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.

Important issues (materiality) for the Ajinomoto Group

Important issues (Materiality) for the Ajinomoto Group are essential to the Group’s ability to continue co-creating social and economic value over the long term.
The Group identifies important issues (Materiality) through a process that reflects the thoughts and ideas of management and employees and the expectations from external stakeholders.
The important issues (Materiality) are deeply embedded in our business strategies, our on-site operations, and our Purpose.

* “Seikatsusha” is a unique Japanese concept that, unlike the partial concept of “consumer” used in business and “citizen” used in political science, seeks to define people holistically.

What the Value Creation Framework Shows

The Value Creation Framework illustrates our approach to sustainable growth as a cycle that connects the power and potential of “AminoScience” (Scientific Possibilities) with the power of stories (Story of Well-being) that contribute to the well-being of all human beings, society, and the planet. The cycle is (1) honing our co-creation capabilities, (2) taking the seikatsusha perspective (3) while achieving well-being, and (4) through our business activities return co-created shared value.
These follow an infinite loop continuously moving from (1) through (4), meaning that it will sustainably co-create social and economic value.

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

The Group has identified Group-wide risks and opportunities that require cross-organizational management, by comprehensively taking into account macro changes in the business environment, the probability of manifestation (low, moderate, high) and the magnitude of impact (low, moderate, high). The classification and severity of risks and opportunities for the year under review were as follows: ten were classified as 'Highly Significant' and four as 'Significant'.

Comprehensive assessment Classification of risks and opportunities
Highly Significant a) "AminoScience" b) Climate change, natural capital and biodiversity, resource depletion; c) Economic security; d) Human capital and human rights; e) Brands; f) Technological innovation; g) Conflict/war, terrorism, riots, and social unrest; h) IT security, intellectual property; i) Demographic trends; j) Finance, accounting and taxation
Significant k) Pandemics, natural disasters, l) Governance and compliance, m) Utilization of non-financial data, n) Consumer preferences and values

Although the Group has developed various responses and mechanisms not only to minimize such management and operational risks but also to capitalize on these as opportunities, the list below is not all-inclusive and may be affected in the future by risks that are currently unforeseeable or which are not presently deemed material.
Forward-looking statements in the text below are based on the Group’s assessments as of March 31, 2024. In the table below, 黒丸 indicates risks and 白丸 indicates opportunities.

