Sustainability Report 2019-2020 The Origin of the These notebooks were used by Tadaka Kainosho, the founder of Takasago International Corporation, when he was studying perfumery Corporate Philosophy in Europe. He put down everything he learned in France and Switzerland in these notebooks. Containing pages of writing in French and German, they give a sense of the young Tadaka’s passion as well as his keen interest in the technology. The notebooks hold a great deal of meaning for Takasago International Corporation, which Tadaka later founded, as they provide the foundation of the company’s corporate philosophy of technology-based development. In 1920, Tadaka founded a company specializing in the manufacture of aroma ingredients, one of the first of its kind in Japan, based on a strong belief that fragrances and flavors enrich people’s lives and can thus contribute to society. The company has grown into a global enterprise and yet still maintains the passion of its founder to contribute to society through technology, which remains unchanged even as the world continues to evolve. In order to fulfill our mission to deliver to countless people products that can increase their enjoyment of life, we will drive our global business forward, aiming to become a world-leading flavors and fragrances supplier.
“Kainosho notebooks,” where Tadaka wrote about the research in Europe (center/right) and a photo taken during the training at a natural aroma manufacturer in Grasse, South France (left)
The Tokyo factory (currently the head office building in Kamata, Ota-ku) at the time of the Takasago International Corporation foundation and the founder Tadaka Kainosho marks its 100th birthday in 2020.
1 TAKASAGO Sustainability Report 2019-2020 2 Cover Picture Uematsu Hobi Contents Incense case with chrysanthemum branch and bird design in inlaid mother of pearl and maki-e Taisho- Showa period, 20th century The Origin of the Corporate Philosophy....P.1 This box is a modern version of the lacquerware with densely sprinkled gold powder and in laid mother of pearl fashionable from the Heian Message from President and CEO....P.5 to the Kamakura periods. It was inspired by the “Inkstone case with hedge and chrysanthemum design in inlaid mother of pearl and Corporate Vision....P.11 maki-e” (National Treasure) handed down by the Tsurugaoka Hachiman Shrine. The artist who created it, Uematsu Hobi (1872-1933) is known Corporate Profile....P.13 for studying classic works and working in a style that gave them interpretations. • Global Network *Quoted from Treasures from The Takasago Collection • Business Outline Sustainability at Takasago....P.19 • Sustainability Vision • History • Message from Senior Vice President • Takasago Sustainability Team Corporate Communication Tools • Materiality Assessment • Initiatives Related to the SDGs Our Activity....P.25 Governance Sustainability • Report • EHS 2019-2020 • Society External Partnerships and Initiatives....P.63 Social and Environmental Report Sustainability Report (Japanese Edition) 2019-2020 GRI Content Index....P.64
Corporate website LinkedIn Takasago site
3 TAKASAGO Sustainability Report 2019-2020 4 Message from President and CEO
Inheriting a 100-year history of overcoming changes, we will leap forward into the next 100 years.
Q. Looking back on fiscal 2019, could you provide materials prices are stabilizing, we forecast little an overview of the company’s business condition? change in net sales (0.7% year-on-year growth) along with increased profits. At present, the COVID- In fiscal 2019, our Flavor Division enjoyed strong 19 pandemic is expected to significantly hinder sales of flavors for beverages at our Singapore growth in the global economy as a whole. While subsidiary, and of coffee-related products in Japan. this may affect some categories of our business, In the Fragrance Division, sales were up 1.3% we believe that mainstay flavors and fragrances for from the previous year, due to factors including an foods and for household goods will remain strong as increase in sales of Aroma Ingredients by our US products that are involved in lifestyle necessities. subsidiary. In terms of profits, however, despite surpassing our forecast value at the start of the Q. Could you discuss the medium-term fiscal year, operating profit declined 54.4% from the management plan, which has reached its final previous year due to factors including a jump in raw year? materials prices, and both ordinary profit and net profit declined. We have promoted our TAKASAGO GLOBAL PLAN In fiscal 2019, an increase in earnings in the fast- long-term vision since 2009, and have worked growing Asia region made a significant contribution to become a world-class flavors and fragrances to our business, in which overseas sales account for company as we approach our 100th anniversary. over 50% of our total sales. While our business in Fiscal 2020 marks the final year of our One-T three- Japan struggled in terms of profits amid a difficult year medium-term management plan that brings environment for revenue, we made advancements this long-term vision to a close. in growth overseas as our business in the Americas The plan sets forth the five basic policies as its attained profitability and both the Europe and Asia basic strategies: Improvement of Customer regions contributed to profits. In fiscal 2020, as raw Satisfaction, Promotion of Business Growth
Satoshi Masumura President and Chief Executive Officer
5 TAKASAGO Sustainability Report 2019-2020 6 Message from President and CEO
fine chemicals business. The result of these actions has been an increase in net sales particularly in overseas markets. At the same time, with regard to initiatives for Improvement of Profitability, global tightness in raw materials and price hikes that we had not anticipated when formulating the plan occurred. Although we addressed these issues in the areas of procurement, production, and sales, we struggled with the initiatives. Under these circumstances, we anticipate difficulty in achieving governance, we formulated a human rights policy net sales of 170 billion yen and a ratio of operating and conducted Human Rights Due Diligence at profit to revenue of 5.2%, our targets for the final all of our sites in Japan and overseas. We were year of the plan. able to confirm the absence of any human rights violations. Through the process, we also identified From the perspective of Corporate, we are vulnerabilities in our corporate activities and made implementing a variety of measures aimed at One- improvements such as IT security. Takasago. One of these is the Global SAP Project, which we are advancing mainly overseas. Over the Q. One-T sets the promotion and strengthening of next several years, we will integrate the backbone sustainability as a goal. What are your thoughts on IT systems of our major sites overseas. Through this, from the perspective of ESG? this project, we intend to unify workflows in line with Takasago’s best practices. In strengthening The Takasago group is strengthening initiatives with E standing for EHS (Environment, Health, and Safety), S for social aspects, and G for governance, from the perspectives of fulfilling our responsibility Strategy, Technological Innovation, Improvement of out Business Growth Strategy by means including as a member of society and increasing our corporate Profitability, and Human Resources Development. expanding the vanilla business, enhancing natural value in non-financial areas. Placing the concept of “Corporate” at the center of aroma ingredients through CIT in the US, and With regard to dealing with environmental issues these five basic policies, we will work to organize the strengthening our expansion in Southeast Asia (climate change), in April of this year we disclosed standards and systems required of a global company, and South Asia by operating a new factory in information on governance, risks and opportunities, strengthen our governance, and enhance our global Indonesia. With regard to Technological Innovation, strategy, and metrics and targets as Takasago functions, and will undertake the creation of creative too, we have been working on the development guidelines, in line with TCFD recommendations. and innovative value. of new materials utilizing biotechnology, and the Giving more specific consideration to metrics and Over the past two years, we have steadily carried enhancement of continuous flow technology in the targets, we hope to move forward in parallel with
7 TAKASAGO Sustainability Report 2019-2020 8 Message from President and CEO
confirming to SBTi criteria. While Green Chemistry not only in the procurement of raw materials but processes and methods for product development Q. In closing, could you say a few words looking will play a central role in our strategy, we want to also in responsible procurement that shares its in the industrial world will change as well. However, ahead to the time after One-T? create new business opportunities through means values with stakeholders, including IT, logistics, and no matter how society may change, flavors and including the development of new materials that stationery. fragrances will uphold their roles in adding color In our next medium-term management plan leverage biotechnology, and synthesis that uses In governance, we will continue Human Rights Due and joy to people’s everyday lives and widely beginning in fiscal 2021, as COVID-19 and other the continuous flow process. We will also make Diligence as noted above, and will work to prevent supporting the affluence of society. Takasago will concerns create ongoing uncertainty, the creation of efforts to put green procurement into practice in human rights violations while resolving vulnerabilities continue adhering to its management philosophy a corporate structure that can sustainably generate raw material procurement. Takasago’s synthetic in our business processes. of “Contributing to Society through Technology” in profit even during deterioration in consumption menthol uses renewable raw materials, and has We will also continue to undertake sustainable order to realize the social value through our core trends, raw materials conditions, or elsewhere in the now been certified as a USDA Certified Biobased management through issues in ESG. business. At the same time, we will adapt flexibly to external environment will be a continuing theme. Product. Safe operation is also vital to sustainable changes in society and will maintain and hone our The square T, as known as “Triple T”, that forms management. Since the accident that occurred at Q. What thoughts do you have regarding the next high technological capabilities, as we strengthen our corporate logo incorporates our wish to gain our Hiratsuka Factory in 2013, we have worked on 100 years? our efforts to secure the profits that support those customers’ Trust through Technology and Teamwork. further building our safety management system. We capabilities. Etching this unwavering wish of the Takasago group are currently making preparations to acquire ISO The times in which Tadaka Kainosho founded the The Takasago group has approximately 3,500 in our minds and always adopting the viewpoint 45001 certification. We will work to unify systems company in 1920 were turbulent. Political and employees today. Of these, overseas employees of our customers, we will strengthen our sales throughout the Group, with steady everyday safety economic turmoil were ongoing after World War I, have come to account for nearly 60% of the total. In capabilities, research and development capabilities, activities as our base. and depression was imminent. A century later, the order to become a company in which diverse human strict quality control, and swift and flexible response, Looking at social aspects, it is important that we severity of those days have come again, with the resources of any nationality play active roles and as we strive to further improve supply chains within strengthen engagement with every stakeholder. With world hit by calamity in the form of the COVID-19 grow together as one, we need to share a new vision. the Group and improve customer satisfaction. our employees, we want to continue creating proper pandemic. Our plan is to formulate this vision and announce it work environments that consider life-work balance. How people work and spend their leisure time will as VISION 2040, presenting the ideal that we hold Inheriting a 100-year history of overcoming changes, With regard to the supply chain, we will make efforts undergo drastic changes over the next few years, and for ourselves 20 years ahead in 2040. we will leap forward into the next 100 years.
9 TAKASAGO Sustainability Report 2019-2020 10 Corporate Vision
Corporate Philosophy Basic Management Policy
Contributing to Society through Technology •A well regarded company that respects the global environment and local communities. •A leading flavors and fragrance company in the global market that consistently supplies dependable products.
Medium-term Management Plan “One-T”
It is essential to combine all management resources of the Takasago group and make group-wide efforts to produce creative and innovative value for the year, 2020. We set Basic Policies in the One-T the new medium-term management plan “One-T” (FY2018-2020), shortened form of One- 1. Customer Satisfaction Takasago which is also a slogan for united the Through improved sales capability, enhanced research and development, comprehensive quality control, Takasago group. Towards the realization of one of and swift and flexible business actions, we aim to improve customer satisfaction. our basic management policies “A leading flavors Customer 2. Business Growth Strategy and fragrances company in the global market Satisfaction While increasing our market presence and securing stable profits, we aim to strengthen our business that consistently supplies dependable products,” foundation and to achieve net sales target of 170 billion yen. we will grow continuously by carrying out our plans with the following five pillars. Human Technological 3. Technological Innovation Resources Innovation With the corporate philosophy of emphasis on technology in mind, we strive to develop new technologies Development and products with great originality and superiority, and to apply their achievements to our global business. Corporate 4. Improvement of Profitability Through optimizing value chain and re-engineering business processes globally, we aim to achieve an operating income ratio target of 5.2%.
Improvement Business 5. Human Resources Development of Growth Profitability Strategy We will optimize our human resources, develop staff members who will pursue ambitious initiatives in new areas, and create an environment where our staff members can fulfill their potential globally.
We put the concept of “Corporate” in the center of the basic policies above and as a global company, we will harmonize rules and guidelines as well as integrate systems to strengthen our corporate governance and accelerate the globalization. This will move us ahead to achieve One-Takasago.
11 TAKASAGO Sustainability Report 2019-2020 12 Sales Operating Corporate Profile Turnover Income 2017 141 2017 6.3
2018 150 2018 5.8 -100 years of Inspiration & Innovation- 2019 152 2019 2.6
Takasago International Corporation, headquartered in Tokyo, Japan, develops, manufactures and supplies flavors, fragrances, aroma ingredients and fine chemicals. Our products are in foods, cosmetics, household products and pharmaceutical intermediates for the life science industry, and functional materials for the electronics industry. Ordinary Net Income Income
2017 2017 Name TAKASAGO INTERNATIONAL CORPORATION 6.7 7.0 Headquarters 5-37-1, Kamata, Ota-ku, Tokyo, 144-8721, Japan Corporate 2018 6.7 2018 4.7 Founded February 9, 1920 Profile Capital 9.2 billion JPY 2019 2.8 2019 3.4 Employees worldwide 3,572
ROE* % ROA* % Financial Highlights (billion JPY) 2017 7.7 2017 3.7 EMEA* 2019 Sales Turnover by Region Japan 2018 4.9 2018 3.6 Sales 25 EMEA Sales 69 17% 2019 2019 * Europe, the Middle East, and 3.6 1.5 Africa Japan 45% *Return on Equity *Return on Assets Asia Pacific Asia Pacific 17% 152 Americas Sales 26 billion Sales 33 Equity Capital Americas Ratio % Investment 21% 2017 51.0 2017 6.3
2018 51.5 2018 4.5 4 Core Businesses 2019 Sales Turnover by Category 2019 51.1 2019 7.8 Fine Chemical 4% Others 1% Flavor Fragrance Aroma Depreciation R&D Expense to Ingredient Expense Sales Turnover % 8% Flavor 2017 5.7 2017 8.6 152 60% Aroma Fine Fragrance billion 2018 6.1 2018 8.1 Ingredient Chemical 27% 2019 6.4 2019 7.9
13 TAKASAGO Sustainability Report 2019-2020 14 Corporate Profile
Office Headquarters Sales Office Representative Office
Global Network Laboratory Flavors Fragrances R&D
We have now business operation in 28 counties and We will continue our efforts to understand our Factory Flavors Fragrances Aroma Ingredients Fine Chemicals Food Natural Resources regions around the world. In November 4th, 2019, customer’s perspective, strengthening sales & a new production factory in Indonesia started its marketing forces, enhance R&D capabilities, conduct operation. This production facility together with thorough quality control on all our product, and provide our facilities in Singapore and India allows us to flexible services with agility to ensure a corporate focus manufacture products at these three sites to supply on delivering customer satisfaction. for growing markets in the region. This is also enable us to shorten lead-time as well as secure flexibility in business plans.
Rockleigh / U.S.A.
Tokyo / Japan
Zülpich / Germany
Selangor / Malaysia
St.Ouen / France
Murcia / Spain Cikarang / Indonesia Singapore / Singapore Shanghai / China Mexico City / Mexico Vinhedo / Brazil
15 TAKASAGO Sustainability Report 2019-2020 16 Corporate Profile
Takasago has been developing innovative flavors, fragrances, Business Outline aroma ingredients and fine chemicals to enrich people’s daily lives.
