Materiality determination process

In April 2023, we launched the cross-sectional Materiality Determination Project consisting of members from various positions and age groups, which discussed material issues for about eight months, and in December 2023, the project determined Zeon Group’s materiality with the approval of the Board of Directors. We took below steps to determine Zeon's materiality.

1. Consideration of concepts and axes

We started to determine our materiality based on the concept of double materiality with two axes: the impact on our finances (financial materiality) and the impact of our actions on society and the environment (sustainability materiality).
Based on general elements, we discussed elements that should be included in the two axes used above taking into account the principles and values Zeon considered important. Specifically, elements that should be emphasized in and added to financial materiality included Zeon’s originality, higher motivation of employees, and the safety and stability of operations, while those for sustainable materiality included employees’ eagerness, the history and milestones of Zeon, and the ideas that were put into the company’s corporate philosophy and business.

What Zeon should emphasize in the axes of materiality

2. Extraction of candidates for materiality

Based on the social issues recognized by each division when formulating the Medium-Term Business Plan Phase 2, we added the items presented in the project’s discussions and those that would be regarded as important in future international discussions and extracted candidates for materiality as a basis for further discussion.

3. Evaluation and analysis of candidates for materiality

Based on the axes examined in Step 1, the project members discussed and evaluated the importance of the candidates for materiality extracted in Step 2. Then, in order to reflect social expectations and demands on materiality when determining it, we evaluated the importance of the candidates for materiality using factors such as the degree of attention paid by international NGOs, rating agencies, and other organizations and future market forecasts while obtaining advice from consultants. We reflected the results of these two-level evaluations, analyses of differences therein, etc. on discussions to determine materiality.

4. Interviews with top managers

Furthermore, through interviews, we understood what the management considered as Zeon’s strengths and challenges, its thoughts on how the company should be in the future, etc. and reflected these in our discussions.

5. Close examination and narrowing down of materiality and consideration of how to express it

Based on the foregoing, we further discussed what key elements of materiality were so that we could depict scenarios for Zeon Group and the future of society. Then we formulated the proposed materiality while figuring out effective ways to express it with the relationships among material issues, timeline, and other factors in mind.

6. Approval by the Board of Directors

The proposed materiality thus formulated was finally approved by the Board of Directors in December 2023 through deliberations at the management meeting.