Sekisui Plastics Co.,Ltd.

The occurrence of occupational accidents, fires, or other incidents at business sites may impact surrounding areas, damage social credibility, incur response costs, cause loss of opportunity due to production stoppage, and result in compensation to customers. The Group has established a "Safety Committee" and strives for zero accidents and zero disasters across the Group through safety patrols, safety education, and various training programs.

If unexpected defects or malfunctions occur in products, product recalls, damages compensation, and other consequences could significantly impact business performance and financial condition. The Company has established a "Quality Committee" to strengthen its quality management system, complies with domestic and international laws and standards, and has purchased product liability insurance to prepare for any potential quality issues.

If leakage of chemical substances or an accident affects the environment surrounding a plant, it may result in loss of credibility, compensation costs, and loss of opportunity due to production stoppage. The Company also recognizes addressing climate change as an urgent issue. The Company has established an "Environment Committee" to set environmental policies, discloses information in line with TCFD recommendations, and is accelerating activities toward its goals of reducing GHG emissions by 45% by 2030 (compared to 2018) and achieving carbon neutrality by 2050.

Contraction in demand due to economic trends or fluctuations in the supply-demand balance and prices due to competition with other companies may impact business performance and financial condition. The Company strives to minimize declines in earnings by strengthening its sales capabilities, development capabilities, and financial structure, while steadily advancing the measures of its medium-term management plan.

In overseas businesses operating in Asia, Europe, the United States, and Central America, unexpected changes in laws and regulations, unfavorable political and economic factors, geopolitical issues such as cross-strait relations, and social disruptions such as the spread of infectious diseases may impact business performance and financial condition. To minimize risk, the Company actively gathers information and has established a system capable of promptly responding to changes in the business environment.

If price fluctuations in key raw materials such as styrene monomer and polystyrene cannot be passed on to product prices in a timely manner, or if delivery delays occur due to natural disasters, supply instability among suppliers, supply shortages caused by consolidation among raw material manufacturers, or tightened delivery regulations, business performance and financial condition may be impacted. The Company works to diversify its procurement sources and raw materials used, stabilize logistics routes, and conducts price negotiations with customers as appropriate.

Foreign currency-denominated transactions in overseas businesses are subject to the effects of exchange rate fluctuations upon conversion into yen, which may impact business performance and financial condition. While risk mitigation measures are currently in place, the Company is considering further risk reduction measures, including hedging of foreign currencies related to transactions.

If tangible and intangible fixed assets used for business, as well as shares held in other companies, fail to generate the expected cash flows due to deviations from performance plans or changes in market trends, or if asset values decline, this may impact business performance and financial condition. The Company has established an "Investment and Loan Committee" to closely deliberate the merits of investments and loans, and has put in place a system for subsequent progress management and appropriate assessment of asset value.

If business sites are damaged by large-scale earthquakes, typhoons, or other natural disasters, or if supply chain disruptions or internal and external confusion occur due to the spread of infectious diseases, business activities may be suspended, impacting business performance and financial condition. The Company has prepared initial response plans for emergencies, organized systems for prompt response and information sharing, and is working to formulate business continuity plans (BCP) for its core businesses.

If critical systems become unusable due to external cyberattacks or natural disasters, or if internal information leakage or unauthorized use occurs, this may hinder business operations and damage credibility, thereby impacting business performance and financial condition. The Company has established an "IT Promotion Committee" to formulate information security implementation plans, improves the functionality of security systems, conducts employee training, and assigns information security officers to each department and Group company to ensure appropriate management of information assets.