Carbon Neutral Strategy
Background to the Establishment of the GX Department
In light of the Japanese government’s Green Transformation (GX) policy, the Company newly established the GX Department in April 2025 with the aim of formulating and promoting strategies to achieve carbon neutrality and further accelerating related technological development. Anticipating the full implementation of Japan’s domestic emissions trading system (GX-ETS) in FY2027, the department is engaged in developing strategies that will contribute to the growth of the cement industry and in advocating with the government. It is also advancing the development of fundamental technologies for innovative CO2 capture and CCUS, while promoting the dissemination of the Company Group’s technologies and products as part of disaster-mitigation efforts.
Social Environment
- Significant investment and stronger collaboration in transformation policies will be required for the technological innovation and social implementation to achieve a carbon-neutral society. We are enhancing engagement to make maximum use of government subsidy programs and accelerating the process from research and development to social implementation.
- To maximize the value of green products, we are working in collaboration with the Cement Association and other organizations to promote the dissemination and market value enhancement of environmental labels and environmentally friendly products.
- The GX-ETS, to be fully implemented from FY2027, is a market mechanism that fairly evaluates efforts to reduce emissions. Through collaboration and dialogue with industry associations and the government, we are fulfilling our role as a leading company in the GX-ETS framework.
Risks
- Decline in domestic demand
- Population decline and labor shortage
- Addressing decarbonization
Opportunities
- Introduction of new technologies (such as the C2SP kiln)
- Enhancing competitiveness through the development, standardization, and dissemination of products that meet the growing demand for green products
- Strategic response to GX-ETS through collaboration and dialogue with industry associations and the government
Strengths
- Proprietary CO2 separation and recovery technology (C2SP kiln) aimed at setting the global standard in cement manufacturing
- Advanced technological capabilities and proven track record in blended cement both in Japan and overseas
- Strong adaptability for technological deployment in the carbon-neutral field through global business development
Governance
The Vice President and Representative Director oversees all activities related to carbon neutrality. In addition, the company has established the Carbon Neutral Strategy Committee as a cross-functional organization to promote decarbonization strategies in tandem with management strategy. Under this committee, the company formulated the Carbon Neutral Strategy 2050, which outlines the goal of achieving carbon neutrality by 2050, along with medium-term targets for 2030 and a technology development roadmap.
In April 2025, anticipating the full-scale introduction of GX-ETS in 2026, the company established the GX Department to formulate related strategies and further accelerate the development of innovative decarbonization technologies, as well as the C2SP Kiln Project Team to ensure the smooth implementation of C2SP kiln modification work at DC Co., Ltd.
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Initiatives to Promote Technologies and Products for Extreme Disaster Response
In preparation for the increasing severity of natural disasters associated with climate change, we have produced a PR brochure that introduces the Group’s products and technologies, organized by phase—“Prevention and Mitigation”, “Restoration” and “Early Reconstruction.” This brochure is being utilized for external technical presentations and proposal activities to local governments and contractors, thereby promoting the wider adoption of our Group’s products.
DX Strategy
In April 2025, the Company established the DX Department to advance digital transformation (DX), one of the key strategies under the 26 Medium-Term Management Plan. In August of the same year, the Company announced the full acquisition of Pacific Systems Corporation, a group company engaged in system development. Through this integration, the Company aims to maximize synergies between the two organizations and promote DX across the entire Group.
Through the development of an AI-based ship allocation planning support system, the Company has achieved greater operational efficiency and faster information sharing, while also improving planning accuracy and reducing operating costs.
Going forward, the Company will continue to integrate advanced technologies with accumulated data to further promote the efficiency and automation of its plants and offices. At the same time, it will foster a culture of transformation throughout the Group and enable all employees to effectively utilize the latest technologies, thereby achieving sustainable growth.
Social Environment
- The Company is focusing on institutional design and human resource development to enhance the organization’s overall digital capability.
- With the establishment of the DX Department in April 2025 and the development of an education framework, a foundation has been built to empower all employees to become agents of transformation.
- Efforts are underway to embed DX not merely as a departmental initiative but as an integral part of the corporate culture.
Risks
- Decline in operational efficiency: Continued reliance on manual and paper-based processes hinders productivity and strains human resources.
- Loss of competitiveness: Inability to promptly respond to market and customer needs may result in falling behind competitors.
- Difficulty in securing talent: Challenges in attracting and retaining younger talent who seek digital work environments could impact organizational sustainability.
- Disruption in knowledge transfer: Loss of expertise from veteran employees makes it difficult to pass on skills and know-how to younger generations.
Opportunities
- Serves as a catalyst for structural transformation in the cement industry, enabling the Company to enhance both its competitiveness and social value.
- Accelerates sustainable growth and the development of a highly resilient organization through data-driven decision-making, swift responses to customer needs, and the realization of diverse workstyles.
Strengths
- The Company’s strength lies in its ability to balance operational optimization and customer value creation, underpinned by enhanced digital literacy across the organization.
- Through the use of AI and digital tools, it has improved supply chain efficiency, deepened customer relationships, and supported employee retention and engagement, thereby strengthening its overall transformation capability.