Aroma Flavor Fragrance Fine Chemical Ingredient
Creativity, inspired by nature We design to taste… Endless Possibility Green Chemistry and powered by science
17 TAKASAGO Sustainability Report 2019-2020 18 Sustainability at Takasago Sustainability is a vital element for our growth
Sustainability Vision Message from Senior Vice President As a company that recognizes its corporate responsibility to the global environment and aspires to be a society’s most trusted partner, we position sustainability as one of Directors for further discussion and approval. of the key cornerstones of our business to ensure a Environmental Economic Tatsuya Yamagata Through this process, we reconfirmed our policy of prosperous society for future generations. Responsibilities Responsibilities Senior Vice President, tackling climate change issues. Regarding indicators Global Integration Headquarters, and targets, we will set them with SBTi criteria. In the and EHS Executive Furthermore, as a responsible corporate citizen, we fulfill latter half of the previous year, we started to look into our economic, environmental and social commitment in indicators and targets through an opportunity provided a well-balanced manner. Specifically, we make utmost by the Ministry of Environment. Having received the Social efforts to reduce our environmental impact through support, we were able to calculate CO2 emissions for Responsibilities diverse initiatives for reduced waste and improved energy all categories in Scope 3 and are now developing a efficiency, to conserve bio-derived materials, and to Accelerate Sustainability globally standardized formula. Additionally, in the area actively embrace diversity in our workforce through a of logistics that is difficult to unify globally, we have set sound diversity management. Takasago celebrated its 100th anniversary on February 9, a corporate policy and furthering discussion on targets
2020. In that brilliant year and the final year of One-T, the and action plans to reduce CO2 emissions. current running medium term business plan, we made History an official kick-off of Global SAP Project successfully In the previous year, we formulated the Takasago and marked the first step for New Takasago. This project Group’s Human Rights Policy, which is one of the Takasago has been actively developing environmental initiatives into the business activities since the environment will take several years to integrate the ERP system at most important frameworks for governance. Human statement was first published in 2002. Throughout midium-term business plans, Takasago has been expanding its key affiliates outside Japan. Through this project, we Rights Due Diligence survey was then conducted at all scope to social aspects, such as human rights and diversity and to all sustainability-related issues. aim to develop Takasago Best Practices and unify the affiliates in and outside Japan and at the headquarters, business flow globally. With the standardized business and we confirmed there was no occurrence of human flow and the Best Practices, we will be able to have more rights violations. The survey questionnaire was flexibility in human resources and provide challenging made based on the guideline published by the Japan One -T opportunities for our employees as well as conduct Federation of Bar Associations. Conducting Human business in the best way anywhere. This is exactly what Rights Due Diligence helps identify vulnerability in Strengthen One-T is aiming for. The project is considered as the first our business process and system for improvement. To Sustainability Sustainable GP-3 Position Society important step for our next 100 years. strengthen stakeholders’ engagement, we continue to Develop Global strive in developing better and firmer relationship with Communication GP-2 For the final year of One-T, we are focusing on the every stakeholder. Broaden following challenges. Firstly, we released “Takasago EHS100 Scope Plan in response to TCFD recommendations” on our To make steady and sustainable growth in a long GP-1 - EHS Strengthen - Social webpage on April 1, this year. Having prepared for the term, we will make every possible effort to promote • Takasago Environmental disclosure since the previous year, extensive discussions sustainability this year too. Responses Sustainability - Governance Team formed - Disclosure were conducted within the concerned departments • EHS100 revised to incorporate social aspects as well as in the Sustainability Promoting Committee. • EHS100 Plan launched The draft proposal was finally brought up to the Board • Gained ISO 14001 certification for our global business operations
19 TAKASAGO Sustainability Report 2019-2020 20 Sustainability at Takasago
Takasago Sustainability Team Process for Defining Materiality
Discuss “Importance to Takasago Sustainability Team was formed in 2016 to each function participate, takes place regularly at Assess importance to Discuss at Board of stakeholders” and “Influence on the stakeholders through Corporate Officers and ensure that all our activities are globally aligned with Headquarters to exchange information and concerns group’s business success” global then discuss / approve at the vision and strategy and action plans are executed and monitors the progress of our activities. at Sustainability Promoting sustainability indexes Board of Directors in a timely and appropriate manner. Respective teams are responsible for communicating in Committee The team consists of five key corporate functions: EHS, their functional areas across the globe and developing Human Resources, Quality Assurance, Operations, and their own action plans following the corporate strategy. *We use the term of ‘Materiality’ as defined by the GRI Sustainability Reporting Standards: R&D. A global meeting is held regularly to build mutual Materiality 2019-2020 “relevant topics that may reasonably be considered important for reflecting the organization’s economic, environmental and social impacts, or influencing the decisions of stakeholders.” General manager of Global Integration Headquarters is communication and discuss issues and concerns as Very high leading the team and communicates key sustainability well as monitor the progress. Through this global issues at the Board of Directors. Sustainability communication system, Takasago is strengthening Promoting Committee, in which representatives from sustainability across the globe. •Reduction of Environmental Impact Biodiversity •Climate Change • •Local Communities Sustainability •Employment •Occupational Health and Safety Promoting Committee Global Integration •Human Resources Development Headquarters Business Unit •Raw Material Other Dept. •Customer Health and Safety Importance to stakeholders
Human Quality EHS R&D Operations Resources Assurancce Headquarters •Human Rights •Responsible Supply Chain •Economic Performance •Fair Competition •Transparency •Innovation •Green Chemistry Affiliates
Global Communication
Materiality Assessment
Takasago conducts materiality assessment, taking success”. The team also discusses this aspect for each •Risk Management external opinions into consideration, and reviews its item and plots them on the materiality matrix. material items every year.
In our materiality matrix, Y-axis represents “importance It is then brought up to the corporate officers and high to stakeholders”. Its items are identified based on the Board of Directors for further discussion and global sustainability indexes and standards, such decision-making. high as Global Reporting Initiative (GRI), Dow Jones Through taking these actions, we tackle global issues Very high Influence on business success Sustainability Index (DJSI), and Sustainability and fulfill our corporate responsibility as a member EHS Society Governance Disclosure Economic Performance Accounting Standards Board (SASB). of the society. This also helps enhance the corporate • • • • • Identified items are discussed and fine-tuned by the value in the long term. High Sustainability Team, taking account standpoint of diverse stakeholders. The content and boundaries of this report are defined based on the following process. Low High X-axis represents “influence on group’s business
21 TAKASAGO Sustainability Report 2019-2020 22 Sustainability at Takasago
Initiatives Related to the SDGs
Our business operations closely related with the SDGs. We have plans and initiatives in place to contribute in achieving the SDGs.
Materiality Items SDGs Initiatives
Reduction of Environmental Impact 3 6 7 8 9 11 14 ● EHS100 Plan
● Takasago group’s strategy and plan that are in line with EHS Climate Change 6 7 11 13 15 TCFD recommendations
Occupational Health and Safety 3 6 8 10 11 ● Acquisition of ISO45001
Raw Material 12 17 ● Sustainable Procurement Programs (TAKASOURCE, TaSuKI)
Customer Health and Safety 3 12 15 ● Corporate QC Policy
Innovation 2 3 9 13 15 Sustainable ● R&D Strategy Society Green Chemistry 6 7 12 13 Society
Local Communities 8 15 ● Annual Local Community Activity Program
Human Resources Development 5 8 ● Training Program Guidelines
Responsible Supply Chain 12 17 ● Takasago Supplier Code of Conduct
Human Rights 5 8 10 16 17 ● Human Rights Due Diligence
Governance Economic Performance 8 ● Medium-term Management Plan “One-T”
Risk Management 8 ● Risk Management Committee
Disclosure Transparency 12 17 ● Annual Sustainability Report in accordance with the GRI Guidelines
23 TAKASAGO Sustainability Report 2019-2020 24 Our Activity Governance
The Takasago group continues to further strengthen and policy making functions from Corporate Officers’ its corporate governance by ensuring that decisions execution and implementation roles in the business are made according to the corporate guidelines and operations. the process is properly monitored by the Board of This is to ensure that both the Directors and Corporate Directors. Transparency in corporate activities is further Officers remain focused on their primary roles and Governance enhanced through appropriate information disclosure. decisions made and directions set by the Board of In addition to establishing a basic policy on internal Directors are dutifully executed in a timely manner. • Risk Management control, a corporate officer system was introduced to Improvements of the governance structure have been clearly separate the Board of Directors’ supervisory made continuously. • Crisis Management • Compliance General Meeting of Shareholders • Human Rights Appointment/Dismissal Report Appointment/Dismissal Report Appointment/Dismissal Report Audit & Supervisory Board Board of Directors Audit Audit & Supervisory Board Member Cooperation
Audit & Supervisory Board Of ce Appointment/Dismissal Report Report EHS - Corporate Governance Committee - Risk Management Committee Audit Accounting Environment - Crisis Management Board Auditor • - Compliance Committee • Occupational Health and Safety(OHS) Board of Corporate Of cers Report • Takasago Safety Day 2019 Indication Report Audit and Operating Division Internal Audit Inspection Department Cooperation Society Board of Directors
Stakeholder Engagements Report Risk Management Risk Management • Our People Committee The Takasago group does not only value the Our Supply Chain Operating Division • environment and society, but also the sustainability • Sourcing of its business. In order to fulfill our responsibility to Manager Manager Manager Manager Manager Manager Production General General General General General General • every stakeholder, we regularly monitor and identify • Logistics risks that could potentially affect our business stability Research & Development while striving to maximize stakeholder value. Our • Risk Management Committee, consisting of general We will continually develop and implement measures • Quality Assurance managers, identifies potential risks that may hinder to mitigate each of the risks listed below in the best Shareholders and Investors business continuity as well as formulates and reviews possible way. • preventive measures against those risks. The identified • Society risks are reported at the Board of Directors Meeting for • Community further review. • Spreading Culture of Fragrance
25 TAKASAGO Sustainability Report 2019-2020 26 Identified Risks incompliance with any laws or regulations in social as Accidents/Disaster performance, hindering the group’s business activities well as economic areas. Climate Change Natural disasters or accidents that occur in areas and forcing additional investments to cope with the The Takasago group’s financial performance could where our production sites are situated could damage situation. be significantly impacted by climate change, such as production facilities and disrupt procurement, unexpected climate variability or extreme weather distribution, and sales. Consequently, these difficult Human Resources events due to global warming caused by greenhouse situations could negatively affect Takasago’s business The Takasago group is expanding its business all over gas emissions, or unseasonable weather that occurs performance and financial condition. the world. There could be a risk that the group fails irregularly. For example, as the group sources and to sufficiently secure and develop human resources, uses a variety of natural raw materials, shortage New Products Research and Development which could affect its business performance and and price hike of natural raw materials, caused by The Takasago group continues to make efforts to financial condition. climate change, could restrict the operations. Also, research and development of new products well ahead unseasonable weather in summer could affect the sales of potential needs of the market. However, delay of of our flavor products in the beverage market, which is developments or unforeseen changes in consumer’s one of our main categories. preference could negatively affect the results of Human Rights investments in research and development. Crisis Management Exchange Rate The Takasago group fully recognizes respect for human The Takasago group develops, manufactures, and Information Security Takasago has established its crisis management rights as its corporate responsibility. The Charter of supplies products in a global scale, taking advantage of The Takasago group handles confidential information system, including business continuity plan (BCP), Corporate Behavior and Code of Conduct revised in having 11 overseas consolidated subsidiaries. Due to related to research and development, production, which enables the group to take necessary precautions 2018 include respect for human rights, which is to be fluctuation of the exchange rate, the nonconsolidated marketing and sales as well as personal information of against possible disasters and emergency situations. incorporated into our corporate culture. financial statements, when exchanged into Japanese numerous customers. The Takasago group’s business All the procedures are to help effectively minimize To take actions on this commitment, “Takasago Group yen, could potentially affect the financial condition performance and financial condition could be affected the impact of a contingency, and immediately restore Human Rights Policy” was developed based on the of the consolidated financial statements. In foreign by leak of confidential or personal information held by normal operation. The Crisis Management Board is Universal Declaration of Human Rights, International currency transactions, significant fluctuations of the the group caused by attacks on its server, illegal access, set up at the Corporate Headquarters in Tokyo. In the Labor Organization Declaration on Fundamental exchange rate could impact the group’s business computer virus invasion, or other factors that are out of event of a crisis, no matter where it arises, the Crisis Principles and Rights at Work, Ten Principles of the results and financial condition. our control. Management Board organizes a meeting to manage United Nations Global Compact, and other concepts. the situation and give directions. Globalization Economic Conditions Embodying the policy, we established a system for The Takasago group conducts business globally. Future recession or economic downturn in main human rights due diligence, which is to identify, Confusion of politics, economy, society, and many markets, both in and outside Japan, could affect our prevent, and mitigate relevant risks. With consideration other aspects caused by emergent situations such as sales performance. It could also lead to a change in to diverse stakeholders, we developed a questionnaire terrorism, war, pandemic, and so on, could significantly consumer demand that holds off on buying household Compliance to assess risks based on the Human Rights Due affect the business performance and financial products, foods, and other products under the Diligence Implementation Guideline issued by Japan condition. stagnating economic situation. Decline in consumer The Takasago group considers compliance to be one Federation of Bar Associations. We conducted the first demand in main markets could impact Takasago of its top priority management issues and strives assessment through the end of 2019 to the beginning Procurement/Sales group’s business performance and financial condition.. to continuously improve its compliance system of 2020and did not identify any significant risk related The Takasago group sources raw materials and while ensuring fair and proper business activities to Human Rights in our business operations. supplies its products around the world. Natural Compliance and effective corporate governance. The group has disasters, changes in consumer preference, changes in To conduct our business globally, the group complies a compliance hotline that enables all employees to We will conduct human rights due diligence international and local regulations, and other significant with laws, regulations, and relevant standards on report violations of compliance and consult their assessment on an annual basis and continue with our changes are factors that influence procurement and product quality and safety, environment, and chemical concerns on compliance related issues. All employees utmost efforts to prevent and mitigate relevant risks in sales activities, and thereby significantly affect our substances as well as on accounting, tax, labor, and of any type of contract within the group are informed our business activities. business performance and financial condition. transactions in each country and region. When new of the compliance hotline through KUMPU, our internal laws, regulations, or relevant standards are put into publication. effect, they could significantly impact our business During the reporting period, we did not have any issues brought up through the system. Nor was there any
