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Sustainability Issues and Goals

Sustainability Issues and Goals

In fiscal 2017, OMRON set key sustainable issues based on it sustainability policy, which are made up of two main areas. The first are social issues OMRON should solve through the focus business domains defined in its VG2.0 medium-term management plan. The second are issues that should be addressed by building a strong platform to carry our VG2.0 to meet the expectations of stakeholders. OMRON set fiscal 2020 goals and is working since fiscal 2017 to achieve the goals. By aligning visions and directions of sustainability initiatives with VG2.0, OMRON is working toward sustained enhancement of corporate value.

Issues to solve through business
  • Factory Automation: Respond to labor shortages and diversifying manufacturing practices
  • Healthcare: Zero brain and cardiovascular diseases, respiratory diseases
  • Mobility: Reduction of traffic accidents and the environmental burden of vehicles
  • Energy Management: Increasing use of renewable energy, CO2 reductions
Issues to respond to stakeholder expectations
  • Talent Attraction and Development
  • Diversity and Inclusion
  • Wellness Management
  • Occupational Health and Safety
  • Respect for Human Rights and Labor Practices
  • Product Safety and Quality
  • Reduction of Greenhouse Gas Emissions
  • Appropriate Management and Reduction of Hazardous Substances
  • Supply Chain Management
  • Fair Business Practices
  • Privacy and Data Security

FY2017 Summary

  • During fiscal 2017, we made steady progress toward achieving year 2020 sustainability goals for social issues to be solved through our businesses.
  • We added goals under healthcare and energy management. These goals call for new technologies and new businesses in combination with progress on our ongoing initiatives.
  • In mobility, we raised our goals to reflect progress to date. We also added goals seeking greater impact on the environment in parallel with our business plan.
  • Respect for human rights and labor practices was our focused issue in fiscal 2017. The Executive Council established a group management framework. Based on the framework, we conducted a self-assessment of human rights and labor practice risks at our production centers (including overseas centers), taking action as necessary.
  • For fiscal 2018, we have added goals related to employee wellness. We launched the Boost5 program, which assesses mental and physical wellness.
  • OMRON added goals for product safety and quality for fiscal 2018 to improve manufacturing quality management.
  • Beginning fiscal 2018, OMRON will pursue a new goal to reduce total greenhouse gas emissions in conformity with SBT. We are moving forward with initiatives to reach carbon zero by fiscal 2050.

Goals to Solve Social Issues through Business

OMRON will contribute to society by solving social issues in four focus domains defined by VG2.0, while also achieving business growth.

Factory Automation: Manufacturing Innovation

Social Issues
  • Shrinking labor force due to aging and declining populations, a critical shortage of skilled engineers in developed countries, and soaring labor costs among emerging economies
  • Response to sophisticating and diversifying manufacturing
OMRON’s Initiatives

<Manufacturing Innovation>

  • Approach to four focus industries (Automobile, digital, food & commodity, social infrastructure) that can enrich the world
  • Value generation through innovative-Automation*
FY2020 Goals/KPIs
  • Sales target, Industrial Automation Business (IAB): ¥480 billion
  • Sustainability goals: New innovative-Automation products across four focus industries - Control technology for manufacturing innovation -
    (Creation of new values to contribute to higher productivity in the four industries)
Social Value Contribute to economic growth through social productivity improvement in manufacturing
  • * "innovative-Automation" is a concept unique to OMRON to bring innovations to production floor in the manufacturing industry. "innovative-Automation" incorporates three "i"s to define manufacturing for the future—Integrated, Intelligent, and Interactive Automation.
[Reference: FY2017 progress]

Net sales, Industrial Automation Business (IAB): ¥396.1 billion
Progress toward sustainability goals: Evolution in integrated, intelligent, interactive through co-creation with manufacturing customers (e.g. Launch of i-BELT production floor data service)

Healthcare: Zero brain and cardiovascular diseases, respiratory diseases

In red: targets updated or added
Social Issues
  • Increasing incidence of cerebrovascular and cardiovascular diseases caused by high blood pressure
  • Worldwide increase in respiratory diseases
OMRON’s Initiatives

<Zero cerebrovascular/cardiovascular events caused by high blood pressure, Zero asthma attacks>