Major risks and opportunities Probability of manifestation Magnitude of impact Comprehensive assessment
Category Details
#a
“AminoScience”
  • 黒丸 Risk of stagnation in the evolution and expansion of “AminoScience” or failure to fully utilize “AminoScience” in the ecosystem and cocreation, resulting in a failure to scale its value and a slowdown in the competitive advantage and growth of the business.
  • 白丸 Opportunities for growth in the Food Products business and the Bio & Fine Chemicals business by anticipating the evolution of modalities and leveraging the Ajinomoto Group’s strengths in "AminoScience."
 High High Highly Significant
#b
Climate change, natural capital and biodiversity, resource depletion
  • 黒丸 Risk of delays in decarbonization and other environmental initiatives due to increased use of fossil fuels and difficulties in procuring renewable energy due to policy changes in some major countries.
  • 黒丸 Risk of difficulty in procuring raw materials and providing food to consumers due to the inability to ensure global sustainability as a result of climate change, damage to natural capital, water shortages, and the emergence of animal resource depletion issues (the protein crisis, infectious diseases in livestock, etc.).
  • 黒丸 Risk of incurring or increased costs due to new and/or increasingly stringent laws and regulations (decarbonization, natural capital and biodiversity, packaging, water, greenwashing, DSI) in Japan and abroad and renewable energy procurement requirements.
  • 白丸 Opportunities to facilitate the creation of low environmental impact and resilient agrifood systems through establishing a holistic approach to environmental and food issues as a common approach, through the growing momentum for co-creation of sustainable solutions with other companies and institutions, and through climate finance and increased policy support for farmers.
  • 白丸 Opportunities for increased demand for products and solutions that contribute to regenerative agriculture and a sustainable livestock industry due to increased focus on climate change and natural capital and growing need to work with farmers to strengthen the resilience of agrifood systems.
  • 白丸 Opportunities to strengthen intelligence functions and respond earlier to the regulatory environment by strengthening external relations activities.
 High High Highly Significant
#c
Economic security
  • 黒丸 Risk of weakened globalization and economic decoupling (fragmentation) and weakening of frameworks for international economic partnerships, as countries lean towards prioritizing their own interests over multilateral cooperation.
  • 黒丸 Risk of fragmentation in alliances and deepening conflicts between nations as the fields of economy and security are becoming more closely intertwined.
  • 白丸 Opportunities to advance technological development domestically and contribute to regional economic revitalization through local production and consumption due to reversion to domestic production by the Japanese government as part of economic security.
  • 白丸 Opportunities for stable procurement of better materials due to the examination of alternative raw materials.
  • 白丸 Opportunities to increase sales due to export restrictions, tariff measures and financial sanctions imposed on competitors in other countries.
  • 白丸 Opportunities for increased demand for semiconductors due to their designation as specific important materials, amidst the worldwide spread of AI, increased server demand, and the expansion of autonomous (self-driving) vehicles.
 High High Highly Significant
#d
Human capital and human rights
  • 黒丸 Risk of loss of corporate value due to delays in responding to developments in laws and regulations and information disclosure standards related to respect for human rights.
  • 黒丸 Risk of impairment of corporate value due to the discovery of negligence towards human rights.
  • 黒丸 Risk of inability to secure human resources needed for innovation and business activities due to shortage of human resources in the labor market.
  • 白丸 Opportunities to acquire and retain talent, as well as improve employee productivity, through proactive investment in human resources and diversification of workstyles focused on diversity and taking on challenges.
 High High Highly Significant
#e
Brands
  • 黒丸 Risk of brand damage due to lack of resonance with business activities amid diversifying values of various stakeholders.
  • 黒丸 Risk of negative information about MSG and sweeteners spreading, leading to damage to the corporate brand.
  • 黒丸 Risk of brand damage due to the ease of generating and proliferating false information via the misuse of AI technology, as well as counterfeit products and increasingly sophisticated websites and social media.
  • 白丸 Opportunities to maintain and enhance our position as a leading sustainability company through management mindful of the well-being of our society and our planet, proactive response to nonmandatory sustainability-related requests, and leveraging our strong, locally rooted brand power.
 High High Highly Significant
#f
Technological innovation
  • 黒丸 Risk of failure to capture new value creation and business opportunities due to delays in responding to advancing innovations (including AI technology), as well as the risk of problems emerging such as violation of laws and regulations, ethical issues, and incorrect management decisions driven by excessive reliance on use of technology.
  • 白丸 Opportunities for value creation across new businesses and value chains through improvements in various business activities enabled by DX, creation of new business models and customer contact points, and anticipation of advancements in modalities through advanced technologies.
  • 白丸 Opportunities to advance solutions in the agriculture and food sectors as green transformation (GX) advances, driven by expansion in technological innovation, deregulation, market creation, and financing related to sustainability.
 High High Highly Significant
#g
Conflict/war, terrorism, riots, social unrest
  • 黒丸 Risk of disruption of Group-wide and business strategies, development, and manufacturing due to export restrictions on raw material procurement (including raw materials for livestock feed), supply of other goods, cross-border information sharing, and transfer of funds as a result of military actions and other factors.