27 TAKASAGO Sustainability Report 2019-2020 28 EHS the use of renewable energy. Environment We will continue making utmost effort on reduction Global EHS Management environmental conservation (reduction of water use), of greenhouse gas emissions through strengthening The Takasago group fully recognizes the importance waste management, promotion of renewable energy As part of our basic management policy, we aim to overall energy management, upgrading equipment, of environmental conservation and the occupational and management of chemical substances. EHS data be “A well regarded company that respects the global improving production processes and introducing health and safety of its employees and other associated with these objectives are entered into environment and local communities” and endeavor to more environmentally friendly technologies such as stakeholders. T-ReCS®, an EHS management system, by each site reduce the environmental impact of our activities. continuous flow manufacturing processes to achieve EHS Headquarters is responsible for making the on a regular basis and collected by the EHS office for the objectives set in EHS 100 Plan. strategy and plans on all global EHS activity. The monitoring and further improvement. To enhance Environmental Management System Global EHS Committee, which is chaired by the EHS global EHS management, we acquired ISO14001 As of December 2019, 20 production sites, Corporate For Scope 3, our logistics team has been working on Executive, Tatsuya Yamagata, takes place every quarter multisite certification in 2011 and have maintained Research & Development Division (Hiratsuka, Japan) reviewing distribution points and shorten mileage of to discuss the global activities on the environment and it since then. In addition, we will globally acquire and EHS Department at the Headquarters have transportation with the aim of reducing the indirect
occupational health and safety. ISO45001 in the next two years and will integrate both acquired the ISO14001 certification under a single CO2 emissions. ISO standards. corporate certificate to enforce effective governance Global EHS Committee Energy Consumption within the Organization on environmental issues. 2018(Restated) 2019 Changes in % EHS Executive Our EHS Statement EHS Statement Direct Energy (GJ) We have established the E Energy and Emissions Town Gas 218,645.10 204,547.66 -6.4% EHS Statement as one Environment We manufacture flavors and fragrances from a variety EHS H S LP Gas 3,632.82 3,779.43 4.0% Department of the basis of Takasago Health Safety of natural raw materials, which are sourced from all LNG 285,579.91 264,773.41 -7.3%
Acting as a global enterprise based on the philosophy of contributing to group’s management society through technology, the Takasago Group is renewing its commitment over the world. The price, quality and supply volume of Natural gas 19,800.72 27,763.62 40.2% to meet the needs of society by ensuring compliance with laws, regulations and voluntary compliance obligations, protecting people’s health, RCEO and revised it in April, and safety and preserving the global environment. our raw materials have been affected by unfavorable Residual Fuel Oil 41,792.83 43,315.75 3.6% 1. We hold EHS as a value in all of our business operations. Reginal EHS Director 2. We work to maintain and enhance EHS activities in coordination with our employees and internal and external stakeholders. Gas/Diesel Oil 7,071.47 7,451.89 5.4% 2020 to correspond 3. We provide the required education and training to ensure that our EHS activities are carried out on global weather, especially in recent years. In addition, a systematic and sustained basis. 4. We evaluate the EHS impact of our business activities and constantly enhance our EHS activities on the reduction of the impact on the environment, the safety of our employees and workplaces, and Kerosene 2.57 170.76 6,544.4% to requirements of the maintenance and promotion of the health of our employees. some of our production bases have been directly April 10, 2017
Satoshi Masumura Gasoline 10,100.39 10,557.16 4.5% Site EHS Manager President and Chief Executive Officer ISO45001. Takasago International Corporation affected by natural disasters such as heavy rains Waste Oil 28,973.87 40,490.79 39.7% that placed the supply of raw materials used for our Total Direct Energy 615,599.68 602,850.47 -2.1% products at risk. These extreme weather events are Indirect Energy (GJ) Acting as a global enterprise based on the presumably caused by climate change. Electricity purchased 790,939.37 729,309.47 -7.8% philosophy of Contributing to Society through As such, taking appropriate actions on climate change Steam purchased 28,885.32 28,631.59 -0.9% Technology, the Takasago Group ensures are extremely important issues for us, not only for Total Indirect Energy 819,824.69 757,941.06 -7.5% compliance with laws and internal guidelines and protecting the global environment, but also for assuring Renewable Energy (GJ) standards, responds to society’s demands for Biomass incinerated 32,860.39 38,305.67 16.6% preserving the global environment and protecting the supply of raw materials for our products, which is people’s health and safety, and aims to be a directly associated with sustainability of our business. Electricity purchased 112,695.17 225,335.94 100.0% company that contributes to the realization of Total Renewable Energy 145,555.56 263,641.61 81.1% sustainable society. Total Energy 1,580,979.93 1,624,433.14 2.7% On top of the objectives set in EHS 100 such as
reduction of energy consumption and CO2 emissions 1. We hold EHS as a value in all of our business Energy Intensity operations. as well as increasing the use of renewable energy, the 2018(Restated) 2019 2. We work to maintain and enhance EHS activities Global EHS Committee formulated a plan to introduce Energy intensity in coordination with our employees and internal 24.16 23.91 Global EHS Committee Meeting was held in 30th July, 2020 Science Based Targets Initiatives during One-T. We (GJ per tonne production) and external stakeholders. 3. We endeavor to protect the environment and have already expressed our commitment in July 2019 Greenhouse gas (GHG) Emissions (scope 1 + 2) EHS Department functions as communicating create a work environment where employees can to manifest our promise to tackle climate change 2018(Restated) 2019 Changes in % across affiliates and HQ. It develops guidelines to work in a safe and healthy manner through the issues. assessment and mitigation of EHS risks from our GHG emissions (tonnes) make global alignment under Takasago’s own policy. business activities. Scope 1 30,613.58 32,536.37 6.3% The EHS Department plays key roles in supervising 4. We set specific goals for EHS activities and Our total energy consumption in 2019 increased by Scope 2 23,622.97 22,108.29 -6.4%
progress on a long-term action plan called “EHS 100 continually improve our management system to 2.4% from the previous year due to steady growth of Total (Scope 1 + 2) 65,884.77 65,727.95 -0.2% achieve them. Plan” (2009–2020). This plan includes objectives our business but CO2 emissions in 2019 decreased
such as climate change (reduction of CO2 emission), 0.2% compared to 2018 through our efforts to increase
29 TAKASAGO Sustainability Report 2019-2020 30 GHG Emissions Intensity (scope 1 + 2) are both measured and monitored, with a disclosed Waste by Type and Disposal Method 2018(Restated) 2019 Changes in % combined reduction target. The data are reported on Hazardous waste (tonnes) 2018 (Restated) 2019 Environmental Compliance GHG emissions (tonne)per tonne production monthly basis by each site. The total water withdrawal Recycling 1,157.08 1,271.93 The Takasago group considers compliance as one of its Scope 1 0.47 0.51 10.0% increased by 3.2% from the previous year due to the Incineration 177.92 180.04 top priority management issues. In 2019, discharged Scope 2 0.36 0.35 -3.2% Landfill 61.94 76.90 construction work conducted at several sites. We will water quality slightly exceeded the local effluent Total (Scope 1 + 2) 1.01 1.04 3.2% Total hazardous waste 1,396.94 1,529.24 continue making efforts to reduce water consumption. standards at one production site. We have been It is important to understand the specific conditions Non-hazardous waste (tonnes) 2018 (Restated) 2019 working hard to improve quality of discharged water Other Indirect Greenhouse gas (GHG) Emissions (scope 3) and requirements of water use at each site and proper Recycling 11,022.77 13,937.35 and comply with the standards. Ratio to GHG CO emission 2 total Ratio to the Incineration 4,063.47 3,875.22 (MT) use of water. Through a periodical survey on regulatory gross volumes Landfill 495.28 825.13 cat 1 Purchased goods and services 717,975.76 85.89% trends and risk analysis, we strive to identify water risks Total non-hazardous waste 15,416.90 18,635.70 cat 2 Capital goods 22,378.20 2.68% at each site and its associated management. Fuel- and-energy-related cat 3 12,105.75 1.45% activities Total Water Withdrawal by Source Upstream transportation cat 4 14,855.28 1.78% and distribution water withdrawal (ML) 2018 (Restated) 2019 In fact, reduction of CO2 emissions has been a key cat 5 Waste generated in operations 6,713.54 0.80% Third Party Climate Change issue that Takasago has been tackling for many years cat 6 Business travel 464.36 0.06% Municipal Water 624,115.08 619,494.64
cat 7 Employee commuting 6,016.43 0.72% Industrial Water 457,224.00 455,469.00 We fully recognize climate change as an urgent under our EHS100 Plan which started in 2009. The
cat 8 Upstream leased assets NA Surface Water 85.00 46.00 global issue. In October 2018, Takasago joined the EHS100 Plan includes the reduction target by 2020, Downstream transportation cat 9 NA Ground Water 2,065,243.14 2,172,153.40 Japan Climate Initiatives to support its initiatives. which is to achieve 35% reduction per tonnage and distribution cat 10 Processing of sold products NA Total Water Withdrawal 3,146,667.22 3,247,163.04 The Board of Directors actively discussed TCFD compared to the result in 2009. In addition to day to
cat 11 Use of sold products NA recommendations over past few years and approved day efforts, we will continue to investigate additional End-of-life treatment of Water Discharge by Destination cat 12 746.11 0.09% Takasago Group’s strategy and plan that are in line ways to increase renewable energy use as well as sold products water discharge (ML) 2018 (Restated) 2019 cat 13 Downstream leased assets 65.15 0.01% with the recommendations in this March, which is develop manufacturing processes to introduce more Surface Water 2,666,400.84 2,728,149.48 cat 14 Franchies NA published on the webpage. In addition, to revise our green chemistry and improve its production efficiency. cat 15 Investments NA Ground Water 863.00 179.00 approach in reducing CO2 emissions in a more efficient Furthermore, acquisition of SBTi will enable us to Scope 3 781,320.57 93.46% Third Party 346,328.45 367,451.08 and scientific way, we decided to study more about conduct deeper observations and better insights to Scope 1 32,536.37 3.89% Total Water Discharge 3,013,592.29 3,095,779.56 the Science Based Targets initiative (SBTi) and then set challenge climate change. Scope 2 22,108.29 2.64% the GHG emissions targets according to its criteria . In GHG total amount 835,965.23 Water Consumpution (*1: TCFD (Taskforce on Climate-related Financial Disclosure) was established the process, we will develop concrete plans to reduce by Financial Stability Board and published the recommendations for voluntary We restated the amount of GHG emissions since we had received a 3rd verification. 2018 2019 climate-related financial disclosures that are consistent, comparable, reliable, direct and indirect CO2 emissions in every aspect of our clear, and efficient to help market understand their risks and opportunities. Total Water Consumption (ML ) 132,933 151,383 The recommendations consist of four pillars: Governance, Strategy, Risk supply chain system. Management, Metrics and Targets.) Water and Effluents We require water in our manufacturing process such as Waste Management TCFD Recommendations for clearing and cooling. In 2019, 2.7% of the waste generated is finally Sufficient amount and quality of water is very landfilled, but there are countries and areas where Governance Strategy Risk Management Metrics and Targets important in our operations, as water scarcity and the manifest system is not in place, and processing change or deterioration of water quality directly affect information on waste at outsourced companies is not our production output and quality. available or is unclear for some cases. In the future, Conducted scenario analyses by Takasago Sustainability Team
sustainable EHS culture Full disclosure is available on our website : https://www.takasago.com/en/sustainability/tcfd.html 31 TAKASAGO Sustainability Report 2019-2020 32 crucial part in reducing risk of all incidents. OHS Communication & Inspection Work-Related Injury Since the fire accident in 2013, under the commitment Fatality as a result of work-related injury wasn’t Occupational Health Employee Training on Occupational Health of “Safety First”, Takasago conducts regularly a site occurred in 2019. Number of recordable work-related and Safety audit at all our production sites in Japan to ensure injuries were 11 in Japan, 27 in EMEA, 1 in Asia-Pacific, & Safety (OHS) Prior to official release of the OHS RA rules, OHS that safety measures are taken in an appropriate and 6 in Americas for all employees. RA workshop was conducted in December 2018 to manner and monitor continuous improvement for The main type of work-related injury was “Caught in/ Development of OHS Management System familiarize the EHS managers both in Japan and abroad preventive measures suggested through the audits. between” machines or objects. Takasago is currently striving to acquire ISO45001 to the rules, hazard identification and risk evaluation. In In addition, we organized a Safety Committee that (OHSMS; Occupational health and safety management Japan, a briefing session and workshop on OHS RA was meets on a monthly basis to discuss incidents which system) certification as described in the EHS 100 Plan. held for all production sites in 2019 to provide detail have occurred at production sites with participants, We have formulated numerous rules and systems procedure to implement OHS RA. including site representatives, members of the since December 2013. We will streamline these In addition, each site plans and provides site specific Production Division and the EHS Department. Through rules and systems through Takasago group’s OHSMS OHS training to its employees depending on the discussions, we develop Takasago Best Practices which implementation. We will establish a safety culture identified site specific OHS risks. are implemented and deployed globally. Takasago and more practical management system to eliminate Best Practices are still under development but through incidents. integration with ISO 45001, we aim to achieve highest We plan to create EHS management system that quality globally-standardized safety systems. integrates both EMS and OHSMS with the goal of Since March 2019, we have started conducting site achieving a multi-site certificate similar to the current audits for overseas production sites to introduce details EMS certificate. of the requirements and check their progress. In order We have kicked off in December 2019, beginning with to standardize inspection, a reporting format including the acquisition of the certificate in production sites a checklist and a document request list was developed. in Japan by end of 2020 and expanding the scope to Based on this procedure, we visited sites in the US, other countries by the end of 2021. India and Singapore to discuss EHS issues and share best practices globally. Incident Reporting Rule We have a global reporting rule for EHS related incidents, enabling us to share the overview, root cause and countermeasures for the incidents with our affiliates around the world through the report. The EHS headquarters reviews the reports sent from each site and provide feedback if necessary. The EHS headquarters also shares these reports through the Global EHS Committee, Safety Committee or e-mail. Other sites use the information to prevent similar incidents from occurring on their sites. Site Audit in the U.S.
Hazard Identification, Risk Assessment, and Incident Investigation In January 2019, we released our newly developed Occupational Health and Safety Risk Assessment (hereinafter called OHS RA) Rules. This rule is applied globally to all production sites unless there are more stringent relevant local legal requirements. By introducing this rule, we are evaluating occupational health and safety risks for the employees from workplace hazards. We believe that OHS RA will play a
33 TAKASAGO Sustainability Report 2019-2020 34 Takasago Safety Day 2019
Iwata Factory Kashima Factory R&D Mihara Factory Takasago We designate April 10 as Takasago Safety Day. This day is to reflect on the fire accident in 2013, with a pledge to (Shizuoka, Japan) (Ibaraki, Japan) (Kanagawa, Japan) (Hiroshima, Japan) Food Products never let such accidents happen again. Conducted tele- Conducted operation skill test Conducted joint drill with Conducted safety lecture by (Shizuoka, Japan) communication tests and took on forklift, fire drill, and safety local fire department, tele- a specialist, safety meeting to On April 10, 2019, Takasago Safety Day was held with various safety trainings at all the group companies in and Conducted safety lecture safety education about human education. communication test, and review safety and measures to by the facility manager, outside Japan to develop safety awareness and improve knowledge about safety. We all reaffirmed the commitment error. confirmed evacuation route. be taken. safety education, and tele- towards safety. communication test.
Standard Program Site Specific Programs
DVD Viewing After conducting the Standard Program, each site conducted the following activities respectively; ● Message from the CEO ● Safety Education (Theme of 2019 is “Human Error”) Headquarters Hiratsuka Factory Takasago Spice Takasago Chemical Takasago Coffee Nankaikako Our President and CEO delivered a speech (Tokyo, Japan) (Kanagawa, Japan) Hadano Factory Kakegawa Factory Iwata Factory (Wakayama, Japan) Conducted lecture on human Conducted on-the-table Conducted life-saving at the Headquarters in Tokyo. The video (Kanagawa, Japan) (Shizuoka, Japan) (Shizuoka, Japan) error by a fire officer of a local drill and carried out practical training, including Conducted safety education Conducted safety education Conducted tele- fire department. scenario training. cardiopulmonary message was sent to group companies and safety patrol in the on the facility and forklift, communication test and resuscitation and workplace. life-saving training, and safety safety education. outside Japan. AED operation, with a patrol in the workplace. local fire department. Confirmed evacuation methods from the refrigerator and freezer.
