Materiality and ESG Key Issues

• Materiality and ESG Key Issues
• Materiality (Technology)
• Materiality (Human Capital)

Addressing social issues and creating new value together with customers—these efforts are driven by nothing other than Dexerials’ materiality of technology and human capital. Our organizational strength combines specialized expertise with cross-disciplinary knowledge, enabling innovation on a global scale. In partnership with a diverse range of individuals aligned with and inspired by Dexerials’ Purpose, we foster a corporate culture of bold endeavor that propels our aspirations toward growth.
To implement this growth strategy, it is more crucial than ever to strengthen collaboration globally and focus on cultivating and hiring skilled engineers. So, to achieve the targets in our Mid-Term Management Plan 2028 “Achieving Evolution,” we are strategically developing and acquiring the necessary talents globally, not only in Japan, backcasting to identify the personnel we will need in the medium to long term, while pursuing growth in existing domains and entering new fields. At the same time, we are building organizations that will allow the Company to act swiftly and respond flexibly to rapid changes in society and market environments.
As we expand our business portfolio in line with our growth strategy, we are aligning and advancing our Human Capital Strategies to support that expansion. During the current Mid-Term Management Plan period, we will solidify our foundation for sustainable growth.

The Dexerials Group is committed to its Corporate Philosophy, Corporate Vision, and Purpose as it pursues sustainable growth through efforts to resolve challenges facing society. To further these ends, we have established a Fundamental Belief, a Human Capital Management Policy, and the Dexerials Way behavioral principles as a global framework reflected in our HR management system to maximize the utilization of human capital.
These frameworks form the corporate culture and values that we prize in our Corporate Philosophy of Integrity and our Corporate Vision of “Value Matters.” In other words, they are the DNA of Dexerials, elevated into a global common language for our materiality: our human capital.

The expansion of our business portfolio is part of Dexerials’ growth strategy. To support this expansion, we are formulating and advancing Human Capital Strategies to maximize the value of our human capital—the materiality of our company. Under the current Mid-Term Plan, we are advancing our human capital and business strategies in tandem to strengthen our human capital foundation globally and drive significant business growth.

In an increasingly volatile and uncertain business environment, it is essential for Dexerials to expand its business portfolio strategically. Toward that end, we must enhance both our technology and our human capital, which will allow us to stay ahead of social issues and continue coming up with effective business solutions. To achieve this, we are aligning our business portfolio with management and business strategies and developing a global human capital portfolio by backcasting from the future we envision.
First, we analyze the gap between our current state (As Is) and our targeted future state (To Be) to identify the technologies, skills, and human resources we will need for our 2030 business portfolio. Based on this analysis, we then pursue global talents development and acquisition.

Dexerials is shifting the focus of talents development and acquisition from consumer IT—one of our current strongholds—to automotive and photonics, and other domains where emerging technologies are expected to drive growth. Photonics and semiconductor technologies are especially essential for developing next-generation solutions, and we are actively recruiting engineers with highly specialized technical expertise globally.

In 2023, Dexerials established the structure to provide a Human Resources Business Partner (HRBP) function to strengthen and optimize its human capital portfolio globally. For these four key functions—Technology & Development, Production & Manufacturing, Sales & Marketing, and Corporate Planning & Administration—we are visualizing current and target states of skills and technologies and taking action to close identified gaps.
Unlike conventional HR structures that assign representatives to serve as HRBPs within each business unit or division, Dexerials has built a unique HR support framework in which HR initiatives are planned and implemented across organizational boundaries—both in Japan and globally—based on skills and technologies within each function. Aiming to strengthen and qualitatively transform our human capital, we are identifying, assessing, and visualizing priority skills and technologies in line with our growth strategy.

In fiscal 2024, Dexerials began the full implementation of a global-standard JOB-based HR Management system as the foundation for advancing our Human Capital Strategies.
With a global sales ratio of approximately 67%, strengthening collaboration and optimizing structures across borders is essential. Toward this end, Dexerials aims to build partnerships that promote positive engagement between employees and the Company, allowing for mutual growth.
By establishing a competitive HR system and practice that respects diversity and individuality, we will evolve our organizational culture and work environment, driving sustainable growth and enhancing corporate value.

To achieve the targets in the Mid-Term Management Plan 2028 “Achieving Evolution,” Dexerials has designed required job responsibilities, starting with executive and upper-level positions, aligned with its business model and strategy. Each position has clear performance responsibilities, based on which a global structure with standardized grading has been established. Compensation levels by position are determined by benchmarking against companies of similar scale and industry, using government wage statistics and third-party survey databases. We then set compensation levels by country, region, and grade. By comparing these with our systems and levels, we can ensure external balance and enhance Dexerials’ recruitment competitiveness.
Through these initiatives, we will optimize our human capital portfolio and establish a foundation that supports sustainable growth.

Dexerials’ evaluation system is a framework designed to promote skills development among employees based on the Dexerials Way to maximize the utilization of human capital.
At the beginning of each fiscal year, employees set goals for achievement and behaviors—two axes for balancing the achievement of organizational goals with individual growth. At the end of the year, we have performance review and evaluate both achievements and behaviors taken in line with set goals.
Through this process, employees clarify their challenges and growth opportunities, build self-development plans, and take on new challenges, while driving sustainable growth and enhancing corporate value.