  • 黒丸 Risk of a significant drop in product demand due to being perceived as a company from a hostile country group.
  • 黒丸 Risk that the safety of local executives and expatriates may be threatened or that they may be restrained, and that business activities in particular countries may be impeded and prevented from continuing.
  • 黒丸 Risk of increased social unrest due to conflict, inflation, etc., and increased repression of expression and assembly, discrimination and persecution of specific groups, and violation of rights of socially vulnerable individuals, making it difficult to conduct business activities in some countries.
  • 黒丸 Risk of deteriorating profits due to rising raw materials and fuel costs as a result of inflation.
  • 黒丸 Risk of expropriation and country risk with financial implications due to the occurrence of wars or conflicts.
 High High Highly Significant
#h
IT security, intellectual property
  • 黒丸 Risk of impaired technical and/or business competitiveness due to leakage of technical expertise or business trade secrets to competitors.
  • 黒丸 Risk of cyberattacks becoming more sophisticated due to the commercialization (division of labor) of generative AI technology and ransomware attacks, leading to large-scale system outages and the leakage of personal and confidential information.
  • 黒丸 Risk of incurring financial losses from falling victim to impersonation fraud using generative AI.
  • 黒丸 Risk of administrative penalties and loss of stakeholder confidence due to leakage of personal information.
  • 白丸 黒丸 Opportunities for enhanced competitive advantage and business growth through the strengthening of intellectual property strategies, including the development of an intellectual property portfolio.
  • 白丸 黒丸 Opportunities for enhanced IT security toward streamlined, speedy, and secure communication and decision-making, leading to greater customer trust and growth in business transactions.
 High High Highly Significant
#i
Demographic trends
  • 黒丸 Risk of slowed economic development and market expansion in developing countries due to the reduction of development aid by some major countries.
  • 黒丸 Risk of missing business opportunities due to delays in business development in some developing countries/areas, as population growth in Japan and Europe is unlikely.
  • 白丸 Opportunities for increased demand for solutions helping to resolve health and nutrition issues due to global population growth and capital inflows from public institutions to developing countries, opportunities for significant expansion of the healthcare and other markets.
 High High Highly Significant
#j
Finance, accounting and taxation
  • 白丸黒丸 Risk of increased tax burden, or opportunities for decreased tax burden, from changes in tax systems and deferred tax assets/liabilities.
  • 黒丸 Risk of depletion of capital due to the financial crisis, risk of difficulty in procuring major currencies such as U.S. dollars due to factors such as decline in circulation mainly in emerging countries, and financing risk due to ratings downgrade.
  • 黒丸 Risk of unforeseen bankruptcies of customers and subsidiaries.
  • 黒丸 Risk of impact on business profits from sharp fluctuations in foreign exchange and interest rates (slowdown in overseas business activity, impact of converting overseas subsidiary earnings into yen, increased interest expenses).
 High High Highly Significant
#k
Pandemics, natural disasters
  • 黒丸 Risk of difficulty in promoting innovation and conducting business activities due to shortages of supplies and damage to human resources caused by large-scale/widereaching natural disasters, including pandemics and major earthquakes.
  • 白丸 Opportunities for building a resilient and flexible organizational structure by evolving to an all-hazards BCP that can respond to crises other than pandemics and natural disasters.
 Moderate High Significant
#i
Governance and compliance
  • 黒丸 Risk of criminal or administrative action due to non-compliance (including religious regulations, animal protection regulations, etc.) or inadequate quality or safety management (contamination of unexpected ingredients, etc.), or loss of stakeholder confidence.
  • 白丸 Opportunities that arise from the accumulation of stakeholder trust through the continuation of safety, quality, and environmental management activities that are unique to our company as a result of stronger governance.
  • 白丸 Opportunities to enhance business sustainability by fostering a better corporate culture through enhanced governance, including AGP penetration among employees and proper understanding and implementation of policies and rules and regulations.
 High High Significant
#m
Utilization of non-financial data
  • 黒丸 Risk of missing business opportunities due to delays in responding to increased expectations (social demands) for the evaluation and measurement of social value (such as human rights risks) and environmental value (such as CO2 emissions and impacts on natural capital).
  • 白丸 Opportunities to facilitate the conversion of environmental and social value into financial value through technological innovation and the establishment of indicators and systems (such as carbon credits), which support the collection of non-financial data, the development of quantification methods, and the creation and dissemination of standards.
 Moderate High Significant
#n
Consumer preferences and values
  • 黒丸 Risk of missing business opportunities due to delays in developing businesses, services, and products that respond to consumer awareness of growing social and environmental awareness and personalized healthcare preferences, resulting in delays in acceptance by consumers and society.
  • 白丸 Opportunities for business expansion by responding to changes in consumer values, such as increased awareness of sustainability, emphasis on mental well-being, and activities related to personal passions.
 Moderate Moderate Significant
Initiatives and Targets/KPIs for Risks and Opportunities Related to Important Issues (Materiality) for the Ajinomoto Group