New Jersey, USA New Jersey, USA New York, USA Guangzhou, China Shanghai, China Singapore France Office (Flavor Factory) (Fragrance Factory) Conducted fire drill, safety Conducted fire drill, safety Conducted spill control Conducted safety education education, and safety lecture education, and safety lecture training. about flammable mist and Conducted hands on fire Conducted fire extinguisher Conducted fire extinguisher by an external specialist. by an external specialist. chemical risks. extinguisher training. simulation. simulation. Satoshi Masumura, President and CEO, said in his briefing; “Having reviewed the accidents that frequently occurred at other manufacturers overseas in recent years, we must once again recognize how important it is to maintain safe and secure business operations. In approaching human error, our theme for this year, all of us must consider the measures we should take Mexico India Brazil Madagascar Germany Spain Conducted fire drill and Conducted emergency Conducted emergency Conducted occupational Conducted fire drill, lecture Conducted fire drill. to prevent accidents based on what we are emergency training. training. training, lecture about safety education. about removal of hazardous familiar with in our own working environments.” leadership in crisis, and and harmful substances shared ideas for fostering to human skin and eyes. safety culture. Conducted driving simulation.
35 TAKASAGO Sustainability Report 2019-2020 36 Our Activity
Employment Status Career Development Society Takasago has its workforce in 27 countries and regions Takasago is highly committed to career development around the world with a variety of contracts and and career path of its employees. We understand types of work. In 2019, 42.1% of employees joins the what knowledge, skills, personal characteristics, and collective bargaining agreement. experience are required for an employee to progress Stakeholder Shareholders Our People in their career. We identify talents, support employee Employees Society Employees including temporary staff Engagements development beyond borders, share best practices Region Employees Male Female %Male %Female Takasago respects individuals and and knowledge, broaden perspective and network, Japan 1,790 1,419 371 79% 21% emphasizes importance on Human Customers Suppliers and expand global capabilities. Takasago offers a Asia Pacific 846 449 397 53% 53% Shareholders Resources Development. Europe 775 416 359 54% 54% variety of tools, trainings, and opportunities to develop Americas 650 346 304 53% 47% laterally, through promotion, or by departmental and
-Reform of Work Practices and Enhancement of Workplace Total 4,061 2,630 1,431 60% 44% overseas transfer. Employees actively participate in Environments- Realize work practices that improve the capability of employees and their development plans and discuss career aspirations. that respect their diversity, character, and background. Also, provide Permanent employees by age group safe and healthy working environments. Working collaboratively with managers, employees Employees Society <30 30-50 >50 Region Total build and identify training needs and resources in Establish a human resources development program in which Male Female Male Female Male Female individuals can fully exercise their capabilities. order to enhance performance expectations, aligned Japan 244 58 813 221 329 79 1,744 Promote equal employment opportunities within the workplace and with company objectives. To enable employees to fully prohibit any discrimination due to nationality, religion, sex, age, race, Asia Pacific 84 71 289 264 54 33 795 creed and/or other related social status as it relates to employment understand the operations of the group, performance decisions. Europe 52 58 242 176 105 59 692 Americas 27 65 168 144 121 81 606 metrics are established, development plans are Promote reform of work practices including breaks and leaves, ensuring work-life balance. Total 407 252 1,512 805 609 252 3,837 created, and opportunities to embark on new projects Customers Suppliers Respect each employee’s individuality and support his or her effort are provided in collaboration with the management. to develop skills and a career. Training and Education Develop and maintain an appropriate working environment to realize the employees' safety and health maintenance and enhancement Takasago engages in ongoing training activities to Promoting Diversity Takasago regards shareholders, society, suppliers, promote continuous learning, and has been showing Takasago continually strives to create a work *Extracted from Takasago Group Charter of Corporate Behavior and Code of Conduct customers and employees as our key stakeholders. positive results. These include providing comprehensive environment that welcomes and respects diversity It is very important to strengthen the engagement with education on anti-harassment and diversity to ensure and empowers individuals to realize their full potential. each stakeholder and make clear action plans based on Human Resources Development Statement employees and managers understand the importance As part of this, we support efforts to increase female the corporate policy. Takasago recognizes that our employees are a critical of cultural differences and inclusion, support for human managers and foreign national employees while component for success. The organization supports rights, and respect for different beliefs and practices. promoting the benefits of diversity and inclusion. an environment that empowers and challenges Safety procedures are prioritized to increase awareness Takasago values the contributions of all employees employees to reach their full potential. We focus on of dangerous activities and hazardous materials and believe that the broad perspective provided by a combining employee aspirations for career growth, with the goal of eliminating injuries and illnesses of diverse workforce adds value to all our products and with opportunities to enhance skills, by offering on- all personnel. Anti-corruption, anti-trust, and other operations on a global scale. the-job and external training opportunities. Trust related trainings are also provided across all regions from customers is earned from providing pioneering to educate and reinforce commitment to regulatory Communication technology and exceptional service resulting from excellence and fair competition. The culture of Takasago Japan has been seeking to develop its own solid teamwork of the Takasago group’s employees. To Takasago supports employee growth and development way of team building among the affiliated companies maintain this trust, we continually invest in educational, from on-boarding, ongoing training, and on-the-job in Japan. A sport event called “Takasago-Cup” is one development and enrichment opportunities, resulting experiences. Building on employee expertise allows of its efforts in Japan. The event is held every year, in in confident employees that embrace challenges, learn Takasago to continuously enhance the products and which employees of group companies also participate. from failures as an avenue for growth and successful services provided for the consumer. The matches of various sports such as volley ball, innovative improvements. Lastly, the organization basketball, tennis, and baseball are organized and Educational Programs inspires teamwork by engaging a diversified group of participants enjoy playing matches with other sites. professional competencies, fully equipped to meet We aim to build solid team at each business site and New Employees Compliance a range of challenges. Roles and responsibilities across the companies and develop an appropriate work are aligned across affiliates, ensuring skills sets and environment through these opportunities. Site Specific requirements are comprehensive, utilizing local talents Our people are in a global manner. Professional EHS Development 37 TAKASAGO Sustainability Report 2019-2020 38 Takasago Educational Program consists of above 5 pillars great asset Our Activity
Fighting with COVID-19 feedback, understand their issues, address their needs their masks on. and encourage all to stay positive.
*Global HR team “met” online and discussed how to motivate employees during the COVID-19 crisis in 12th May, 2020. We thank all our employees, especially those who Appreciation of our employees who Takasago Singapore office has a group of employees had worked full-time on-site (during our lockdown supported us during the COVID-19 who commuted daily across the Singapore-Malaysia period) and to our Malaysian colleagues who left home pandemic border to work in Singapore. This group of employees to continue working with us here in Singapore. Our was suddenly caught in a dilemma when on 16th sincere thanks to all for their relentless dedication, Thank you for all our colleagues March the Malaysia government announced the Singapore governance implemented remaining safe and keeping strong in these In February 2020, the World Health Organisation decision to implement lockdown in a day’s time. It lockdown unprecedented times. #TakasagoStrong (WHO) declared China’s coronavirus outbreak a global was to prevent the rising spread of the COVID-19 in Takasago International Singapore (TIS) was thrown into Elaine Tay public health emergency when a Coronavirus emerged Malaysia, but it meant our employees would not be another challenge when the Singapore government Takasago International (Singapore) Pte. Ltd. in Hubei, China. Soon, the Singapore government able to cross the borders for 2 weeks and the only implemented lockdown on 7th April 2020. We are Human Resources Director had decided to shut its borders to any visitors from or way to continue working in Singapore was to stay here deemed essential services and TIS was able to continue transit via mainland China. during the lockdown period. They were given only one operations but on a reduced workforce on-site and the day to decide. There should have been many things rest to work partially or 100% from home. Our Chinese national colleagues who had gone home running through our employees’ minds on that fateful Working from home posed challenges as well. For Takasago Strong to Mainland China for vacation were immediately put day and eventually, each had to decide if to stay back in many who had never worked from home, they had to on a 14-day paid leave on self-home quarantine upon Malaysia or relocate to Singapore during the lockdown adapt overnight, there were no trial periods. We know their return to Singapore. The event quickly brought period. some ended up working too much without scheduled The programs and policies implemented at Takasago memories of the 2013 SARS outbreak. As more It was a difficult decision, with little time and not work hours. It was difficult to prioritise work in a home International Corporation serve to prevent health- infection cases were reported in the nearby countries, mentally and physically prepared for such a lengthy environment. Some missed the human interaction related issues, work injuries and promote safe fearing the spread of infection, several cities in the Asia step. For those who decided to remain in Malaysia, we and felt isolated. There were occasional technology operations at our sites worldwide. We are equally started to close its borders with cities and countries. empathized that it was a difficult decision, due to many hiccups, bad health habits, interruptions of family, pets, committed to serving the needs of our customers and family reasons. Those who decided to relocate to doorbells and particularly young children, having school supplying products and services to meet their needs Singapore, were immediately put in a hotel since they students moved to home-based learning as schools and maintaining efficient business operations. had no accommodation in Singapore. The lockdown were close. During internal meetings (audio or/and The COVID-19 pandemic added an immense had since extended several times, and these dedicated video), managers and staff were accommodating and challenge, as we worked to mitigate the spread of the employees have not physically seen their loved ones patience, when a team member was interrupted by a virus at our sites and within the communities we serve, for more than 4 months as both countries continue baby crying, a child tabbing on the keyboard, a child while we continue to service our customers. to have travel restrictions. The least that the Human calling for attention, etc. Resource personnel could do was to put in some Occasional Bento meals were provided to those of Takasago was deemed an “essential” business due to snack packs at the hotel to cheer them up while they our teams who continued to work 100% on-site, it the types of products we manufacture, accordingly, are missing their loved ones. The HR personnel held was merely to cheer them on while the rest work from operations were maintained throughout many of our several Skype dialogue sessions with both groups of home. Photographs of them at work were taken and facilities globally. We migrated to work from home employees (those in Singapore and Malaysia) to gather you could still see the smiles in their eyes, even with arrangements, where possible, and maintained on
39 TAKASAGO Sustainability Report 2019-2020 40 Our Activity
We practice the following in our procurement activities:
site activities in those processes that could not be #TAKASAGOSTRONG outreach. Employees working • Pursuing the three elements of quality, cost, and Our Supply Chain stable supply performed remotely. At Takasago, we implemented diligently, at home, in the office, in our labs and at a • Persisting in the observance of all relevant laws, numerous safeguards and precautions throughout manufacturing facility, were pictured and highlighted Shareholders respect for human rights, being fair, dealing facilities to mitigate the spread of the disease and doing their part to Sourcing impartially and considering preserving the Employees Society environment protect those employees unable to telework. We meet the needs • Valuing a regional culture and building a partnership practiced social distancing, reduced density among of our customers Our Supply Chain and between the Takasago Group and the supplier Customers Suppliers employees, communicated recommended hygienic in a safe manner, Procurement Model at a Glance practices and increased the sanitation protocols within while we weathered Takasago values sustainability in Corporate Procurement Guidelines all areas, just to name some measures. the COVID-19 its business activities. It is, therefore, essential to Corporate Procurement Guidelines embody Corporate Pandemic. source raw materials used by its all business units in a Procurement Policy. Takasago, like other organizations, learned to operate responsible way, in full alignment with the group values The Guidelines include fundamental subjects such as under “new conditions” because of the COVID-19 During this unprecedented time, we remain committed and needs of both clients and civil society’s aspirations. compliance, fair trade, anti-corruption, human rights Pandemic. The “work/life” balance became more to our core values: Trust, Technology & Teamwork. We Takasago uses approximately 13,000 different raw and environmental protection, to be align with the blended as home spaces also became work areas, will strive to fight against the pandemic, protect our materials sourced from more than 1,000 suppliers all concept of responsible sourcing. employees shifted to telework arrangements, and employees, partner with our customers to support our over the world. About 4,000 of those raw materials In the Takasago group, all staff in charge of children were obliged to attend school virtually. Most communities. Our work and actions will demonstrate are natural ingredients derived from natural sources procurement activities, including day-to-day challenging was the emotional toll the illness had on our commitment to our dedicated employees, the such as fruits, vegetables, plant roots, leaves and purchasing at each local site, follows the Guidelines. the health of employees and their families, as well as health and safety of our team and their families, and flowers. On the other hand, approximately 9,000 of the To ensure its implementation, Global Procurement the need to isolate to minimize the spread of the virus. the communities in which we operate, as well as our raw materials are synthetics, made by sophisticated Training includes sessions on Corporate Procurement Understanding the hardship, it placed on the team, customers. chemical technologies. Their main starting materials Guidelines as well as other basic corporate policies. mentally, physically, and emotionally, we shared Lisette Masur can be of natural origin like wood or synthetic origin solidarity and conducted various teambuilding Takasago International Corp. (U.S.A.) such as natural gas or naphtha. They can provide a Takasago Supplier Code of Conduct and morale boosting activities, while supporting Vice President, Human Resources unique sensory profile which does not exist in nature as As we emphasize global environment, we respect sustainability efforts. well as replace natural ingredients to decrease usage of business partners who value environmental and social protected ingredients such as musk and ambergris. responsibility to maintain a high level of trust from In the US, T-Shirts were designed that stated “We To timely supply of high-quality raw materials with society. To ensure business partners understand our Stay Here for You, Please Stay Home For Us” – the appropriate prices to our facilities around the world, policy and our expectations, we have established message was straightforward. A reminder to shelter we are promoting procurement activities using our Takasago Supplier Code of Conduct. It is included in at home, and flatten the curve, while recognizing the global network. In order to build fair and trustful our questionnaire and ensure their full understanding work of our valuable team members who manufacture relationship with worldwide business partners for before dealing with Takasago. essential products. Funds raised from the sale sustainable procurement, we have established a of T-shirts were donated to support and provide Corporate Procurement Policy, Corporate Procurement “As a company that values the global environment resources to a hospital and food pantry in the local Guidelines, and Takasago Supplier Code of Conduct. and aspires to gain a high level of trust from society, Takasago holds sustainability as one of the key community. cornerstones of our business. Additionally, we recognized our teams via Corporate Procurement Policy Takasago therefore prioritizes and values suppliers that As a guide for our procurement activities to consider place importance on global and social responsibilities (e.g. sustainability, compliance with laws, regulations the global environment and the conservation of local & social norms, protection of human rights, assuring communities, we have established the "Corporate health and safety and fair trade).” Procurement Policy" in accordance with the "Basic Management Policy". Takasago Code of Conduct is a summarized statement. As such, it is reinforced by our Responsible Sourcing Policy which indicates our ambition, objective and commitment in detail.
