Materiality

Identification process of important issues (Materiality) for the Ajinomoto Group

The Ajinomoto Group identifies its important issues (Materiality) that have a substantial impact on our ability to create value in the short, medium, and long term through ASV management, taking into account changes in the macro environment for 2050. Once we identify opportunities and risks from materiality, we clarify their importance and priority, and then reflect these matters in our business activities.

Material issues (materiality) for the Ajinomoto Group

In 2024, the Ajinomoto Group is tasked with addressing the following six key themes, based on expectations from multiple stakeholders and the value that it provides to society. These themes were determined utilizing the Value Creation Framework established in 2023 after several rounds of dialogue with a variety of stakeholders and based on the report from the Sustainability Advisory Council, which is mainly composed of outside experts.

(1) Achievement of a sustainable global environment, (2) Achievement of well-being through food,
(3) Contribution to advanced medicine and prevention, (4) Contribution to the evolution of a smart society*1,
(5) Respect for diverse values and human rights, (6) Reinforcement of our management foundation

*1 A society in which companies, government administration, consumers, etc. connect through networks to solve social issues.

Risks and opportunities relating to important issues (Materiality) for the Ajinomoto Group

The Ajinomoto Group has identified Group-wide risks and opportunities that require cross-organizational management by analyzing changes in the macro environment, the likelihood of occurrence (high (H), medium (M), and low (L)), and the magnitude of the impact, as detailed in the table below.
The Ajinomoto Group is taking various measures and creating mechanisms to minimize management and business risks while also leveraging them as new opportunities. However, the below table is not exhaustive, and the Ajinomoto Group may be affected in the future by risks that are currently unforeseeable or not currently considered as significant.
Furthermore, future-related matters mentioned in the text are those based on the Ajinomoto Group’s judgement as of the end of this consolidated fiscal year.
Please note that last year, “Financial risks and opportunities” and “Risks and opportunities relating to important issues (Materiality) for the Ajinomoto Group” were disclosed separately. Starting this year, these are integrated and disclosed as business-related risks and opportunities for the Ajinomoto Group.
Characters ● and 〇 indicate risks and opportunities in the table below.

