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Management Strategy and Sustainability

Key CSR Theme Formulation Process

In understanding society's challenges, Daikin assesses the impact that its business activities have on society, and identifies key challenges (materiality) from two aspects—"stakeholder concerns and impacts," and "importance to Daikin." We have organized these challenges into our key CSR themes, which have been reflected into our strategic management plans. Each key theme has targets that we are working toward.

Understanding Stakeholder Concerns and Impacts

One important judgment criterion in analyzing materiality is stakeholder concerns and impacts. To fully understand this, Daikin follows international frameworks toward solving society's challenges (global risks), and it takes into account stakeholder assessments of Daikin and the wishes and opinions that stakeholders have expressed in dialogue with Daikin.

Society's challenges (Global risks)

  • Extreme weather events and temperatures
  • Natural disasters
  • Failures of climate change mitigation and adaptation
  • Water crises
  • Loss of biodiversity
  • Pandemics
Note:
World Economic Forum Global Risks Perception Survey 2019-2020

International frameworks

  • Paris Agreement to the UN Framework Convention on Climate Change
  • Kigali Amendment* to the Montreal Protocol
  • Sustainable Development Goals (SDGs)
  • UN Global Compact (UNGC)
*
International agreement to phase down the global warming impact (CO2 equivalent) of HFCs.

Assessments of Daikin, stakeholder dialogue

ESG assessment Dialogue with stakeholders

  • Briefings for shareholders and investors
  • Air Conditioner Forums
  • Dialogue with international organizations, NPOs, NGOs, etc.

Assessing the Impact of Our Business on Society throughout the Entire Value Chain

Procurement

Business impact, what Daikin to do

Throughout the globally expanding supply chain, Daikin is expected to respond to various procurement risks involving, for example, quality control, labor practices, and environmental protection.

Efforts of significant materiality

  • Supply chain management
  • Anti-corruption
  • Free competition and fair business dealings

Development, Design

Business impact, what Daikin to do

As air conditioner demand grows in emerging markets and other countries, Daikin must develop products that offer comfort and superb environmental performance and meet regional needs.

Efforts of significant materiality

  • Response to climate change
  • Effective use of resources and energy
  • Measures against atmospheric pollution
  • Management of chemical substances
  • Waste and water-use reduction
  • New value creation
  • Product quality and safety
  • Customer satisfaction
  • Information security

Manufacturing

Business impact, what Daikin to do

It is crucial that Daikin increase productivity while at the same time improving manufacturing quality and reducing environmental impact at all worldwide production sites.

Efforts of significant materiality

  • Response to climate change
  • Effective use of resources and energy
  • Measures against atmospheric pollution
  • Management of chemical substances
  • Waste and water-use reduction
  • New value creation
  • Product quality and safety
  • Customer satisfaction
  • Information security

Sales, Transportation, Installation

Business impact, what Daikin to do

Faulty air conditioner installation not only causes quality problems but also leads to environmental problems such as refrigerant leakage. It is crucial that Daikin raises the level of installation skills of employees and retailers worldwide.

Efforts of significant materiality

  • Response to climate change
  • Product quality and safety
  • Customer satisfaction
  • Anti-corruption
  • Free competition and fair business dealings
  • Information security

Usage

Business impact, what Daikin to do

Global warming impact from air conditioner use presents a huge challenge. At the same time, air conditioners provide benefits such as preventing heatstroke and making people more productive.

Efforts of significant materiality

  • Response to climate change
  • Measures against atmospheric pollution
  • Customer satisfaction
  • Information security

After-Sales Service, Recovery, Recycling

Business impact, what Daikin to do

To achieve a recycling-based society, it is crucial that we are thorough in recycling air conditioners and recovering/recycling refrigerants.

Efforts of significant materiality

  • Response to climate change
  • Waste and water-use reduction
  • Customer satisfaction
  • Information security

Business Activity Foundation

Business impact, what Daikin to do

In order to continue contributing to society, we must develop the human resources who conduct our business, comply with laws and regulations, and have in place a system of corporate governance.

Efforts of significant materiality

  • Human resource development
  • Workplace diversity
  • Occupational safety and health
  • Labor-management relations
  • Respect for human rights
  • Corporate governance

Relationship with Society

Business impact, what Daikin to do

In order to spread Daikin technologies and thus contribute to solving society's problems, it is essential that we work closely with numerous partners, including governments, United Nations bodies, international organizations, NPOs, NGOs, key individuals, and local communities.

Efforts of significant materiality

  • Response to climate change
  • Biodiversity protection
  • Communities
  • Stakeholder engagement

Identifying Materiality and Organizing It into 9 Key CSR Themes

We identified materiality from the two aspects of "stakeholder concerns and impacts" and "importance to Daikin," and together with the formulation of the Fusion 20 Strategic Management Plan we organized nine materiality issues as key themes in fiscal 2015: four themes of CSR for value provision, and five themes of fundamental CSR. Note that in fiscal 2018, when formulating plans for the final three years of Fusion 20, we revised some materiality issues based on the changing situation.

Materiality Analysis

Materiality Analysis

Daikin's 9 Key CSR Themes

CSR for value provision
We provide healthy and comfortable air environments for people around the world while at the same time reducing environmental impact.
  • Environment
  • New Value Creation
  • Customer Satisfaction
  • Human Resources
Fundamental CSR
We respond to society's requests through corporate action based on transparency and sincerity.
  • Corporate Governance
  • Respect for Human Rights
  • Supply Chain Management
  • Stakeholder Engagement
  • Communities

Formulating a CSR Action Plan and Reflecting This into the Fusion 20 Strategic Management Plan

The nine key CSR themes have been incorporated into the Fusion 20 Strategic Management Plan as important management items that are being put into action group-wide. In fiscal 2018, we established targets for 2020, which include quantitative indicators for the various CSR themes. These were reorganized as the CSR Action Plan 2020. In implementing this plan, we will contribute to solving society's challenges and respond to stakeholder demands.

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