41 TAKASAGO Sustainability Report 2019-2020 42 Our Activity
Global Procurement Team Takasago team globally shares inventory within the Responsible Sourcing ● Thorough implementation of the "Takasago Supplier Teamwork is one of the important values in the group. In June 2017, Takasago signed the UN Global Compact Code of Conduct" and distribution of “Responsible Takasago group. In addition to a regular annual meeting at the (UNGC) and we continue our efforts to realize the UN Sourcing Policy”, which emphasizes corporate social We have established a Global Procurement Team to headquarters, our global procurement team schedules Global Compact's Ten Principles in the areas of human responsibility such as sustainability and respect for consolidate procurement activities. Additionally, in various workshops, regional meetings, visits, and rights, labor, the environment, and anti-corruption. We basic human rights, by periodic supplier surveys today’s VUCA (Volatility, Uncertainty, Complexity, and training via a matrix-like structure by region, ingredient are also striving for sustainable procurement as much utilizing questionnaires Ambiguity) world, mutual-aid between affiliates is category, or business type under the corporate as possible, while focusing on compliance with laws in ● Ensure that no forced labor or child labor exists by becoming more important from the point of view of initiative. each country, respect for human rights, environmental periodic supplier questionnaire, Sedex SAQ, and BCP (Business Continuity Plan). The Team currently conservation, fair business practices, involvement and Responsible Sourcing Questionnaire. contains delegates from 11 global production sites. Training Session development in local communities. (According to the supplier questionnaire results in 2019, we confirmed all our As we handle various raw materials from all over the Global Procurement Team members have the business partners acknowledged as Takasago global suppliers meet the social and environmental standards.) world, mostly having different cultural background, opportunity to attend a training session at the In the end of 2019, our Responsible Sourcing Policy *2 An online platform for sharing information on ethical and responsible our presence at their source is one of the major keys headquarters in Japan. has been verified and recognized to be in line with practices. to ensure stable supply. As such, each affiliate is These have been conducted the session twice a year, global standards and practices, ISO26000, and SMETA responsible for supplier relationship management as with the aim of deepening the Teams understanding (Sedex Members Ethical Trade Audit)*1 principles as 2) Collaboration with 3rd Party Organization an international procurement office of the Takasago of corporate medium-term management plan, well as supporting the UN 17 SDGs by Des Enjeux In order to pursue responsible sourcing, the Takasago group. corporate procurement policy and guidelines as well as et des Hommes. Our Responsible Sourcing Policy group has joined social organizations promoting Based on the concept of standardization, including intergroup networking and building teamwork through embodies the concept of Supplier Code of Conduct. sustainable and ethical sourcing. We improve harmonization of raw materials, we continue to face-to-face meetings. Based on the Policy, we are investigating the risks procurement taking into consideration environmental explore every possible opportunity for comprehensive Even under current challenges due to COVID-19, and potential impact of our procurement activities in conservation. We have become a member of RSPO optimization of raw material management. Global we are trying to various fields of "human rights, labor, environment, and (Roundtable on Sustainable Palm Oil)*3and JaSPON RFQ (Request for Quotation) is one example of such continue providing anti-corruption". If a possibility of negative influence is (Japan Sustainable Palm Oil Network)*4, and attended activities. the opportunity for confirmed, we will promptly plan for improvement and a sustainable palm tour in Malaysia to understand trainees via video take measures in cooperation with suppliers and other the sustainability in palm oil supply chain. In 2019, When it is necessary to manage the availability of conference etc. stakeholders for their implementation. our affiliate in France received RSPO certificate for raw materials due to global volume constraints, the Mass Balance as the first step in producing fragrance *1 An audit methodology, providing a compilation of best practice ethical audit techniques sustainably. RSPO team including Sales, Supply Chain, Regulatory, and QA in the US as well as France RSPO VOICE VOICE 1) Supplier Relationship Management team are working for the next target of receiving Yasutada Miyato in Winnie 王蒨 in The Takasago group conducts international RSPO-MB certificate for the New York facility in 2020. Takasago Europe Shanghai procurement activities utilizing the global procurement Perfumery Laboratory Takasago-Union organization with Procurement Department in S.A.R.L. (France) Fragrances the headquarters at the center. Through global & Flavors Co., Ltd. I am working in France, (China) procurement activities, we will continue to contribute engaging in raw material not only to our customers but also to all stakeholders Training for me is a great procurement and sustainability matters by reliable supply of high-quality, safe, and secure chance to get a general overview of our global in Europe. Europe is the origin of many products. For this purpose, we utilize dialogue with internal organization and workflow in a very authentic fragrance and flavor ingredients. suppliers, supplier questionnaire, Sedex*2 SAQ, short time, and understand more about the Access to Africa where there is a large Responsible Sourcing Questionnaire, and RFQ (Request challenges and issues faced by each affiliate. number of precious ingredients is easy. For Quotation) to conduct supplier relationship It is also an excellent opportunity for me to Working in such region is convenient to grasp management as stated below. communicate with everyone face-to-face. market situations. In addition, meeting people ● Build strong, mutually beneficial, and transparent I believe that with more discussion and directly locally is a wonderful opportunity partnerships with suppliers In early 2016, we joined Sedex (AB membership) information exchange, we can help each other to understand their cultural background. ● Maintain and strengthen a system that can stably enabling assessment of suppliers in the areas of to improve work processes in the future. I believe this kind of cooperation will help and reliably procure high-quality raw materials work environment, health and safety, environmental us to make a stronger and more respectful ● Mutually understand shared goals through dialogue management, and ethical business practice. Using the relationship. Pursue safe, reliable and& RFQ withstable suppliers supplyworld’s largest bycollaborative platform for sharing supply 43 TAKASAGO Sustainability Report 2019-2020 responsible sourcing with all stakeholders 44 Our Activity
chain data globally, along with a separate Supplier Life, and FSC are not always financially accessible for TaSuKI Originals - From Kyoto to Grasse - Sourcing posts Questionnaire, we will ensure an ethical supply chain. all suppliers. By 2019, relationships with around 180 major suppliers In such case, we have several factors in the program overseas and in Japan were established on Sedex. We to confirm commitment to sustainability of those confirm whether new business partners are Sedex suppliers. members when starting transactions, and encourage them to become a Sedex B member if they are not. We We have also followed this commitment in terms of 1. The foundational continue to promote activities for prioritized existing preserving resources by working on all of our raw 8. The Mediterranean post - Japan suppliers to attend Sedex for sustainable relationship. materials containing palm oil or those derived from cradle - Hinoki - Yuzu palm oil. *3 A social organization trying to transform the palm oil industry into a sustainable …. 4. Vibrant industry with fewer burdens on the environment. - Grapefruit 6. Millenia Following the headquarters becoming a member of India *4 A platform for sustainable procurement and consumption of palm oil in Japan. Africa the RSPO in September 2017, Takasago’s European 7. Vast fragrance production has taken the next step Americas 3. Indispensible Indonesia 3) Sustainability: Evolution of Our Sourcing in receiving the RSPO-MB certification. A team 5. Strategic - Patchouli To enable us to realize sustainable procurement, we representing purchasing, QA, and sustainability Indian Ocean - Clove developed a sourcing assessment tool; TAKASOURCE. department was formed to highlight the key steps in …. - Vanilla This is a matrix for evaluating the sustainability of our identifying all raw materials derived from palm, tracing …. 2. Far away sourcing, validated by Des Enjeux et des Hommes, volumes of ingredients purchased as mass balance, Pacific rim based on the three pillars of sustainable development: and volumes supplied as compounded fragrances.
environment, economy, and society. This allows us to Following accreditation in October 2019, the first - Sandalwood identify a list of priority raw materials which we must CoA for customers with a RSPO-MB engagement was …. reduce the related risks. issued in February 2020. Based on this experience, other fragrance manufacturing facilities are due to
4.5% 3.5% NORTH 33% MIDDLE EAST 4) “TaSuKI” Update 2. Ongoing Projects Update has been decreasing during recent years, causing AMERICA EUROPE 1. Overall unstable availability and fluctuating prices of gum 2020 is indeed quite unique for Takasago as we are Strengthen Procurement for “Green Chemistry” turpentine. celebrating the 100th anniversary of the Company. One 2.9% hundred years ago, back in 1920, our founder, Tadaka On the other hand, nowadays with consumers CARIBBEAN 24.5% • Sustainable Myrcene: Agreement on Stockholding – ASIA “TaSuKI Originals, Care and Comply” 10.1% Kainosho, successfully established the Company in paying more attention to responsible sourcing and SOUTH AMERICA Japan. transparency throughout the supply chain, Backward
6.4% In March 2020, Takasago International Corporation integration is becoming increasingly important. INDIAN OCEAN 11.4% An avid learner and visionary, he first spent many years announced the acquisition of a stake in LAWTER Regarding pine chemicals as related business of NORTH 3.7% AFRICA AFRICA abroad to better understand the emerging fragrances B.V. and accordingly signed an agreement between forestry industry, there are some global initiatives such and flavors industry prior to returning to Japan and shareholders with Harima Chemicals Group, a as Carbon Disclosure Project (CDP Forest started in Takasago is committed to a more sustainable sourcing incorporating Takasago. parent company of LAWTER B.V. The agreement will 2013) and SDG 15 (“sustainably manage forests”) approach. strengthen procurement at Takasago specifically for which encourage specific actions for sustainable We are launching a supply program which promotes To celebrate Tadaka Kainosho’s early 1900’s discovery the production of ℓ-Menthol which is using "Takasago's operations. sources certified as "sustainable" through the journey, we have combined our TaSuKI initiatives and Green chemistry", core technology. TAKASOURCE. recreated our own “From Kyoto to Grasse” itinerary. As the primary raw material for many strategic aroma The idea is to support producers and advocates who Reorganizing TaSuKI initiatives under one single Pine chemicals, chemicals derived from pine trees, chemicals, LAWTER B.V. provides Takasago crude share our commitments by participating financially “Kyoto to Grasse banner” will improve overall visibility, are utilized for various products including resin, sulfate turpentine (CST) from paper mill companies, through the purchase of their productions. implementation as well as ensure best practices to be electronic components and other chemicals. For which is considered as a source with less fluctuation in On the other hand, certifications such as RSPO, Fair for shared. aroma chemicals, crude sulfate turpentine and gum supply and price as well as better traceability. Takasago turpentine are important raw materials. However, aims to secure more stable supply of the key raw demand for gum rosin, a co-product of gum turpentine, material by strengthening the partnership upstream. 45 TAKASAGO Sustainability Report 2019-2020 46 Our Activity
FLORIDA GRAPEFRUIT is a strategic supplier and brand partner of The Coca- Indonesian essential oils production (ton/year) 2. Takasago potential sourcing plan - Indonesia Potential sourcing opportunities for Takasago Cola Company, supplying orange, grapefruit and lemon
• Sustainable Grapefruit: New Groves Plantation – juices, and citrus products to support Coca-Cola’s TOP 5 “TaSuKI Originals, Care and Comply” brands across the globe. Peace River also supplies Nutmeg 320 juices and citrus by-products such as pulp, essence, Takasago strengthened long-term support for the and oil to private label bottlers, retailers, and flavor Cajuput 550
grapefruit industry under the Tree Funding Agreement. companies in both US and international markets. Patchouli 1100 For the first time in 100 years, Takasago Corporations The Scott Family Companies is a vertically integrated joined in an ambitious plan to increase grapefruit organization that grows, packs, and markets fresh plantations in the State of Florida. grapefruit in the US and international markets. The Vanilla MADAGASCAR
Peace River Citrus Products, Inc. (citrus processor) companies that make up this organization include Scott Clove and The Scott Family Companies (citrus grower) have Family Groves, Scott Citrus Management, Riverfront Citronella 4200 • News from Takasago Madagascar - launched a project to plant a quarter million new Packing Company, and Scott Marketing. The Scotts 1100 “TaSuKI Originals, Care and Comply” grapefruit trees on 1,000 acres in Florida’s St. Lucie and are third generation citrus growers that have a long Indian River counties. history of farming in the famous Indian River growing 1. Strategic Sourcing – TaSuKI Originals Next TOP 15 This is the first major grapefruit planting in the State district. Five family members are intimately involved 2019 - 2020 is finally the time for the cycle to Ton/Year 0 5 10 15 20 25 30 35 since citrus greening disease decimated Florida’s in the day-to-day operations across management of bounce back and prices to decline. This seven- Gurjun Balsam grapefruit groves. the farms, fresh fruit packing plant, and marketing and Vetiver year unprecedented “storm” was rough. However, Through this innovative grove planting commitment, distribution company of the fresh product. Massoia bark Takasago’s local infrastructure, many years of local Cananga Peace River and The Scott Family Companies aim to sourcing presence, and expertise in Madagascar Ginger boost Florida’s grapefruit crop by 15 percent when the Kaffir lime leaf proved to be a great asset to support our clients to new groves reach maturity. Cubeb secure high-quality supply and further grow their Sandalwood businesses. It is also said that one should “never waste Lemongrass Agarwood a good crisis”. Takasago used every opportunity during Cinnamomum culilawan these past years to fully understand issues impacting Cinnamon bark the vanilla supply chain (social, cultural, economic, and Black pepper Fennel scientific) and address them accordingly. Piper betle One key example is our presence upcountry. We source Second, deploy strategies and plans: Combine vanilla from 6,000 individual farmers. However, some of Indonesia Takasago’s 40 years of local experience with a thorough those farmers must transport their vanilla to far away Takasago gained the rights to procure 100% of due diligence of agro- and socio-economic trends villages for collection. In 2020, Takasago intends to
the grapefruit essentials oil produced under this • Leverage Indonesia's rich Oils and Spices Heritage – (graph 1) to prioritize, design, and implement natural open a large purchasing station close to where farmers agreement. Increase in volume will reduce the impact “TaSuKI Originals”. ingredients sourcing and manufacturing strategies and are located. This will facilitate logistics, diminish risks, of open market fluctuation. plans (graph 2). and facilitate and accelerate payments. This Takasago Despite Takasago not being a citrus grower, it is First, identify sourcing potential: While local patchouli Upcountry Buying Station will serve 250 individual 1. Responsible Sourcing due diligence important that we engage closely with the plantation sourcing and processing has been already in full Responsible Sourcing due diligence farmers. We are planning to further deploy additional
Governance business by supporting the costs for planting each new swing for decades at Takasago, we embarked on a Community involvement Traceability Upcountry Buying Stations in other locations in need of tree. comprehensive program to leverage Indonesian oils Sustainable consumption Pollution this service. and spices sourcing and upgrading opportunities. Respect for property rights Resource use
Promoting social Energy Peace River Citrus Products, Inc. is a privately held The first step is to confirm and prioritize the next raw responsibility 2. Support to Local Communities and Environment –
and vertically integrated citrus grower, processor, and materials TaSuKI will address. (as shown in the graphs Fair competition Climate change TaSuKI Care
Biodiversity and packager founded by Bill Becker and headquartered below) Fair operating practices Besides the above described local Upcountry Buying protection of the environment
in Vero Beach, FL. Peace River employs 325 people in Human development Human rights Stations which benefit the farmer communities,
Health and Safety Labor practices its modern and efficient citrus grove and processing Social dialogue Takasago is making good progresses in its multi-year sites located throughout central Florida. Peace River academic research program in cooperation with
47 TAKASAGO Sustainability Report 2019-2020 48 Our Activity
