduction in Scope 3 emissions by FY2030, and aims to expand its bio-cycle initiatives and achieve a 100% sustainable procurement ratio.

The manifestation of geopolitical conflicts and global-scale trade wars poses risks to employee safety and the risk of supply chain disruption. Reduced price competitiveness and declining sales due to high tariffs on imports and exports are also a concern. In particular, escalation of the Taiwan Strait issue carries risks of difficulty in procuring raw materials from specific regions and rising raw material costs associated with securing sea lane safety. As a countermeasure, the company is strengthening its management intelligence function to examine management risks by backcasting from future scenarios.

There is a risk that external cyberattacks could halt core systems and disrupt operations, as well as a risk of significant losses arising from information theft or leakage. These risks could also lead to reputational damage and legal liability, including litigation. In response, the company is building a global quality assurance system and implementing ongoing measures to raise compliance awareness.

Due to diversification of procurement sources and domestic production requirements in various countries, as well as competitors' technological innovation, there is a risk that substitute technologies for the company's materials, such as ABF®, could become widespread, leading to lower customer adoption rates and declining market share, thereby reducing sales. Trends in security policy surrounding semiconductors are also increasing uncertainty. In response, the company is accelerating innovation creation to contribute to semiconductor evolution, expanding the provision of advanced materials, and promoting technology and material development in advanced semiconductor fields such as optical-electronic convergence.

Amid changes in the labor market, if the recruitment and development of personnel embodying AGW does not proceed as planned, there is a risk that innovation promotion could stagnate, leading to reduced competitiveness. There is also a risk that difficulty in securing personnel for plant operations could reduce on-site execution capability, raising labor costs associated with maintaining operational systems and skill transfer. In response, the company has set targets for FY2030 including an 88% ES score in the ASV realization process, 30% diversification of the leadership layer, and a 40% ratio of female managers.

There is a risk of falling into a competitive disadvantage compared to other companies that make advanced use of AI. At the same time, the use of AI carries risks such as unauthorized leakage of confidential information, the spread of fake information, regulatory violations due to inadequate AI governance, ethical issues, and erroneous management decisions. In response, the company aims to deepen its advanced use of AI to improve operational efficiency and productivity, enhance decision-making in R&D and business strategy, and strengthen its medium- to long-term competitive advantage.

The rapid expansion of demand for animal protein due to global population growth is tightening supply, creating a risk of rising procurement prices for meat and higher costs for meat-based products. While this demand expansion could also be an opportunity to expand alternative protein-related businesses, there are concerns about the short-term impact on raw material costs. In response, the company is expanding related businesses such as culture media and amino acids needed for alternative protein production, and promoting food development using biomass fermentation and plant-based ingredients.

With growing interest in physical and mental health and wellbeing, there is a risk of rising costs for compliance with requirements such as nutritional labeling on food products. There is also a risk of increased costs for obtaining certifications such as Halal and Vegan to meet diverse social needs, as well as costs related to raw material management, manufacturing requirements, and labeling compliance. In response, the company has set a target of providing 2.1 billion nutritionally balanced meals annually by FY2030, and contributing to sodium reduction equivalent to 1.1 billion meals annually through reduced-salt seasonings, while expanding its range of regulation-compliant products.

Against the backdrop of depleting freshwater resources and rising water costs, there is a risk of higher procurement costs and declining sales linked to production slowdowns at business partners. Increased water usage in manufacturing processes could also affect business continuity. In response, the company has set a target of reducing water usage by 15% by FY2040 (versus FY2018), and is promoting disclosure based on the TNFD information disclosure framework.

The occurrence of severe natural disasters poses risks to employee safety and business continuity in affected regions. Supply chain disruptions could stall raw material procurement and product supply, potentially having a material impact on business performance. In response, the company is strengthening resilience through the continued implementation of health and safety assessments, audits, and inspections, as well as by enhancing its management intelligence function.