The following are initiatives and targets/KPIs for the six Material Themes currently being addressed by the Ajinomoto Group ((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, (5) Respect for diverse values and human rights, (6) Reinforcement of our management foundation A). The risks and opportunities presented here are a simple summary of the major risks and opportunities provided above, and the letters in parentheses indicate the corresponding category code for the same.

Key risks, opportunities, focus areas, initiatives, targets/KPIs, and progress related to Material Themes

(Black circles (黒丸) represent risks and white circles (白丸) represent opportunities. Letters in parentheses indicate the corresponding categories for the aforementioned major risks and opportunities.)

Achievement of a sustainable global environment
黒丸Risks
白丸Opportunities
  • 黒丸 Risk of loss of business opportunities due to difficulties in procuring raw materials caused by climate change, degradation of natural capital, and depletion of animal resources, as well as the tightening or easing of related laws and social demands, along with delayed or fast adoption of advanced technologies such as cultured meat and packaging recycling, and AI
  • 白丸Opportunity to support the construction of eco-friendly and resilient agrifood systems, and increasing demand for related products and services due to technological innovation, increased deregulation and policy support expansion, early response to regulations, capital inflows, and increasing momentum for co-creation with other companies (a, b, f)
Focus areas Initiatives Targets/KPIs Major progress
Climate change Mitigation and adaptation
    • Reduce GHG emission reductions
      - FY2030: 50.4% reduction in Scope 1 and 2, 30% reduction in Scope 3 (vs. FY2018)
      - FY2050: Net zero, 100% renewable energy for electricity
      - Reduction of GHG emissions from cattle by providing solutions using specialized feed-grade amino acids (Contribution to building an ecosystem through collaboration with the government, local governments, and dairy and meat manufacturers)
    • Contribution to sustainable agriculture
      Expand the deployment of biostimulant products (reducing GHG emissions by reducing fertilizer use, improving environmental stress resistance, improving harvest quality, improving degraded soil)
    • Expansion of the bio-cycle (cyclic amino acid fermentation cycle)
    • Provision of food and ingredients made with environmentally low-impact materials and methods, and promotion of lifestyle changes among consumers (technology development such as cultured meat and precision fermentation, development of foods using biomass fermentation and plant-based sources)
Reduction of GHG emissions
  • FY2024 Scope 1 and 2: 43% reduction (vs. FY2018)
  • FY2024 Scope 3: 13% reduction (vs. FY2018)
  • Renewable energy share of electricity in FY2024: 43%
Natural capital Biodiversity conservation
    • Disclosure of information based on the TNFD framework
      - Consideration of evaluation and prioritization in line with SBTi for Nature
On track
Prevention of deforestation
    • No deforestation
      - FY2025: Target raw materials: palm oil, soybeans, beef, paper
On track
Conservation of water resources
    • Reduction of water usage
      - FY2040: 15% reduction (vs. FY2018)
    • FY2024 water usage reduction rate: 12% (vs. FY2018)
Sustainable procurement
    • Realize sustainable procurement for priority raw materials
      - FY2030: Target raw materials: paper, palm oil, soybeans, coffee beans, beef, sugar cane
    • Animal welfare improvement
FY2024 sustainable procurement rates
Paper: 99%, palm oil: 99%, soybeans: 70%, coffee beans: 39%, beef: 100%, sugarcane: 90%.
Circular economy Zero waste emissions
    • Maintain resource recovery rate of 99% or more
    • FY2024 Resource recovery ratio: 98.7%
Plastic waste reduction
    • Plastic waste reduction
      - FY2030: Achieve zero plastic waste
    • Promote consumer behavior change through the provision of personal care products using our chemical materials
    • FY2024 plastic usage: 65kt
    • FY2024 recyclable packaging ratio: 47%
Food loss and waste reduction
    • Food loss and waste reduction
      - FY2025: 50% reduction from receipt of raw materials to delivery to customers (vs. FY2018)
      - FY2050: 50% reduction throughout the entire product life cycle (vs. FY2018)
      - Contributing to reducing food loss and waste within the home by sharing information such as recipes and collaborating with the local community (government, distribution, etc.)
    • Utilize our commercial (BtoB) products to help customers reduce food loss and waste
    • FY2024 final waste disposal reduction rate: 62% (vs. FY2018)
Achievement of well-being through food
黒丸Risks
白丸Opportunities
  • 黒丸 Loss of business opportunities and brand damage due to delays in responding to changes in consumer values and lack of understanding of products and business activities amid changing and diversifying values and inappropriate use of advanced technologies such as AI
  • 白丸Expanding business by offering products and services that meet the preferences of consumers in each region and their growing awareness of sustainability and health, and enhance the brand through management mindful of the well-being of our society and our planet (a, e, m, n)
Focus areas Initiatives Targets/KPIs Major progress
Health and nutrition Solving health and nutrition challenges through food
    • Contributing to a nutritionally balanced diet (by FY2030)
      - Provide 2.1 billion servings of nutritionally balanced* products per year