universities in Europe and Madagascar. Once the 3. CSR Compliance – TaSuKI Comply Global Meetings program is completed, findings will be shared, and Since Takasago established in Madagascar for vanilla Production Takasago holds regular international meetings (e.g. the training will be organized for smallholders, with the sourcing and manufacturing 7 years ago, it took Global Operations Directors Meeting shown below) as primary objective being to improve quality and yields, steps to thoroughly understand each dimension of Our Production Model at a Glance a concrete way to exchange information and to discuss thus benefit the farmers. Publications will soon be the sourcing process and implement required best The main objectives for Production are: (1) to issues such as crisis management, quality, and EHS in released followed by immediate local implementation practices. As we conducted backward integration, we manufacture goods with a singular “Takasago detail. of the program. deepened relationship with smallholders and further Quality” at all affiliates around the world with zero Through these meetings, we strengthen identified risks in vanilla beans supply chain as well as incompatibilities, (2) to globally align CSR activities communication, which leads to promoting a sense of Environmental conservation is another important points of improvement. With the recent deployment to actively contribute to the creation of a sustainable unity in production and CSR activities. priority for Takasago. Without forests, vanilla would of Upcountry Buying Station, we society, and (3) to cooperate with QA/QC and EHS in not exist. Therefore, Takasago Madagascar SA joined felt we had sufficient insights and order to establish Takasago’s best practices. two reforestation programs in 2019. The first in May control and decided to begin fair in the Toamasina area and the second in October trade certification process (Fair Corporate Production Policy (images below). Takasago Madagascar SA and its for Life). The Takasago group developed a Corporate Production partner, Ramanandraibe Exportation SA, participated Policy (below) to implement activities for production in a national reforestation project monitored by local and sustainability with a coherent purpose in the environmental authorities “DREED”, with a target to global function area. By utilizing the characteristics replant 10 million trees in 2020. Takasago Madagascar of each affiliate and promoting a sense of unity in SA contributed in planting 2,600 new trees in two days. global production practices, Takasago aims to create
a product supply system trusted by customers around Global Operations Directors Meeting the globe. Environmental Risk Initiatives Achieving Uniform Quality Takasago understands how climate change and natural disasters can be a potential risk to production activities, and believes that the approach corresponding to Corporate Philosophy environmental risks is integral to sustaining growth. As a result, Takasago has promoted water risk Basic Management Policy initiatives in parallel with reductions to environmental impacts. The Takasago group carried out a water risk Charter of Corporate Behavior EHS QC evaluation using WWF-DEG’s Water Risk Filter at each of our affiliates. In addition, headquarters delivered a Corporate Production Policy report on the response to recent natural disasters in Japan at the Global Operations Directors Meeting. Guidelines TPGG(Takasago Production Global Guideline) Zero-Accident Activities Zero-Accident Activities are programs where all Corporate Production Policy employees practice precautionary measures relating We practice the following in our production to industrial safety and health with the philosophy of activities: “Respect for Human Life”. They are implemented at all • Continuously striving to provide the highest level of our Japanese affiliates. of customer service while maintaining safety in the workplace, stability of supply and quality On top of the activities prescribed by EHS, Takasago assurance in all of our production activities. aims to promote activities that encourage employees • Constantly pursuing excellence in our production to take ownership of workplace safety, as well as ideas practices and manufacturing systems. to handle situations that are not explicitly covered by • Persisting in the observance of all relevant laws and regulations, respect for human rights, being rules, in addition to continuous improvement of safer fair, and considering environmental preservation. production practices. Specifically, Japanese affiliates Connecthave held “hazard prediction” workshops, to where the 49 TAKASAGO Sustainability Report 2019-2020 next generation50 Our Activity
employees examine potential real-life scenarios for Rationalization of Logistics for GHG natural resources, we have promoted backward ways to improve safety. Also, they have established Emissions Reduction integration with natural flavor material suppliers as Shareholders “pointing and calling” exercises to build a culture of Takasago is preparing to acquire certification from SBTi Research & well as pursuit to reduce excessive dependence on safe habits. These practices promote the development (Science Based Targets Initiatives) by March, 2021. Employees Society natural resources. With our cutting-edge analytical of leaders who support future health and safety This certification is to set a target for reduction of GHG Development technologies, we thoroughly investigate aroma
Suppliers initiatives and embody the spirit of “Respect for Human emissions including the supply chain emissions. Customers components of natural products and our advanced Life” when considering the safety of their colleagues. In 2019, taking the Ministry of Environment’s support synthesis and flavor creation technologies enable us to program, we were able to calculate the emissions Based on our corporate philosophy of "Contributing to develop flavor extenders reconstructed based on the of several categories which we were not able to. Society through Technology", our R&D contributes to results to partially replace natural ingredients in our We found that our emissions of Scope 3 consists a the improvement of QOL (Quality of Life) by developing formulation. large part of our total GHG emissions. The amount unique and superior technologies and products We are also focusing on reduction of waste from flavor of Category 4, which is transportation and delivery through organically and functionally integrating three development perspective. One of our approaches (upstream) emissions, consists the second largest types of innovations (“concept innovation”, “product is to reduce waste by extending the shelf life of our Left photo: Hazard prediction workshops. Right photo: Pointing and calling. amount of Scope 3. innovation” and “processes innovation”) and open products and our customers products. To achieve Reducing the Scope 3 emissions is very challenging but innovation in collaboration with external partners. this, we pursue every possibility of improving the we recognize this as an important issue. In recent years, global warming caused by climate stability of our products from various aspects. There We are working to review the transportation and change is becoming more pronounced. As part of our are several key aroma components in natural products delivery system and are considering ways to reduce the important efforts to solve these global challenges which contribute to the olfactory properties, however, emissions, such as through rationalization of logistics. addressed by the SDGs, we promote environmentally some of them are unstable and generate undesirable friendly R&D with green chemistry always in mind. off-notes under certain conditions. With our intensive To reduce environmental impact, we are focusing on investigation, we have identified more stable aroma Recycled & Renewable Materials and green chemistry such as utilizing our original catalytic compounds and have fully utilized them to create Packages technology, white biotechnology, designing eco- more stable flavors. For some important natural flavor Zero-Accident Activity philosophy For the Takasago group*1, the ratio of renewable raw friendly processes, and considering wastewater to materials which contain unstable components, we are materials*2 we used in 2019 is about 50%. facilitate efficient use of water and reduction of energy leveraging our innovative processing technologies to We do not use recycled containers that come and greenhouse gas. In addition, we are also actively remove unstable components from the natural flavor Logistics in contact with our products because of safety working to explore and utilize renewable raw materials, materials so our flavor will be able to remain closer regulations. Basically, recycled pallets are only used reduce the use of natural flavor ingredients by to its original profile over a longer period of time. Corporate Logistics Policy for some storages and one-way use for safety reason. developing alternative ingredients, and utilize unused Furthermore, our patented encapsulation technologies The Takasago group established the “Corporate We use recycled materials (waste paper and steel resources to use natural resources more efficiently. also enable products to have longer shelf life. These Logistics Policy” as principles of logistics in accordance materials) for cardboard packaging and steel drums, We will continue to contribute to the realization of a approaches contribute to extending the shelf life of with the “Basic Management Policy” which includes and the ratio of waste paper used in cardboard sustainable society by resolving various social issues products and also improve inventory management, consideration toward the environment and local varies according to the country. We are also reusing through these innovative R&D reducing unnecessary dead stock. It is also important community. intermediate bulk containers (IBC), steel drums activities that consider SDGs. to reduce waste generation in the production process. We practice the following in our logistics activities: and pallets as far as there is no potential safety risk. Although waste generation is inevitable when Fumihiro Yanaka Packaging materials unfit for reuse are collected, processing natural resources, we are committed to Senior Vice President • Continuously striving to provide the highest level of sorted and recycled by authorized recycle contractors. Corporate Research and reducing waste in our production process with process customer service while providing a safe and stable Development Div. optimization and by reusing or recycling waste for *1 All Japan subsidiaries and affiliates in global, except CIT. source of supply. *2 Renewable raw material: A renewable resource is a natural resource which other products. • Constantly pursuing excellence in our logistics can replenish itself to overcome human consumption through biological reproduction, naturally recurring processes and/or other positive actions. Based With these various approaches, Takasago always operations, systems and processes. on the definition of GRI Standard Japanese version, we compiled the ratio of • Persisting in the observance of all relevant laws renewable raw material usage. INNOVATION strives to contribute to the society through our flavor and regulations, respect for human rights, being developing technology. fair, and considering environmental preservation. Sustainable Flavors - Supporting conservation of natural resources “Attractive Japanese Natural Scents” We always aim to design environmentally friendly - Delving into psychological effect to relieve products by using our technologies. stressful society Due to the recent difficulties in sustainably acquiring The concept of “nature" is a major global trend in
51 TAKASAGO Sustainability Report 2019-2020 52 Our Activity Promoting SDG-oriented R&D the fragrance market. Takasago has been engaging These flavors are expected to enhance consumer material launch. In this context, Takasago strives to in capturing and analyzing the scents of unique Aroma Ingredients from Renewable satisfaction of food products and contribute greatly to strengthen this function. The process development Japanese flora with our technology AROMASCOPE® to Resources improving their QOL through eating and drinking. department was established in 2017 as an reconstitute them without losing their natural qualities. We are honored to be the leading global Japanese independent laboratory which works closely with fine In 2017, we started “Japan Wood Project” which aroma ingredient company marked our 100th Aroma TunesTM chemicals and aroma ingredients research groups. A focuses on the scents of Japanese traditional trees anniversary in 2020. Sustainability is a key mindset of - Supporting human well-being wider green chemical viewpoint can be incorporated such as Hinoki (Chamaecyparis obtusa) in Kiso area, our vision. Scents are known to have effects on human physiology from the very early stage of research. Hiba (Thujopsis dolabrata var. hondae) in Aomori area ℓ-Menthol is a representative example as we and psychology. A number of research reports have Some of the viewpoints from chemical engineers and Sugi (Cryptomeria japonica) in Akita area which are manufacture it from renewable myrcene. We also described their effects on humans. Takasago, as include safety and energy saving, which are key species endemic to Japan. use renewable resources coupled with our synthetic a pioneer in this research field, has been working components of green chemistry. At the process In this project, our team has established an innovative technology to give birth to our sustainable ingredients on revealing how scents affect our psychological development laboratory, reaction data are collected method for reconstituting natural scents and we are such as Biomuguet® and Biocyclamol®. Both are states with scientifically established physiological by using special instruments, giving thermodynamic now working on creating our collection of woody nature-identical, biodegradable and chiral molecules measurements. By investigating human responses data for both safety assessment and energy control. fragrances with a concept of “blooming and relaxing which are indispensable alternatives to existing market to scents, we have proved that some of the scents These data with interpretation are promptly fed woods.” This concept expresses a new woody note with ingredients. Our newest molecule Dextramber®, can have influences on humans. With these studies, back to the research team, helping them to optimize freshness and diffusivity. launched with a woody and amber note, is one such we strive to develop flavors and fragrances based reaction conditions. Under this circumstance, the We utilized both GC/MS and GC-olfactometry (GC/O) ingredient under our CHIRAROMA® platform which on human physiological data to support the state of development period of the processes is reasonably analysis to identify key components contributing to the utilizes our asymmetric chemistry technology and human emotion. shortened by considering green chemistry. While the unique odor, which finally lead to the reconstitution epitomizes our commitment to contribute to society Many people expect scents to have a relaxing new organization works as expected, instruments to of natural woody scent. The scent of each wood was through technology. In addition, we are now working on effect. However, the definition of “relax” is not generate kinetic data are fully engaged. To further compounded based on the results respectively and our new and improved development process for replacing scientifically clear. As such, we investigated the facilitate these activities, Takasago is aware that Japanese wood fragrances faithfully reflect their unique petroleum feedstock with renewable and bio-based psychophysiological effects of scents under a stress enhancing this capability is necessary. As such, fresh woody characters. feedstock under our BIOSWITCH® concept. condition by psychoneuroimmunology, which is the Takasago began investing new infrastructure. Moreover, as the scents of wood and forest have study of interaction between psychological processes Installing energy saving technology in new facility psychological effects such as mental healing, Retronasal Aroma and the nervous, endocrine and immune systems design will incorporate greener processes from the relaxation and enhancing recovery from fatigue, we are Aroma can be perceived with two ways: orthonasal of the human body. This is an evaluation of aroma start and contribute in more environmentally friendly researching into these effects. and retronasal. Aroma components that are released effects from diversified standpoints using multi-modal development. In 2019, we confirmed positive effects of our Japanese from what you eat or what you drink and pass through measurements. We named it Aroma TunesTM and aim The above mentioned approach coupled with wood fragrances on humans with physiological and the oral cavity and enter the nasal cavity are called to support human well-being. introduction of new catalyst and natural aroma will psychological measurements such as subjective retronasal aroma. They play a major role in our further enhance Takasago's capability to contribute to evaluation, contingent negative variation (CNV), palatability of food and beverages when eating and realizing a greener world. electrocardiogram (ECG) and saliva analysis. We drinking. Therefore, understanding of the retronasal GREEN CHEMISTRY successfully developed Japanese wood fragrances that aroma is an important aspect for flavor creation. give fresh scent with psychological effects. At Takasago, we are developing flavors that are closer Process Innovation to how people perceive when eating and drinking - Approach to realizing a greener world We are now focusing on Japanese herbs such as through retronasal aroma analysis. Takasago has Our R&D activities and manufacturing are oriented Yomogi (Artemisia indica var. maximowiczii), Mitsuba developed a new technology to monitor the retronasal toward Green Chemistry, based on the well known (Cryptotaenia canadensis subsp. japonica) and Sansho aroma in real-time when eating and drinking by using 12 principles. One of the key activities is to fully (Zanthoxylum piperitum). PTR-MS (proton-transfer-reaction mass spectrometry). utilize continuous flow processing, realizing safer We are striving to create a new collection of traditional This technology has enabled us to provide our operation with less energy. Takasago has successfully Japanese herbs with a concept of “botanical herbs”. customers with flavors that consider changes in flavor implemented several continuous flow processes Japanese herbs are not well-known in the world and profile over time, including a flavor with longer-lasting including pipe flow reactor and CSTRs (Continuous there are few essential oils in the fragrance market. effect in the mouth after drinking beverages and a Stirred-Tank Reactors). To realize them, the process Our challenge is to offer Japanese herb fragrances flavor with higher top impact. development function in R&D has played a key role Utilization of Special Catalysts with a concept of natural and botanical healing effect Takasago has been creating new series of fruit flavors from process design to actual implementation. The - Toward energy and waste reduction through an integration of our innovative analytical and that bring the experience of deliciousness by analyzing importance of this function is not limited to the Our efforts for Green Chemistry include development psychological technologies and creation expertise. retronasal aroma release when eating fresh fruits. continuous flow implementation, but every new of catalysts mediating the chemical conversions
53 TAKASAGO Sustainability Report 2019-2020 54 Our Activity