Major risks and opportunities Likelihood Magnitude Significance
Category Content
#1
"AminoScience"
  • 白丸 Opportunity to grow business by leveraging the Ajinomoto Group’s strength in "AminoScience" and getting ahead of the curve in the modality space
  • 黒丸 Risk of stagnation in the development and expansion of "AminoScience", or failure to fully utilize "AminoScience" for the Ajinomoto Group’s ecosystem and co-creation, resulting in a lack of scalability in its value and a slowdown in the business’s competitive advantage and growth
H H Highly significant
#2
It security and intellectual property
  • 白丸 Opportunity to enhance competitive advantage and drive business growth by creating an intellectual property (IP) portfolio through the coordination of IP strategies and business and R&D strategies, and by actively utilizing IP for business
  • 白丸 Opportunity to increase deals by earning the trust of clients by strengthening IT security and conduct communication and decision making efficiently, swiftly, and securely
  • 黒丸 Rick of leaks of technological know-how and confidential strategic information to competitors, negatively impacting technology and business competitiveness 
  • 黒丸 Risk of more sophisticated cyber attacks due to misuse of AI technologies, ransomware attacks, etc.
  • 黒丸 Risk of personal information leakage, resulting in administrative disciplinary action or loss of trust from stakeholders
H H Highly significant
#3
Brand
  • 白丸 Opportunity to maintain and enhance our position as a leading sustainable company through management that prioritize the well-being of society and the environment, addressing voluntary sustainability initiatives, and leveraging strong locally rooted brand
  • 黒丸 Risk of business activities not being understood due to the diversifying values of various stakeholders, leading to damage to the brand
  • 黒丸 Risk of negative information about MSG and sweeteners spreading, leading to damage to the corporate brand
  • 黒丸 Risk of generation and spread of fake information becoming easy and sophistication of counterfeit products, webpages, and SNS accounts due to misuse of AI technologies, leading to damage to the brand
H H Highly significant
#4
Technological innovation
  • 白丸 Opportunity to enhance productivity, drive business and technological innovation, and create value across new business models and value chains by automating, accelerating, and streamlining various business activities through digital transformation (DX), getting ahead of the curve in the modality space with advanced technologies, and creating new customer contact points.
  • 白丸 Opportunity for solutions to advance in the agriculture and food sectors through technological advancements, relaxed regulations, and the expansion of markets and financing related to sustainability and biodiversity, such as circular economy, precision fermentation, regenerative agriculture, driven by the advance of Green Transformation (GX)
  • 黒丸 Risk of missing out on new value creation and business opportunities due to delays in adapting to innovation
  • 黒丸 Risk of loss of business opportunities due to delay in application of AI technologies, or emergence of AI-related issues such as breaches of relevant laws, ethical issues, and inaccuracy of judgement using AI due to premature adoption of AI technologies
H H Highly significant
#5
Human resources and human rights
  • 白丸 Opportunity to scale co-creation value by investment in human resource focused on diversity and taking on challenges, as well as diversification in working styles
  • 黒丸 Risk of loss of corporate value due to delay in addressing development of regulations and disclosure standards relating to human rights protection
  • 黒丸 Risk of being unable to secure necessary personnels for innovation and business operation due to labor shortage
H H Highly significant
#6
Climate change, natural capital /biodiversity, and resource depletion
  • 白丸 Opportunity to facilitate creation of resilient food systems through generalization of holistic approaches to environmental and food issues, and the growing momentum for co-creation of sustainable solutions with other companies and organizations
  • 白丸 Opportunity for facilitated creation of resilient food systems with low environmental impact due to expansion of climate change fund and policy support for farmers
  • 白丸 Opportunity for the increased demand for products and solutions that contribute to regenerative agriculture and sustainable livestock management due to increased attention to natural capital and biodiversity
  • 黒丸 Risk of difficulties in procuring raw materials and providing food to seikatsusha (consumers) due to climate change, degradation of natural capital, water shortages, and depletion of animal resources (including protein crisis and livestock diseases), threatening sustainability on a global scale
  • 黒丸 Risk of added or increased costs of addressing emerging and/or increasingly stringent regulations (decarbonization, natural capital/biodiversity, packaging materials, water, green washing) and requests for procurement of renewable energy
H H Highly significant
#7
Conflicts, wars, terrorism, riots, and social unrest
  • 白丸 Opportunity to achieve more stable procurement of superior raw materials by exploring alternative raw materials
