Mitsui Chemicals, Inc.

As markets become more complex and diverse and AI and automation advance, latent areas that cannot be addressed with existing assets alone are expanding, and failure to continuously create new businesses may lead to competitive disadvantage and loss of growth opportunities. There is also a risk that the emergence of innovative new technologies could erode the Group's technological advantage, rendering products obsolete. The Group addresses this by strengthening internal and external collaboration, building a cross-domain business development structure, and formulating and reviewing medium- to long-term technology development plans.

Amid the introduction of carbon pricing systems in countries around the world and growing social demand for GHG emission reductions, such as Japan's GX-ETS, there are risks of reputational decline due to delays in GHG emission reduction plans, cost increases due to carbon pricing and difficulty securing low-carbon raw materials and fuels, and reduced added value due to delays in developing Blue Value® and Rose Value® products. The Group is promoting each measure of its carbon neutrality strategy, including conversion to low-carbon raw materials and fuels, introduction of renewable energy, development and adoption of carbon-negative technologies such as CCUS, and development of biomass and recycled products.

Large-scale disasters, accidents, geopolitical risks, infectious diseases, cyberattacks, and other events at domestic and overseas sites may cause suspension of production, sales, and R&D activities, as well as supply chain disruptions. In particular, plant trouble has been designated a key management risk, with anticipated impacts including production stoppages, accident damage to surrounding areas, and reputational decline. In response, the Group is pursuing a full revision of overseas safety management regulations, securing alternative supply chain measures, and promoting trouble-prevention measures in an integrated effort between business divisions and manufacturing departments.

Trouble arising from operations, equipment, construction, or maintenance work, as well as product quality defects, may lead to industrial accidents, damage to surrounding areas, product liability lawsuits, and reputational decline. Risk factors also include the addition of companies with differing safety management levels through M&A associated with the promotion of VISION 2030, and the expansion of the scope of quality assurance responsibility accompanying the growth of the solutions-type business. The Group addresses these risks by building an advanced risk assessment system, enhancing equipment diagnostic technology, and formulating and operating quality guidelines for new fields such as recycled materials.

In the event of a serious compliance violation, criminal penalties, damages, and reputational decline may result. In addition, inadequate response to changes in laws and regulations affecting business activities—such as moves toward economic security and the Work Style Reform legislation—may lead to prosecution by authorities in various countries or loss of business opportunities. Responses to new laws and regulations associated with entry into new fields, as well as to group affiliated companies added through M&A, are also required. The Group addresses this through the planned promotion of group compliance measures, the dissemination of awareness using the Global Policy Platform (M-GRIP), and the collection of information from government agencies and industry associations with prompt responses.

Due to the declining working-age population, increased labor mobility, and rising demand for talent in specific fields, there is a risk that the Group may be unable to recruit and secure the necessary personnel to execute its growth strategy, as well as a risk of difficulty responding to changes in required staffing levels accompanying business portfolio transformation. In the fiscal year under review, this was designated a key management risk as "Securing Quality and Diverse Talent and Workforce Management," and the Group addresses this by forming a diverse talent pool, developing systems that support employee success, and expanding key talent development and placement through revisions to the operation of the company-wide talent development committee.

There are risks that the Group may fail to secure and allocate necessary management resources and appropriately execute growth investments, leading to delays in business development and expansion; that ROIC-focused management with awareness of capital costs may not be sufficiently enforced; and that defects in companies or businesses acquired through M&A, or unsuccessful PMI, may negatively impact business performance. The Group addresses this by accelerating portfolio transformation based on business classification according to growth rate and capital efficiency, concentrating resources intensively in priority business fields, and sharing M&A-related knowledge company-wide, developing related personnel, and enhancing the PMI support system.

Amid advancing geopolitical and economic fragmentation and diversifying needs across countries and regions, there is a risk that the Group may fail to respond appropriately to global market conditions, resulting in competitive disadvantage overseas and loss of growth opportunities. There is also a risk that a delayed response to accelerating industry consolidation centered in Japan and drastic changes in the business environment surrounding petrochemicals could lead to a decline in the Group's presence. In the fiscal year under review, this was designated a key management risk as "Global Management," and the Group addresses this by incorporating region-specific revenue into its management planning system, promoting regional strategies, designing the overall layout of global R&D sites, and establishing an operational structure for key talent management in each region.

There is a risk of reputational decline due to increased backlash against plastics amid worsening social issues such as ocean plastic pollution, or due to delays in responding to various measures, as well as a risk of cost increases due to growing difficulty in procuring raw materials such as biomass feedstocks and waste plastics. There is also a risk of cost increases due to rising water resource prices amid growing social demand for the conservation of natural capital. The Group addresses this through participation in cross-industry collaborations such as CLOMA, improving recycling technology, deepening efforts on water security, and responding to disclosure requirements such as CSRD and CDP.

Intensifying cyberattacks and internal information leaks may result in long-term losses due to operational suspension, customer attrition, and loss of trust, administrative penalties and guidance under laws such as the Act on the Protection of Personal Information and the High Pressure Gas Safety Act, and procurement suspensions caused by attacks on the supply chain. In the fiscal year under review, this was designated a key management risk as "Cybersecurity & Information Leakage Prevention," and the Group is working to thoroughly manage information using information protection tools, provide learning opportunities to raise security awareness, and strengthen incident response capabilities by enhancing threat monitoring and response services.