which have been carried out in stoichiometric fashion. QC Policy, global QC Standard Operating Procedures One of the examples is reduction of amides to give Column (SOPs) and guidelines were established to standardize amines. Amines are among the most frequently used Quality Assurance detailed QC procedures across all business units and compounds in the pharmaceutical industry. ℓ-Menthol and Biomuguet® received affiliates. These guidelines are also incorporated in the Conventionally, stoichiometric amount of metal USDA Certified BioPreferred Label Takasago is committed on working as a valuable local quality management procedures and practices to hydrides has been used for reduction reactions. We Takasago International Corporation partner with our customers to meet all their product ensure global alignment of QC management. succeeded in replacing the protocol to catalytic use of announces that ℓ -Menthol, Biomuguet® quality and safety requirements. a Ru-MACHO® derivatives. With this catalyst, cyclic and Biocyclamol® are certified USDA Global Meeting amides are converted to the corresponding amines in Biobased products as 100%. USDA certified Quality Assurance Organization Global meetings are held on a regular basis by each high yield (Org. Lett. 2019, 21 (24), 9954). BioPreferred label offers recognition and Mission of the Corporate Quality Assurance quality division. These meetings are designed to update Leveraging feedback from potential and actual users, confidence to our efforts and commitment Headquarters (QAHQ) is to ensure that Takasago all affiliates on the latest regulations, global policies we are currently working on expanding the substrate to provide products that will contribute to a supplies safe, wholesome and reliable fragrances, and guidelines and to discuss any relevant issues or scope. more sustainable society. Takasago's journey flavors, aroma ingredients, and fine chemicals that concerns on a timely basis. This activity ensures that Natural Aroma Ingredients Developed by towards a 100% Biobased ℓ -Menthol began comply with safety and regulatory requirements of Takasago provides the same level of quality and service White Biotechnology in 1954 was ground-breaking. It also opened governing bodies, customers and trade associations. for our customers globally. QC Centers, for instance, As a company that started its business in Japan, up the door to discover many other Biobased In addition, Takasago QAHQ strives to ensure that coordinate quarterly teleconferences and semi-annual Takasago has heritage based on Japanese culture aroma ingredients on our portfolio. This USDA Takasago consistently delivers high-quality products meetings with all key QC leadership from all facilities called “Mottainai” for reducing waste and recycling. Biobased certification is a timely reminder and services to satisfy customers’ needs. QAHQ is an to exchange information, leverage and share best White biotechnology is another key driver in green to us that the journey towards Biobased independent organization within Takasago and consists practices, set and measure KPIs and to keep the teams chemistry. This takes advantage of enzyme or molecule is not by chance or serendipity of quality assurance departments around the world aligned and informed. microorganism biocatalysts, which fulfills many key but through hard-work, ingenuity and that operate under “One Takasago Quality Assurance criteria of green chemistry and contributes to SDGs. resourcefulness that goes beyond Kaizen. Concept”. QAHQ also includes four centers: Global Increasing demand for natural flavors also drives new Truly Takasago bringing together Nature and Flavor Quality Control (QC) center, Global Fragrance R&D using biocatalyst. Chemistry for the benefit of society. QC center, Global Flavor and Fragrance safety As for captive natural specialty R&D, the targets are Third-party verification for a product's center and regulatory affairs center which operate requested by flavorists, the production process that biobased content is administered through the globally and closely with local affiliates. These four complies with EU natural regulation and kosher is USDA BioPreferred Program. One of the goals centers are also responsible for the development and investigated using microorganisms and enzymes. We of the BioPreferred Program is to increase the implementation of global policies and guidelines under cooperate with Takasago Food Products Co., Ltd. and development, purchase, and use of biobased a globally standardized operation process. Thus, we are US-based Centre Ingredient Technology, Inc. (CIT), products. The USDA Certified Biobased able to provide the highest quality products to meet or which joined our group in 2016. They will become a Product label displays a product's biobased exceed all of our customers’ expectations worldwide. leading manufacturing hub for bioprocess production content, which is the portion of a product Training Programs of our natural aroma ingredients. CIT is a high-tech that comes from a renewable source, such as QC Policy, SOP and To enhance and maintain the highest level of quality production and pilot production facility which uses fed- plant, animal, marine, or forestry feedstocks. Guideline and service, all Takasago Flavor and Fragrance QC batch cultivation with accurate cultivation control and Utilizing renewable, biobased materials Takasago’s Corporate teams participate in global training sessions provided monitoring, downstream processes with consideration displaces the need for non-renewable QC Policy was by the Global QC Centers. The Global QC Centers of production safety and recovery by thin film petroleum-based chemicals. Biobased developed based under the Takasago HQ as technical supporting distillation. Our key natural products manufactured at products, through petroleum displacement, on our Corporate groups build globally aligned QC systems and train CIT include gamma-decalactone, gamma-octalactone, have played an increasingly important role Philosophy, Basic local QC teams of all Takasago affiliates. The technical gamma-nonalactone, phenylethyl alcohol, hexanal and in reducing greenhouse gas emissions that Management Policy supervisors of the Global QC Centers coordinate these other specialties. In 2019, we successfully launched exacerbate global climate change. and Charter of training at predetermined intervals. This globally captive natural specialty by white biotechnology which Corporate Behavior. coordinated and operated system is a key to ensuring will significantly add value to our flavor compounding. This enables us to have that the same high quality service is being offered and a globally consistent that our products consistently meet or exceed all of our quality mindset and systems that not only meet our customer’s requirements. customer’s expectations, but also ensure appropriate Our flavor affiliates produce flavors distinct to their and timely improvements. In line with the Corporate region. Recent flavor QC trainings conducted by
55 TAKASAGO Sustainability Report 2019-2020 56 Our Activity
the flavor technical supervisors included training on sustainable use of chemicals and the quality of life of all established requirements and standards, and organoleptic, gas chromatography methodologies, all citizens in Europe as well as the environment. Last that they are aligned with Takasago’s business plan, maintenance procedure, technical laboratory best year (2018) was a key milestone for REACH. Takasago objectives and quality control policy. Shareholders Shareholders practices and quality systems designed to provide the took an active role in its implementation and registered Employees Society same high-quality services to all customers around the all the relevant substances by the deadline. REACH is Customer Health and Safety and Investors world. These trainings are also designed to respond to a continuous process and we are ready to work with Takasago develops and manufactures a wide range
Customers local needs to improve and enhance specific analytical ECHA and the competent authorities to provide any of products across four business pillars: Fragrances, We strive to offer an appropriate Suppliers areas. Our proactive activities will help to align and required additional data that are needed to assess Flavors, Aroma Ingredients, and Fine Chemicals. return of profits to shareholders streamline QC best practices, and in turn encourage the safe and sustainable use of the chemicals we As an integral part of the creation and production by realizing sustainable growth through sound and improve efficiency of procedures, resulting in less registered. In addition, Takasago continues to monitor processes, Takasago continually evaluates all products transparent corporate management. At the same time, waste and safety risks. all the other chemical control regulations around the for their health and safety compliance. This approach we work hard to further strengthen communication world with a special focus on K-REACH and Turkey is applied from the research and development stage with shareholders and investors both in and outside Additionally, we conduct proficiency testing globally, REACH in 2018 and beyond. up to the manufacturing and delivery stage of our Japan. based on Takasago’s accreditation of the ISO/IEC17025 products. During the reporting periods, Takasago has Takasago discloses corporate information in a timely schemes. This helps to confirm and standardize QC Global Safety and Regulatory Affairs Centers not identified any non-compliance with regulations or and adequate manner to shareholders and investors. testing skills and maintain them at the highest level as continuously monitor ever changing global regulations, voluntary codes. As part of our efforts to improve our IR activities, we well as motivating the QC staff members. customer requirements, standards and guidelines from send Newsletter to Shareholders twice a year while trade organizations such as FEMA, IFRA, RIFM, IOFI, Marketing and Labeling also disclosing related documents and press releases As for Takasago fragrance affiliates, representatives ACI, PCPC and many other organizations. Information All of Takasago’s sales are made through business-to- on the IR site on our website to expand the investor of the QC teams attended olfactive intensive training is shared promptly with each affiliate around the world, business channels. None of the product is sold directly community and enable shareholders and investors in the Fragrance QC Center. The training consists of guaranteeing that Takasago provides safe and reliable to end-consumers. Our fragrances and flavors are to deepen their understanding about our business smelling natural raw ingredients and finished products products all over the world in a consistent manner. sold to companies manufacturing consumer goods, activities. to understand their complex nature and characteristics. who incorporate them into their products that are In addition, we hold financial result briefings twice The training also included discussions on sharing the Certifications sold to the general public. Our Aroma Ingredients a year (May and November), and our president and level expected for the quality of raw material and Takasago promotes the acquisition of management are sold to other flavor and fragrance companies for officers in charge directly communicate with the finished product. After the training, attendees who system certifications such as ISO9001, FSSC22000/ use in the creation and manufacture of their own investors and analysts. The details of the briefings are were validated as Technical Referent support and ISO22000, GFSI Scheme and other internationally compounds. Takasago fine chemicals are generally also disclosed on our IR site. Furthermore, Investor and teach daily olfactive training at their site and also act recognized quality and safety standards that are used as intermediates for the manufacturing of Public Relations Department takes charge in handling as sensory contact for the key site Global Fragrance QC appropriate for products we manufacture. A new pharmaceuticals and chemicals. When supplying our reporting related to IR and visits to investors. center. flavor and fragrance facility was built in Indonesia and products to our customers, Takasago provides product When it comes to shareholder returns, Takasago obtained ISO9001 certification and FSSC22000 food information as required by regulations and/or the embraces shareholder-favoring business operation All training results are shared with global and local safety specifically for flavor facility in March 2020. customer for all the products we manufacture. This and aims to attain corporate base which enables a management to ensure that the lessons and skills Introducing such international standard system is one typically includes one or more of the following: higher level of profit and generates continuous and learned are effectively reflected and utilized as of the key elements for globalization rather than a part stable dividends taking into account the business part of all local QC teams’ daily activities as well as of localized activity in all Takasago. We are confident Sourcing of the raw materials used in the performance at the same time. To improve capital continuous improvement plans. This is a crucial part of that these internal standards drive us to promote manufacture of our products efficiency and increase shareholder returns, we • Composition of our products (dependent on Takasago’s efforts to continuously supply the highest better quality service as well as boosting customer conducted purchase of treasury stock in 2019. disclosures) quality products to our customers anywhere in the satisfaction. To keep moving forward, Takasago is in • Safety data sheets (which highlight components world. These global trainings contribute not only to the process of implementing a program designed that may have a health or environmental impact) standardize the quality of Takasago products, but also to integrate systems from the viewpoint of hazard • Information on the safe use of our products serve to improve teamwork between all the QC teams analysis in FSSC22000. as “One TAKASAGO.” During the reporting period, Takasago has not On-site Audit identified any incident of non-compliance concerning Compliance To further strengthen the group’s quality management, product information or labeling. It is Takasago’s global policy to comply with the latest global QC centers routinely conduct on-site audits of laws and regulations. Takasago fully supports the all manufacturing sites to ensure their systems are objective of REACH in Europe to improve the safe and consistently improvingStriving as well as meeting or exceeding to provide safe, 57 TAKASAGO Sustainability Report 2019-2020 reliable and quality products 58 Our Activity
Japan Kashima Factory Society Shareholders Kashima factory donated used stamps and plastic bottle caps, unused notebooks, and Society Employees calendars to a local welfare center. Used stamps and plastic bottle caps are sold and the profit is Community used for food supports in developing countries. Customers Suppliers
As stated in the Basic Management Policy, Iwata Factory Takasago group respects the global environment and Germany Iwata factory participated in tree planting and local communities and considers relationship with thinning activities in forests in corporation with a Takasago Germany attended the Business the local communities is fundamental. We have been local environmental conservation association to Run in Cologne, as yearly sports and contribute to the protection of groundwater source taking various approaches such as holding cultural charity activity. and the environment of forests. events, offering educational programs, offering donations and supporting community activities for a long time. We will continue these activities and strive to be a partner trusted by the local communities.
USA Takasago U.S. employees came together to Europe participate in the 2019 Bergen County Out of the Darkness Walk. The Walk is meant to bring Takasago West Japan awareness and help raise funds for the American Foundation of Suicide Prevention. So far, the 2019 About 50 employees joined “Mihara Yassa Festival” Bergen County walk has raised over $130,000 and as dancers. is taking donations throughout the end of the year. Through such activity, we continue to build relationship with the local community. Americas Asia Pacific
France Takasago France has committed 1,500€ to support "Les Cantines du Sourire" which aims to finance India breakfasts. Our donation made it possible to offer more than 4,500 breakfasts to young school Takasago India employees children. visited the Panchayat School in Kunnapattu which is close to its factory site. Takasago India has donated four blackboards to the school in response on the request from the school last year.
Singapore Guided by the knowledgeable staff at Takasago, students applied simple practical skills they learned at school Brazil Spain (use of electronic balance, droppers, Children of ages 4 to 15 calculation of dilution) in real-world Takasago Spain renewed the University chair, a years visited Takasago contexts by making their very own collaboration agreement with a local university. Brazil. They experienced drinks using their very own unique mix The local university is made up of technology, the application of products entrepreneurship, and socioeconomic chairs. All of of flavours. Thailand and tasted and smelled them carry out training, research and development, new flavors and aromas. or knowledge transfer activities in areas of common Takasago Thailand participated in the Mangrove interest. Forest Planting activity at Bang Pu Mangrove Forest.
59 TAKASAGO Sustainability Report 2019-2020 60 Spreading Culture of Fragrance
Perfumes are believed to date back over 5,000 years, which have been selected by Mr. Tomita (Head of Tokyo developing as distinctive form of aroma-related Station Gallery). We also reproduced the fragrance of culture over the long history of human civilization. It the perfume that was offered to the Emperor Showa, is commonly believed that people in Japan started which the visitors can smell and feel more familiar using “koh” when Buddhism was introduced to with fragrances. We thought this event would be a Japanese culture in the Asuka period (A.D. 538). In great opportunity to showcase the history and culture the Muromachi period, kohdo was established as way of fragrance to a wider of appreciating aroma in accordance with a set ritual audience. Unfortunately, among the upper-class. Use of perfumes became Takasago Collection in popular among the common people in the Edo Akita scheduled in April period for cosmetics and other means. kohdo is now was cancelled due to the integrated into traditional Japanese culture. coronavirus outbreak. We hope the situation As a flavor and fragrance manufacturing company, will get better soon, Takasago believes that it is our responsibility to spread and hopefully the rest and sustain the culture of fragrance in the society. will take place as per Takasago started its collection, called “The Takasago scheduled. Collection” since we acquired the Mito Tokugawa family’s fragrance instrument, ‘incense case with young We will look for every possible opportunity to organize pine, plum branch and maki-e’ in 1960. In 1993, we an event associated with Kodo and continue to make further purchased dozens of items, and those became efforts to spread and sustain culture of Fragrance. the base of our current collection.