  • 黒丸 Risk of delay in company-wide and business strategies, development, and manufacturing due to restriction on procurement of raw materials (including livestock feed) and supply of other goods, cross-border information-sharing, and transfer of funds due to export restrictions, tariff measures, financial sanctions, and/or the use of force
  • 黒丸 Risk of a significant decline in product demand as a result of being perceived as a member of an adversarial country
  • 黒丸 Risk of safety of local executives and expatriates being threatened or restrained, and/or business activities being impeded and unable to continue
  • 黒丸 Risk of business activities becoming difficult in some countries due to heightened social unrest caused by conflicts and inflation, intensified suppression of expression and assembly, and infringements of women's rights
  • 黒丸 Risk of decline in profitability due to rising raw materials and fuel costs caused by inflation
  • 黒丸 Risk of expropriation and financial risks relating to outbreaks of wars and conflicts
H H Highly significant
#8
Finance, accounting, and tax
  • 白丸 黒丸 Risk of increased tax burden or opportunity of reduced tax burden due to changes in tax system and deferred tax assets/liabilities
  • 黒丸 Risk of impairment loss due to acquired subsidiaries not achieving their business plans and/or steep increases in capital costs and interest rates
  • 黒丸 Risk of insufficient capital raising due to shortage of fund in the market caused by the financial crisis, a decline in circulation of major currencies such as USD mainly in emerging countries, and downgrade in credit ratings
  • 黒丸 Risk of unexpected bankruptcy of major clients and business partners (including those overseas)
  • 黒丸 Risk of impact on revenue due to sudden fluctuations in exchange rates and interest rates (e.g., stagnation of business activities overseas, impact on JPY conversion of overseas subsidiaries’ financial performance, and increased interest expenses)
H H Highly significant
#9
Utilization of non-financial data
  • 白丸 Opportunity to convert environmental and social values to financial value more easily, through technological innovation that enables the collection, quantification, standardization and dissemination of non-financial information
  • 白丸 Opportunity to collect data for building resilient food systems more easily due to technological advancement in the natural capital space
  • 黒丸 Risk of loss of business opportunities due to delay in addressing the increasing demands for assessment and measurement of social values and human rights risks
M H Significant
#10
Pandemics and natural disasters
  • 白丸 Opportunity to build a resilient and flexible organizational structure as a result of evolving all-hazard Business Continuity Plan (BCP) that can address emergencies including, but not limited to, pandemics and natural disasters
  • 黒丸 Risk of difficulties in promoting innovation and business operations due to shortages of goods and damage to human resources caused by pandemics and large-scale natural disasters
M H Significant
#11
Consumer preferences and values
  • 白丸 Opportunity to grow business by capturing changes in consumer values such as the rise of sustainability awareness and inclination towards mental well-being
  • 黒丸 Risk of loss of business opportunities due to delays in developing businesses, services, and products that address consumers’ heightened social and environmental awareness and trends towards personalized health care
M H Significant
#12
Population growth, aging population, and capital inflows to developing countries
  • 白丸 Opportunity for increased demand for solutions that help address health and nutrition issues and expansion of the healthcare market due to global population growth and capital inflow to developing countries by public institutions
  • 黒丸 Risk of loss of business opportunities due to delays in business development in some developing countries and regions, given the unlikely population growth in Japan and EU
M H Significant
#13
Governance and compliance
  • 白丸 Opportunities that arise from accumulation of trust from stakeholders through strengthening of governance and continuation of safety, quality, and environmental management activities that are unique to our company
  • 白丸 Opportunity to improve corporate culture and enhance business sustainability through strengthened governance, such as widespread AGP (Ajinomoto Group Policies) among employees, and the correct understanding and practice of policies and regulations
  • 黒丸 Risk of criminal or administrative disciplinary action and loss of trust from stakeholders due to violations of compliance (including religion-related and animal protection regulations) and/or inadequate quality/safety management (such as contamination with unknown substances)
M H Significant
#14
Economic security (with regards to semiconductors)
  • 白丸 Opportunity for facilitated domestic technological development due to the Japanese government’s economic security policy to support domestic production of semiconductors
  • 黒丸 Risk of supply chain disruption and intensified market competition due to effect of economic security policies leveraging semiconductors by governments of various countries
M M Significant
Key initiatives, goals, and KPIs related to risks and opportunities relating to important issues (Materiality) for the Ajinomoto Group