      *Health Star Rating (HSR) rating 3.5 or above


      - Contribute to salt reduction of 1.1 billion servings per year by reducing salt in seasonings
      - Contribute to sugar reduction of 700 million people per year through sweeteners
      - Provide nutritionally balanced dishes
      - Provide valuable nutritional information to consumers
    • Contribute to mental well-being
      - Visualizing the contribution of cooking and eating together to well-being (clarifying relationships) and expanding products with high contributions
    • Develop a personalized experience for consumers through a deep understanding of their needs and behaviors
      - FY2030: 10 million POND* customers (number of common IDs) (Japan)
      - FY2030: 2-3 new products annually with sales over ¥1 billion (Japan)

      *POND: Company-wide customer base
  • Nutrition-related KPIs: Calculations start from FY2025
Contribution to advanced medicine and prevention
黒丸Risks
白丸Opportunities
  • 黒丸 Delayed response to technological advances in the medical field, issues arising from hasty application of technology leading to ethical concerns or risk of stagnation in the evolution and expansion of AminoScience” or failure to fully utilize ecosystem and co-creation opportunities, resulting in a failure to scale value and furthermore limited expansion of business and corporate value
  • 白丸Provide new value by continuously anticipating the evolution of modalities and delivering advanced medicine to customers through the use of DX (a, f)
Focus areas Initiatives Targets/KPIs Major progress
Health and nutrition Evolution of treatment and prevention
  • Expand availability of products that utilize the physiological and nutritional functions of amino acids
    - FY2030: Double (vs. FY2020)
  • Strengthening the medical food field
    - FY2030: Double the offerings (vs. FY2024)
  • Stable supply of high-quality pharmaceutical amino acids for infusion and other pharmaceuticals
  • Evolve into a service solution-oriented business for culture media and advanced medical materials
  • Strengthen and expand the realm of contract services for the development and manufacturing of biopharmaceuticals
  • FY2024 availability of products utilizing the physiological and nutritional functions of amino acids: 1.11 times (vs. FY2020)
Contribution to the evolution of a Smart Society
黒丸Risks
白丸Opportunities
  • 黒丸 Disruption of the value chain and intensification of competition due to the implementation of trade regulations, tariffs, and financial sanctions on semiconductor-related products by governments as part of economic security measures, as well as the domestication of related products by trade friction partner countries
  • 白丸Opportunity for expansion of company sales due to the increase in semiconductor demand, the advancement of semiconductor-related technology development domestically as production returns to the country, and the implementation of legal measures such as tariffs (a, c)
Focus areas Initiatives Targets/KPIs Major progress
Advanced semiconductor package Advancement of semiconductors through materials provision and ecosystem creation
  • Speed up innovation creation and expanding the provision of advanced materials that contribute to the evolution of semiconductors, while strengthening co-creation ecosystems within the semiconductor value chain
  • Realize the development of technology and materials in advanced semiconductor fields such as the optoelectronic fusion field
 On track
Respect for diverse values and human rights
黒丸Risks
白丸Opportunities