As one of 100th anniversary events, we planned to hold “Forms for Fragrance-Treasures of The Takasago Collection“ exhibition in Akita, Mie and Tokyo starting March, this year to the beginning of the next year. There are approximately 230 items to be displayed,
100 Years Commemorative Goods Treasures from The Takasago Collection
61 TAKASAGO Sustainability Report 2019-2020 62 External Partnerships GRI Content Index Related information Standard General Disclosures Pages / Reasons for omission and Initiatives 102 General Disclosures GRI 102: General Disclosures 2016 1 Organizational profile 102-1 Name of the organization P.13-18 Corporate Pro le P.13-18 Corporate Pro le Takasago engages in several organizations, supports initiatives and responds to 102-2 Activities, brands, products, and services P.17-18 Business Outline sustainable related platforms including below. 102-3 Location of headquarters P.13-18 Corporate Pro le 102-4 Location of operations P.13-18 Corporate Pro le American Chemical Society 102-5 Ownership and legal form P.13-18 Corporate Pro le • 102-6 Markets served P.13-18 Corporate Pro le CDP • P.13-18 Corporate Pro le
• EcoVadis 102-7 Scale of the organization Consolidated Financial Statements The Fiscal Year ended March 31st, 2020 • European Flavour Association (Executive Board) https://www.takasago.com/en/ir/library1.html#ir202103 Flavor and Extract Manufacturers Association (Board of Governors) 102-8 Information on employees and other workers P.38 Employment Status • 102-9 Supply chain P.42 Our Supply Chain and Procurement Model at a Glance International Fragrance Association (Board of Directors) Signi cant changes to the organization and its supply P.15-16 Global Network • 102-10 International Organization of the Flavor Industry (Board of Directors) chain P.42 Our Supply Chain and Procurement Model at a Glance • P.28 Crisis Management 102-11 Precautionary Principle or approach • Japan Business Federation P.29 Global EHS Management Japan Chemical Industry Association 102-12 External initiatives P.63 External Partnerships and Initiatives • 102-13 Membership of associations P.63 External Partnerships and Initiatives Japan Climate Initiative • 2 Strategy • Japan Flavor & Fragrance Materials Association 102-14 Statement from senior decision-maker P.5-10 Message from President and CEO Japan Food Additives Association P.20 Message from Senior Vice President • P.21-22 Materiality Assessment Japan Sustainable Palm Oil Network (JaSPON) 102-15 Key impacts, risks, and opportunities P.23-24 Initiatives Related to the SDGs • P.26-28 Risk Management Mint Industry Research Council P.32 Climate Change • 3 Ethics and integrity Monell Chemical Senses Center P.11-12 Corporate Vision • 102-16 Values, principles, standards, and norms of behavior P.19-24 Sustainability at Takasago Natural Renewable Stewardship Circle • 102-17 Mechanisms for advice and concerns about ethics P.28 Compliance • Rainforest Alliance 4 Governance Research Institute for Fragrance Materials (Board of Directors) 102-18 Governance structure P.26 Governance • P.21 Takasago Sustainability Team 102-19 Delegating authority • Roundtable on Sustainable Palm Oil P.26 Governance Executive-level responsibility for economic, P.20 Message from Senior Vice President Sedex 102-20 • environmental,and social topics P.21 Takasago Sustainability Team Syndicat National des Fabricants de Produits Aromatiques Consulting stakeholders on economic, 102-21 ー • environmental,and social topics UN Global Compact • Corporate Governance Report P.5-6 (Japanese)
Company Info > Corporate Governance Composition of the highest governance body and its 102-22 https://www.takasago.com/en/aboutus/governance.html committees
About This Report Takasago International Corporation Company Info > Board of Directors, Audit & Supervisory Board Members, and Corporate Of cers Issue date Nissay Aroma Square, https://www.takasago.com/en/aboutus/members.html Corporate Governance Report P.5-6 5-37-1, Kamata, Ota-ku, Tokyo 144-8721, Japan 102-23 Chair of the highest governance body 31st August, 2020 (Japanese) TEL +81-3-5744-0511 FAX +81-3-5744-0512 Corporate Governance Report P.8 102-24 Nominating and selecting the highest governance body Scope and Boundaries http://www.takasago.com/en/index.html (Japanese) Corporate Governance Report P.6-7 The scope of this report is the Takasago group. This includes 102-25 Con icts of interest Contact: Global Integration Headquarters (Japanese) consolidated subsidiaries as well as non-consolidated subsidiaries Role of highest governance body in setting purpose, P.20 Message from Senior Vice President 102-26 defined by the equity-method. values,and strategy P.21-22 Materiality Assessment 102-27 Collective knowledge of highest governance body P.20 Message from Senior Vice President Period Covered 102-28 Evaluating the highest governance body’s performance ー Fiscal 2019. In this report, the term of “Fiscal” is as follows; P.21-22 Materiality Assessment Identifying and managing economic, environmental, and 102-29 P.26-28 Risk Management social impacts From April 1, 2019 to March 31, 2020 for Japan P.32 Climate Change From January 1, 2019 to December 31, 2019 for the others 102-30 Effectiveness of risk management processes P.26-28 Governance > Risk Management 102-31 Review of economic, environmental, and social topics P.21-22 Materiality Assessment External Assurance Highest governance body’s role in sustainability 102-32 ー There is no external assurance for this report. reporting P.26 Governance 102-33 Communicating critical concerns Guideline referenced P.28 Compliance GRI Standard (core option) 102-34 Nature and total number of critical concerns P.28 Compliance
63 TAKASAGO Sustainability Report 2019-2020 64 205-3 Con rmed incidents of corruption and actions taken ー Corporate Governance Report P.7-8 102-35 Remuneration policies (Japanese) GRI 206: Anti-competitive Behavior 2016 Legal actions for anti-competitive behavior, anti-trust,and Corporate Governance Report P.7-8 206-1 ー 102-36 Process for determining remuneration monopoly practices (Japanese) 102-37 Stakeholders’involvement in remuneration ー GRI 207: Tax 2019 207-1 Approach to tax ー 102-38 Annual total compensation ratio ー 102-39 Percentage increase in annual total compensation ratio ー 207-2 Tax governance, control, and risk management ー 5 Stakeholder engagement Stakeholder engagement and management of concerns 207-3 ー 102-40 List of stakeholder groups P.37 Stakeholder Engagement related to tax 102-41 Collective bargaining agreements P.38 Employment Status 207-4 Country-by-country reporting ー 102-42 Identifying and selecting stakeholders P.37 Stakeholder Engagement 300 Environmental 102-43 Approach to stakeholder engagement P.37 Stakeholder Engagement GRI 301: Materials 2016 102-44 Key topics and concerns raised P.37 Stakeholder Engagement 301-1 Materials used by weight or volume ー 6 Reporting practice 301-2 Recycled input materials used P.51 Recycled & Renewable Materials and Packages P.63 About This Report 102-45 Entities included in the consolidated nancial statements 301-3 Reclaimed products and their packaging materials P.51 Recycled & Renewable Materials and Packages P.13-18 Corporate Pro le GRI 302: Energy 2016 102-46 De ning report content and topic Boundaries P.21-22 Materiality Assessment 302-1 Energy consumption within the organization P.30 Energy and Emissions 102-47 List of material topics P.22 Materiality 2019-2020 302-2 Energy consumption outside of the organization ー P.63 About This Report P.30-31 Energy and Emissions 302-3 Energy intensity P.30 Energy and Emissions 102-48 Restatements of information P.31 Water and Ef uents 302-4 Reduction of energy consumption P.30 Energy and Emissions P.31-32 Waste Management Reductions in energy requirements of products and P.63 About This Report 302-5 ー 102-49 Changes in reporting services P.22 Materiality 2019-2020 GRI 303: Water and Effluents 2018 102-50 Reporting period P.63 About This Report P.31 Water and Ef uents 303-1 Interactions with water as a shared resource 102-51 Date of most recent report P.63 About This Report P.52 Production > Environmental Risk Initiatives 102-52 Reporting cycle P.63 About This Report 303-2 Management of water discharge-related impacts ー P.31 Water and Ef uents 102-53 Contact point for questions regarding the report P.63 About This Report 303-3 Water withdrawal P.31 Water and Ef uents > Total Water Withdrawal by Source Claims of reporting in accordance with the GRI 102-54 P.63 About This Report 303-4 Water discharge P.31 Water and Ef uents > Water Discharge by Destination Standards 303-5 Water consumption P.31 Water and Ef uents > Water Consumption 102-55 GRI content index P.64-69 GRI Content Index GRI 304: Biodiversity 2016 102-56 External assurance P.63 About This Report (There is no external assurance for this report) Operational sites owned, leased, managed in, or 103 Management Approach 304-1 adjacent to, protected areas and areas of high ー GRI 103: Management Approach 2016 biodiversity value outside protected areas P.21-22 Materiality Assessment Signi cant impacts of activities, products, and services 103-1 Explanation of the material topic and its Boundary 304-2 ー P.23-24 Initiatives Related to SDGs on biodiversity P.11-12 Medium-term Management Plan“One-T” 304-3 Habitats protected or restored P.48-49 Suppport to Local Communities and Environment - TaSuKI Care P.12 Basic Management Policy IUCN Red List species and national conservation list 304-4 ー P.21 Takasago Sustainability Team species with habitats in areas affected by operations P.29 Environment, Occupational Health & Safety > Global EHS Management P.30 Environment > Environmental Management System GRI 305: Emissions 2016 P.33 Occupational Health & Safety (OHS) > Development of OHS 103-2 The management approach and its components 305-1 Direct (Scope 1) GHG emissions P.30 Energy and Emissions > Greenhouse gas (GHG) Emissions (scope 1+2) Management System P.37-38 Our People 305-2 Energy indirect (Scope 2) GHG emissions P.30 Energy and Emissions > Greenhouse gas (GHG) Emissions (scope 1+2) P.42-51 Our Supply Chain P.31 Energy and Emissions > Other Indirect Greenhouse gas (GHG) P.52-55 Research & Development 305-3 Other indirect (Scope 3) GHG emissions P.56-58 Quality Assurance Emissions (scope 3) P.59-60 Society 305-4 GHG emissions intensity P.31 Energy and Emissions > GHG Emissions Intensity (scope 1 + 2) 103-3 Evaluation of the management approach P.20 Message from Senior Vice President P.30 Energy and Emissions > Greenhouse gas (GHG) Emissions (scope 1+2) 200 Economic 305-5 Reduction of GHG emissions P.31 Energy and Emissions > Other Indirect Greenhouse gas (GHG) Emissions (scope 3) GRI 201: Economic Performance 2016 305-6 Emissions of ozone-depleting substances (ODS) ー P.13-18 Corporate Pro le Nitrogen oxides (NOX), sulfur oxides (SOX), and other 305-7 ー 201-1 Direct economic value generated and distributed Consolidated Financial Statements signi cant air emissions The Fiscal Year ended March 31st, 2020 GRI 306: Waste 2020 https://www.takasago.com/en/ir/library1.html#ir202103 306-1 Waste generation and signi cant waste-related impacts P.31 Waste Management Financial implications and other risks and opportunities P.27 Risk Management > Climate Change 201-2 due to climate change P.32 Climate Change 306-2 Management of signi cant waste-related impacts P.31 Waste Management De ned bene t plan obligations and other retirement 306-3 Waste generated P.32 Waste Management > Waste by Type and Disposal Method 201-3 ー plans 306-4 Waste diverted from disposal P.32 Waste Management > Waste by Type and Disposal Method 201-4 Financial assistance received from government ー 306-5 Waste directed to disposal P.31-32 Waste Management > Waste by Type and Disposal Method GRI 202: Market Presence 2016 GRI 307: Environmental Compliance 2016 Ratios of standard entry level wage by gender compared 202-1 ー 307-1 Non-compliance with environmental laws and regulations P.32 Environmental Compliance to local minimum wage GRI 308: Supplier Environmental Assessment 2016 Proportion of senior management hired from the local 202-2 ー New suppliers that were screened using environmental community 308-1 P.44 Supplier Relationship Management criteria GRI 203: Indirect Economic Impacts 2016 Negative environmental impacts in the supply chain and 308-2 P.44-49 Responsible Sourcing 203-1 Infrastructure investments and services supported ー actions taken P.44-49 Our Supply 400 Social 203-2 Signi cant indirect economic impacts ー Chain > Responsible Sourcing GRI 401: Employment 2016 GRI 204: Procurement Practices 2016 401-1 New employee hires and employee turnover ー Bene ts provided to full-time employees that are not 204-1 Proportion of spending on local suppliers ー 401-2 ー provided to temporary or part-time employees GRI 205: Anti-corruption 2016 401-3 Parental leave ー 205-1 Operations assessed for risks related to corruption ー GRI 402: Labor/Management Relations 2016 Communication and training about anti-corruption 205-2 P.38 Training and Education policies and procedures 402-1 Minimum notice periods regarding operational changes ー
65 TAKASAGO Sustainability Report 2019-2020 66 Incidents of non-compliance concerning GRI 403: Occupational Health and Safety 2018 417-3 ー marketing communications P.33 Occupational Health & Safety (OHS) > Development of OHS 403-1 Occupational health and safety management system Management System GRI 418: Customer Privacy 2016 Hazard identi cation, risk assessment, and incident P.33 Incident Reporting Rule Substantiated complaints concerning breaches of 403-2 418-1 ー investigation P.33 Hazard Identi cation, Risk Assesment, and Incident Investigation customer privacy and losses of customer data 403-3 Occupational health services ー GRI 419: Socioeconomic Compliance 2016 Worker participation, consultation, and communication Non-compliance with laws and regulations in the social 403-4 P.34 OHS Communications & Inspection 419-1 P.28 Compliance on occupational health and safety and economic area P.33 Employee Training on Occupational Health and Safety 403-5 Worker training on occupational health and safety P.35-36 Takasago Safety Day 2019 P.50-51 Zero-Accident Activities 403-6 Promotion of worker health ー Prevention and mitigation of occupational health and 403-7 ー safety impacts directly linked by business relationships Workers covered by an occupational health and safety 403-8 ー management system 403-9 Work-related injuries P.34 Work-Related Injury 403-10 Work-related ill health ー GRI 404: Training and Education 2016 P.38 Training and 404-1 Average hours of training per year per employee ー Education Programs for upgrading employee skills and transition P.38 Training and Education 404-2 assistance programs P.38 Career Development Percentage of employees receiving regular performance P.38 Training and 404-3 ー and career development reviews Education GRI 405: Diversity and Equal Opportunity 2016 P.38 Employment Status 405-1 Diversity of governance bodies and employees P.38 Promoting Diversity 405-2 Ratio of basic salary and remuneration of women to men ー GRI 406: Non-discrimination 2016 406-1 Incidents of discrimination and corrective actions taken P.28 Human Rights Freedom of Association and Collective Bargaining GRI 407: 2016 Operations and suppliers in which the right to freedom 407-1 ー of association and collective bargaining may be at risk GRI 408: Child Labor 2016 Operations and suppliers at signi cant risk for incidents 408-1 ー of child labor GRI 409: Forced or Compulsory Labor 2016 Operations and suppliers at signi cant risk for incidents 409-1 ー of forced or compulsory labor GRI 410: Security Practices 2016 Security personnel trained in human rights policies or 410-1 ー procedures GRI 411: Rights of Indigenous Peoples 2016 Incidents of violations involving rights of indigenous 411-1 ー peoples GRI 412: Human Rights Assessment 2016 Operations that have been subject to human rights P.28 Human Rights 412-1 reviews or impact assessments P.45 Sustainability: Evolution of Our Sourcing Employee training on human rights policies or P.42 Corporate Procurement Guidelines 412-2 procedures P.43 Training Session Signi cant investment agreements and contracts that 412-3 include human rights clauses or that underwent human ー rights screening GRI 413: Local Communities 2016 Operations with local community engagement, impact 413-1 P.59-60 Society assessments,and development programs Operations with signi cant actual and potential negative 413-2 ー impacts on local communities GRI 414: Supplier Social Assessment 2016 414-1 New suppliers that were screened using social criteria P.44 Supplier Relationship Management Negative social impacts in the supply chain and actions 414-2 P.44-49 Responsible Sourcing taken GRI 415: Public Policy 2016 415-1 Political contributions ー GRI 416: Customer Health and Safety 2016 Assessment of the health and safety impacts of product 416-1 P.58 Customer Health and Safety and service categories Incidents of non-compliance concerning the health and 416-2 P.58 Customer Health and Safety safety impacts of products and services GRI 417: Marketing and Labeling 2016 Requirements for product and service information and 417-1 P.58 Marketing and Labeling labeling Incidents of non-compliance concerning product and 417-2 P.58 Marketing and Labeling service information and labeling
67 TAKASAGO Sustainability Report 2019-2020 68