As described in the “Important issues (Materiality) for the Ajinomoto Group” of “Section 2 Business Status”, the Ajinomoto Group is working on six “Material Themes”, which are (1) Realization of sustainable global environment, (2) Realization of well-being through food, (3) Contribution to advanced medicine and disease prevention, (4) Contribution to the evolution of Smart Society, (5) Respect for various values and human rights, (6) Strengthening of foundation of business management. The table below shows key initiatives, goals, and KPIs under each Material Theme. The risks and opportunities in the table below are the summary of the aforementioned “Major risks and opportunities, with # in the parenthesis corresponding with the category number of the abovementioned “Major risks and opportunities”.

Major risks and opportunities, key initiatives, goals, and KPIs related to Material Themes (# in the parenthesis in the row “Risks and opportunities” correspond with the category number of the abovementioned “Major risks and opportunities”)

Material Themes Risks and opportunities (# correspond with the category number of the “Major risks and opportunities”) Key initiatives Goals and KPIs
Realization of sustainable global environment
  • 白丸 Creating sustainable and resilient food systems that is environmentally friendly, supported by technological advancement, relaxed regulation, expanded policy support, increased capital inflows, and heightened collaboration with other companies, leading to increased demand for related products and services.
  • 黒丸 Difficulty in procuring raw materials due to climate change, degradation of natural capital, and animal resource depletion, coupled with stricter regulations and societal demand, loss of business opportunities due to delays or premature adoption of advanced technologies such as cultured meat, recycling of packaging materials, and AI
    (#1, #4, #6)
  1. 1Road to Net Zero
  2. 2Contribute to the transformation of a resilient food system that supports 10 billion people
  1. 1
    • Reduce GHG emissions (vs. 2018)
      By 2030: 50% reduction in Scope 1 and 2, 24% reduction in Scope 3
      By 2050: Net Zero emissions and 100% renewable energy for electricity
    • Promote biodiversity
      Implement initiatives including risk and opportunity assessments in selected raw materials under the LEAP approach*
      1. *LEAP approach: A process to assess nature-related risks and dependencies based on scientific evidence. Guidance is provided by TNFD (Taskforce on Nature-related Financial Disclosures).
    • Eliminate plastic waste
      By 2030: Zero plastic waste
    • Reduce food loss (vs. 2018)
      By 2025: 50% reduction (from raw material sourcing to delivery at customer)
      By 2050: 50% reduction (across entire product life cycle)
    • Collaborate with local stakeholders to solve environmental problems (food loss, plastic waste, etc.)
    • Reduce water consumption (vs. 2005)
      By 2030: 80% reduction in water consumption
    • Increase sustainable sourcing of raw materials
      By 2030: 100% sustainable procurement of key raw materials, promoting animal welfare
  2. 2
    • Contribute to the creation of a society with a resource circulation system by expanding the biocycle
    • Contribute to sustainable agriculture through biostimulant products
      (Contribute climate change mitigation and adaption through increased yield per unit area, strengthened resistance against environmental stress)
    • Provide products using cattle raised by more sustainable methods utilizing amino acids. Create an ecosystem by collaboration with dairy and meat manufacturers
    • Promote practical implementation of on-site production of low environmental impact ammonia
Realization of well-being through food
  • 白丸 Business expansion through provision of products and services that address local consumer preferences in each region, increasing awareness of sustainability and health, and enhancing brand reputation through socially and environmentally conscious management
  • 黒丸 Loss of business opportunities and brand reputation due to delays in adapting to changing consumer values and a lack of understanding of products and business activities, given changes and diversifying values and misuse of advanced technologies such as AI
    (#1, #3, #9, #11)
  1. 3Respect local food cultures, create an environment that supports people in making healthy food choices, for humans and the planet, that don’t compromise on taste, and provide value to many people
  2. 4Contribute to individuals’ emotional enrichment and subjective well-being by encouraging the joy of cooking and eating together
  3. 5Contribute to consumers’ self-actualization through our products and services that cater to each individual
  1. 3
    • Provide solutions for B2B customers
    • Collaborate with local stakeholders to solve food and health issues
    • Provide nutritionally balanced products and services and encourage healthy food-related behaviors of seikatsusha based on nutrition assessment technologies such as the Ajinomoto Group Nutrient Profiling System (ANPS)
    • rovide healthy products through the Nutrition Commitment
      By 2030: Increase the percentage of products that have improved their nutritional values to 60%
      By 2030: Increase the number of people reached with products that promote “delicious salt reduction” and “protein intake optimization” to 400 million/year
      By 2030: Double the availability of products that utilize the physiological and nutritional functions of amino acids (vs. 2018)
    • Provide foods and materials made from low environmental impact food ingredients and production methods (cultured meat, plant-based foods, etc.)
  2. 4
    • Quantify how much cooking and eating together contribute to well-being (study the relationship) and promote products that have high contribution to well-being
  3. 5
    • Develop a highly personalized experience for consumers through a deep understanding of their needs and behaviors
      By 2030: Increase the number of POND* customers (No. of common ID) to 10 million