Production Process Innovation (Smart Factory)
| Outline of Strategy | Progress Status |
|---|---|
| To enhance production processes, the Company is promoting the development of smart factories aimed at labor savings and improved productivity in plant operations. | The Kumagaya Plant has been designated as a model facility, where initiatives include autonomous drone on-site patrols and AI-based equipment management systems. At the Kamiiso Plant, an AI-assisted operation system for production lines has been introduced, and with progress toward automating all three kilns, expansion to the Oita Plant is now under consideration. |
Operational Efficiency Reform (Smart Office)
| Outline of Strategy | Progress Status |
|---|---|
| Promote productivity improvement and efficient allocation of human capital by streamlining business processes and centralizing management functions through digital technology. | Generative AI is being utilized for preparing materials and meeting minutes and, through pilot implementation, the Company is verifying its practical applications across various operations. In addition, through “Sales DX”, efforts are underway to improve operational efficiency and customer responsiveness using digital tools. The Company is also promoting work efficiency through the use of digital technologies such as RPA and generative AI, while expanding remote work to remove location constraints and promote borderless workstyles. |
DX Human Resource Development
| Outline of Strategy | Progress Status |
|---|---|
| Aiming to enhance operational efficiency and productivity in preparation for a declining workforce. The Company plans to develop 450 DX professionals during the 26 Medium-Term Management Plan period, focusing on individuals skilled in generative AI, automation tools, and data analytics. | In FY2025, 170 advanced digital professionals were trained. |
Human Capital Strategy
Our basic policy for human capital strategy is to regard our people as “capital” — the driving force behind our growth and the source of our competitiveness — and to create an environment in which each individual can demonstrate their full potential by respecting one another’s individuality and values.
Under the 26 Medium-Term Management Plan, we have identified three key focus areas for developing human resources aligned with our Group’s management strategy: “development of global human resources”, “promotion of workplace diversity”, and “development of management human resources.” We are steadily advancing various initiatives to achieve these goals.
By advancing smart office initiatives aimed at improving administrative efficiency in anticipation of a labor-constrained society, we are creating new ways of working and enhancing employee engagement. At the same time, through initiatives that help employees balance work and personal life and fully demonstrate their abilities, we strive to maximize the value of our human capital.
Social Environment
- In response to current labor conditions, we have begun to review the restructuring of the personnel system, including reconsidering the transfer system and personnel management systems based on work location.
- As the development of global human resources is an urgent priority for our growth strategy, we are actively expanding our overseas trainee programs and related initiatives.
- To enhance recruitment and retention, we have raised salaries, including for new employees.
Risks
- Outflow of human resources
- Imbalance in employee age distribution (shortage of mid-career personnel)
Opportunities
- Development of global human resources
- Promotion of diversity and inclusion
- Cultivation of management personnel
- Enhancement of employee well-being (flexible work styles and health-oriented management)
Strengths
Enhanced training system
- A variety of OJT/OFF-JT programs, e-learning opportunities, and training courses provide an environment that supports continuous skill development for employees.
mployee engagement score
- In the employee survey conducted in May 2025, items such as “satisfaction with company policies and business strategies”, “work-life balance” and “pay satisfaction” were identified as key strengths.
Support systems for flexible work styles
- Systems such as flextime, telecommuting, and maternity/childcare leave follow-up interviews are well established, creating a comfortable and supportive work environment.
Development of global human resources
| Outline of Strategy | Progress Status |
|---|---|
| In addition to expanding the overseas trainee program, the company is implementing overseas language study and internship programs while promoting exchanges with overseas group companies. | Since last fiscal year, the company has resumed in-person overseas internship training in Malaysia. Under the overseas trainee program, employees were dispatched to the Philippines, Thailand, and Vietnam, while the overseas language study program supported language learning through study in the United States and Canada. |
Promotion of workplace diversity
| Outline of Strategy | Progress Status |
|---|---|
| Support the career development of female employees while promoting hiring of experienced persons through diverse hiring practices such as the recruitment of foreign nationals, referral hiring, and alumni hiring. In addition, focus on expanding the employment of persons with disabilities and senior personnel. | The ratio of female employees reached the target of 10%, and the ratio of female managears achieved the FY2027 goal of 3% ahead of schedule. Three foreign employees were newly hired. The employment rate of persons with disabilities stood at 2.6%, exceeding the statutory requirement; however, as the statutory rate will rise to 2.7% in July 2026, continuous recruitment efforts will be made. |
Development of management human resources
| Outline of Strategy | Progress Status |
|---|---|
| Enhance executive training programs and next-generation leader development training (for women), while promoting reskilling initiatives. | Implemented executive training programs such as the Management Academy and Financial Leadership Program. For next-generation leadership development training, external training sessions were held to provide opportunities for participants to interact with female role models. |
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Certified as a “Health and Productivity Management Excellent Corporation 2025 (Large Enterprise Category)”
The company has been certified for the third consecutive year as a Health and Productivity Management Excellent Corporation 2025 (Large Enterprise Category) by Japan’s Ministry of Economy, Trade and Industry (METI) and the Nippon Kenko Kaigi. This recognition demonstrates the outcome of the company’s commitment to the annual health management action plan that is part of the company’s human capital management. In FY2025, the company organized a walking event in collaboration with its Health Insurance Society. Going forward, it will continue to work closely with related organizations to promote and maintain the health of employees and their families, and to create a workplace environment where all employees can fully demonstrate their capabilities.
Tobitate! (Leap for Tomorrow) Study Abroad Initiative – New Japan Representative Program
In recognition of its support for the Tobitate! Study Abroad Initiative – New Japan Representative Program, a public–private overseas study support scheme, the company was awarded the Medal with Dark Blue Ribbon on March 6, 2025. This program, jointly operated by Japan’s Ministry of Education, Culture, Sports, Science and Technology (MEXT) and the Japan Student Services Organization (JASSO), promotes overseas study opportunities for young people in Japan. The company began supporting the initiative in 2015 and continues to do so as of 2025. Moving forward, it will remain committed to fostering global human resources both within and outside the organization.