  • 黒丸 Loss of business opportunities and corporate value due to delays in responding to requests for consideration of human rights and the evaluation and measurement of non-financial data such as human righs
  • 白丸Encouraging management decision-making from a long-term perspective and from both financial and non-financial perspectives by making it possible to collect non-financial data on topics such as human rights through technological innovation, the establishment of indicators and systems, and participation in the creation of various standards that will lead to competitive advantage by leveraging Ajinomoto's environmental and social values (d, m)
Focus areas Initiatives Targets/KPIs Major progress
Human rights Responsible employment
  • Steady promotion of human rights and environmental due diligence in accordance with international standards
    - Respect for Human Rights in the Supply Chain.
    Depth: Implementation of human rights impact assessments based on the results of country-specific human rights risk assessments, as well as preventive and corrective measures and monitoring
    Comprehensiveness:
    Understanding the actual situation of suppliers and providing support and monitoring for improvements based on the "Guidelines for Group Shared Policy for Suppliers.":
    - Respect for Human Rights of Group Company Employees
    Watching trends and understanding the actual situation regarding global issues, and formulating policies (responsible hiring, living wage, etc.)
    Disseminate global policies: 70% or more globally in the Group by FY2030
On track
Reinforcement of our management foundation
黒丸Risks
白丸Opportunities
  • 黒丸 Expanding multifaceted threats to the management foundation due to drastic changes in the business environment, such as changes in tariff policies under the guise of economic security, demographics, conflicts, pandemics, major earthquakes, gaps in supply and demand for human resources, tightening of regulations, and threats to IT security
  • 白丸As the importance of intangible assets in management increases, opportunities to revitalize creative activities by diversifying human resources and encouraging them to take on challenges, as well as to strengthen our competitive advantage by enhancing intellectual property, IT systems, and our financial strategy (a, c, d, g, h, i, j, k, l)
Focus areas Initiatives Targets/KPIs Major progress
Human capital Human resource investment
  • ASV realization process engagement score
    - 80% (FY2025) ⇒ 85% (FY2030)
  • Diversity in leadership
    - 27% (FY2025) ⇒ 30% (FY2030)
  • Ratio of female managers
    - 30% (FY2025) ⇒ 40% (FY2030)
  • Encourage employees to take up challenges
    - Promote ‘ASV Awards’
  • FY2024 ASV realization process engagement score:76%
  • FY2024 Diversity in leadership: 25%
  • FY2024 Ratio of female managers: 27%
  • Improve employee literacy
    - Deploy literacy improvements measures for the environment, human rights, DX, etc.
    - Nutrition education: 100,000 cumulative employees (FY2025)
  • FY2024 Nutrition education: 122,000 cumulative employees
Changes in the business environment Strengthening resilience
  • Strengthen management intelligence functions to utilize strategic backcasting from future risks and opportunities
  • Strengthen resilience by building a global quality assurance system and global strategic IP portfolio
  • Carry out ongoing measures to improve compliance awareness
  • Continuously carry out assessments, audits, and inspections related to health and safety
  • Minimize risk of impairment and fluctuation in foreign exchange and interest rates, and mitigate risk through effective use of intra-Group funds and flexible financing
 On track