      By 2030: Increase the number of newly offered products with a revenue of more than a billion JPY to 2 – 3 products/year
      1. *POND: Company-wide customer base
    • Improve value provision in the frozen food core business category (GYOZA and other dumpling products)
Contribution to advanced medicine and disease prevention
  • 白丸 roviding new value by continuously getting ahead of the curve in the modality space and delivering cutting-edge healthcare to customers through digital transformation (DX) utilization
  • 黒丸 Limited business and company value growth due to delayed adaptation to technological advancements in the medical space, stagnation in evolution and/or expansion of "AminoScience", and failure to fully leverage ecosystems and co-creation for scaling company value
    (#1, #4)
  1. 6Contribute to realization of advanced medicine and modality
  1. 6 Improve medical treatment and prevention, and provide solutions that lead to healthy life expectancy
    • Improve and expand biopharmaceutical manufacturing services
    • Evolution towards service solution-oriented businesses in culture media and advanced medical materials
    • Strengthen the medical food business
Contribution to the evolution of Smart Society
  • 白丸 Facilitation of domestic development of semiconductor-related technologies due to the Japanese government’s economic security policies supporting domestic production of semiconductors
  • 黒丸 Disruption of the value chain and intensified market competition due to other countries facilitating domestic production of semiconductor-related products, as a result of their governments' regulation on import/export as a part of their economic security policies
    (#1, #14)
  1. 7Support a sustainable and accessible information and communications technology (ICT) society, accelerate development and provision of advanced materials, and co-create sustainable business models by continuous innovation
  1. 7
    • Strengthen the co-creation ecosystems in the semiconductor value chain, accelerate the innovation that contributes to evolution of semiconductors, and provide more advanced materials
    • Realize development of technologies and materials in the advanced semiconductor space, such as photoelectric fusion
Respect for various values and human rights
  • 白丸 Facilitation of management decision making with a long-term perspective that considers both financial and non-financial aspects, facilitated by the collection of non-financial data such as human rights, enabled by technological innovation. Contribution to standard-making that enhances competitive advantage that leverages our environmental and social values
  • 黒丸 Loss of business and corporate value due to delays in addressing the increasing demands for assessing and measuring non-financial data such as human rights
    (#5, #9)
  1. 8Promote human rights initiatives throughout the value chain and foster shared purpose with multi-stakeholders
  1. 8
    • • Conduct human rights and environmental due diligence in alignment with the global standard. Through dialogue with stakeholders, address this from both perspectives below:
      • Depth: Conduct human rights impact assessment based on country-specific human rights risk evaluation (once in four years), including prevention, corrective action, and monitoring
      • Exhaustiveness: Assess the current status of suppliers and providing support for their improvement based on “Guidelines for Group Shared Policy for Suppliers”(To be completed for domestic Tier 1 suppliers in 2024 and for overseas Tier 1 suppliers in 2025)
Strengthening the foundation of business management
  • 白丸 Enhancing creative activities through employee diversification and encouragement of taking on challenges, and strengthening competitive advantage by enhancing IPs, IT systems, and financial strategies
  • 黒丸 Increased threats to the foundation of business management due to disruptive changes in the business environment including demographic change, conflicts, pandemics, supply-demand gap in the labor market, strengthened regulations, threats to IT security
    (#1, #2, #5, #7, #8, #10, #12, #13)
  1. 9Promote DE&I initiatives that serve as role models for local communities and improve employee well-being by investing in human resources, encouraging challenges and creating culture of innovation. Strive to create a workplace where every employee works with a sense of purpose and dedication
  2. 10Strengthen resilience to changes in the business environment
  3. 11Improve employee literacy
  1. 9
    • Increase ASV realization process engagement score (global)
      By 2025: 80%
      By 2030: 85%
    • Increase diversity at the leadership level (global)
      By 2025: 20%
      By 2030: 30%
    • Increase ratio of women in management (global)
      By 2025: 35%
      By 2030: 40%
    • Increase career recruitment employees ratio* to promote diversity (Ajinomoto Co. Ltd. only)
      By 2025: 20%
      By 2030: 30%
      1. *Target ratio of new career recruitment employees out of all new employees every year: 50%
    • Promote ASV Award (global) to celebrate employees that embrace challenge, voluntary department transfer, and participation in cross-organizational projects (Ajinomoto Co. Ltd. only)
  2. 10
    • Strengthen resilience by global Ajinomoto System of Quality Assurance and creation of the strategic IP portfolio
    • Promote measures that encourage continuous compliance awareness
    • Ensure proper assessments, audits, and inspections related to health and safety of employees
    • Identify management risks and consider countermeasures (annually)
    • Projections, opportunity identification, and portfolio strategy (as appropriate)
    • Minimize impairment loss and risk of fluctuations in exchange rates and interest rates, and reduce risks by effective utilization of funds within the Ajinomoto Group and flexible capital raising
  3. 11
    • Implement measures to improve literacy in environment, human rights, digital transformation, etc.
      By 2025: Increase the number of employees receiving nutrition education to one hundred thousand employees