As a basis for employees to grow self-directedly and design their own careers, Dexerials is gradually making all formalized job architectures and career maps available internally for all employees. To expand career possibilities, we have also introduced an internal job posting system that allows employees to apply for any job that interests them from among a wide range of departments and positions. This system encourages employees to enhance their skills and pursue a career that they envision for themselves.
Going forward, we will further enhance our global talents management system and make active use of HR data to implement initiatives that support employees’ further growth and encourage taking on new challenges.

We want our employees to adopt a proactive work style in which they are constantly learning, thinking, acting, and growing. In turn, Dexerials shall create an environment that supports this approach and clearly articulate the aim of fostering mutual growth for both employees and the Company.

To achieve sustainable growth, we are aligning our HR systems and practices with our talents development initiatives. This approach focuses on unlocking each employee’s potential and maximizing our human capital to foster a creative and dynamic organizational culture.
We encourage employees to be self-directed in their learning and have established a system that supports their development, along with a wide range of training programs that enable every individual to rise to their full potential. We also prioritize developing the next generation of leaders to drive our business forward by providing education that fosters a management perspective and practical learning opportunities. In this way, we aim to nurture talents capable of contributing to ongoing corporate value enhancement.
We will continue to build a globally unified education and training system while advancing our organizational culture and work environment to drive sustainable growth and enhance corporate value.

Starting in fiscal 2024, we began promoting cross-disciplinary learning and interaction opportunities with other companies through open courses offered by business schools. Such opportunities expose employees to trends and diverse values from outside the company, broadening their perspectives and fostering practical learning and growth. We also offer online video learning services to all employees who wish to participate, to support their self-development, providing a structured environment for acquiring knowledge, from business fundamentals to practical skills and applications. These initiatives are building a framework that enables every employee to learn and grow independently on an ongoing basis.

To further strengthen our management base, we have been conducting a next-generation management candidate development program for selected members from across the Group, including global sites. The D-BLP^＊1 program for management-level employees, launched several years ago, hones the critical thinking, judgment, and creativity needed to address challenges from a management perspective. Participants formulate viable business proposals and gain practical experience, learning how to directly enhance business operations with support from executives, in a process that broadens their leadership perspective as next-generation management candidates.
In fiscal 2024, we also launched our FIP^＊2 program for non-managerial employees, designed to systematically cultivate leaders from an early stage who will drive our future transformation. Participants include diverse members from Group companies worldwide, who engage in six months of discussion and collaboration centered on the theme of strategic planning for creating new value. We designed this original program by taking into account recent changes in internal and external environments. It provides practical learning opportunities rarely available on their own assignment, such as exchanges with senior management and D-BLP graduates, dialogues with leaders active outside the company, and fieldwork focused on real business issues. Participants reflect on their leadership skills as they cultivate the capacity to deal with difficulties. After the program ends, they go on to tackle new challenges in their respective departments. We will continue to develop and expand these programs, with a commitment to cultivating a new generation of leaders.

• *1Dexerials Business Leadership Program
• *2Dexerials Future Innovators Leadership Development Program

To support employee growth and career development in the medium to long term, we actively promote regular 1-on-1 sessions with a supervisor. Even within the JOB-based HR Management system, ongoing dialogue throughout the year is vital for aligning individual and organizational goals. Through conversations between employees and their managers, we help employees pursue personal growth and find their individual Purposes. The efforts also help to foster a culture that values open dialogue.
By fiscal 2024, we had conducted 1-on-1 training on effective conversations for senior management, general managers, and managers, and have since expanded the program to include assistant managers. We will continue to strengthen our corporate culture that balances career autonomy with sustainable organizational growth through ongoing system implementation.

To deepen understanding of our Purpose and expand the alignment between corporate and individual Purpose, top management conducts direct communication sessions on a regular basis. These sessions are provided for managers who have been newly promoted to general manager-level or manager-level positions—key milestones in their careers. They offer opportunities for these managers to engage directly with top management, experience the company’s vision firsthand, and exchange ideas, and issues, thereby strengthening team-building between top management and frontline leaders.

The Group conducts an engagement survey every two years to monitor alignment with the Mid-Term Management Plan.
In the 2024 survey, new questions were added to assess the degree of implementation of our Corporate Philosophy and Vision, and to measure employees’ empathy with Dexerials’ Purpose, aiming to achieve engagement that reflects our corporate identity. The survey revealed positive results in these areas, which underpin our corporate culture.
Against the results of the 2022 engagement survey, overall engagement among general managers and managers improved, along with categories related to goal and performance management, including supervisory practices. We attribute these improvements to the transition to a JOB-based HR Management system, which has brought increased clarity of alignment between business strategies and job or performance objectives.
Meanwhile, categories related to the acquisition, assignment, and utilization of talents remain ongoing challenges. We aim to address these by transforming our human resources to our targeted portfolio and by supporting employees in achieving designed career by themselves. These initiatives are closely linked to our Human Capital Strategy. Following the Updating of HR platform, we will promote a PDCA cycle to tackle these challenges through the utilization (activation) phase and enhance employee engagement.

• Sustainability Management

• Environmental Measures

• Relationships with Society

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