  • Reducing cerebrovascular/cardiovascular diseases caused by high blood pressure to near-zero by further promoting blood pressure monitoring at home, and advancing technology to enable continuous monitoring
  • Enable detection and treatment of asthma in early stages by offering nebulizers and asthma wheeze monitors
FY2020 Goals/KPIs
  • Sales target, Healthcare Business (HCB): ¥150 billion
  • Sustainability goals:
    • Blood pressure monitor sales: 25 million units /year
    • Develop analytical technologies to continuously track blood pressure fluctuations
    • Nebulizer + asthma wheeze monitor sales: 7.65 million units/year (aims to bring these products to more people)
Social Value Contribute to healthy and comfortable lives for people around the world through lengthened healthy lifespans and reductions in medical expenditures
[Reference: FY2017 progress]

Net sales, Healthcare Business (HCB): ¥108.5 billion
Progress toward sustainability goals: Adoption of home-use blood pressure monitors and nebulizers in emerging economies struggling with rising lifestyle and respiratory diseases (India, China, etc.)

Mobility: Reduction of traffic accidents and the environmental
burden of vehicles

In red: targets updated or added
Social Issues
  • Increase in accidents involving elderly drivers in developed countries
  • More accidents, congestion in emerging countries
  • Higher environmental burden
OMRON’s Initiatives

<Reduction of traffic accidents and the environmental burden of vehicles>

  • Provide advanced traffic control and road management systems
  • Provide automotive sensors for advanced driver assistance system/autonomous driving
  • Provide automotive products enabling increased fuel efficiency for vehicles and development of EVs, HEVs, PHEVs
FY2020 Goals/KPIs
  • Sales targets
    • Automotive Electronic Components Business (AEC): ¥150 billion
    • Social Systems, Solutions and Service Business (SSB): ¥80 billion
  • Sustainability goals:
    • Create safe driving support systems, technologies
    • Create 360° recognition technologies for advanced driving support/self- driving vehicles
    • Sales of vehicles with eco-friendly products: 12 million units/year
      (Increase ratio of high fuel efficiency products: 50%)
Social Value Contribute to safe, secure, pleasant, and clean lifestyles for people around the world
[Reference: FY2017 progress]
Net sales
  • Automotive Electronic Components Business (AEC): ¥131.2 billion
  • Social Systems, Solutions and Service Business (SSB): ¥63.7 billion
Progress toward sustainability goals:
  • Introduced DriveKarte (AEC, SSB), world’s first driver management service for safe driving using on-board driver monitoring sensors
  • Developed high-precision 3D-LIDAR (AEC); self-driving technology
  • Ratio of high fuel efficiency products in eco-friendly vehicles: 36% (AEC)

Energy Management: Increasing use of renewable energy, CO2 reductions

In red: targets updated or added
Social Issues
  • Acceleration of global warming due to increasing CO2 levels
OMRON’s Initiatives

<Promoting widespread and stable operation of renewable energy systems>

  • Maximize energy efficiency by drawing on energy conversion and control technologies of energy-related products such as PV inverters and battery storage systems
  • Develop infrastructure for dispersed power supply systems
FY2020 Goals/KPIs
  • Sustainability goals:
    • Cumulative shipped capacity of solar power/storage battery systems: 11.2GW
      (Contribution to generate more renewable energy)
    • Build the energy resource aggregation business using PV/storage system (Japan)
Social Value Contribute to sustainable society by promoting the use of renewable energy
[Reference: FY2017 progress]

Progress toward sustainability goals: Cumulative shipped capacity of solar power/storage battery systems: 8.0GW

Goals to Respond to Stakeholder Expectations

Human Resource Management

Under VG2.0, our human resources strategy calls for creating a strong company where employees grow, enjoy their work, and improve performance continually. OMRON envisions an organization in which individual members of a diverse workforce can put their unique talents to use and achieve personal growth on their own initiatives. By so doing, these workforce members drive the growth of OMRON by contributing to customers and society as a whole, through improvements of productivity and added value.

Talent Attraction and Development

OMRON’s Initiatives

<Implementation of Human Resources Strategy>

  • Acquire and foster next generation of leaders (candidates for assuming core positions)
  • Establish a workplace environment that can attract and empower the diverse talent necessary for business growth
  • Foster self-motivated employees who can achieve self-transformation and development
FY2020 Goals/KPIs
  • (1) Evolve and advance TOGA* to act in the spirit of the OMRON Principles
  • (2) Ratio of non-Japanese in managerial positions overseas: 66%
  • (3) Accelerate PDCA cycle via employee engagement surveys
Social Value Develop leaders who can drive innovation for solving social issues through businesses and a pool of talented workers who can put their diverse capabilities to use
  • * TOGA stands for The OMRON Global Awards, an internal award system designed to encourage employees to put the OMRON Principles into action. This initiative is intended to motivate individual employees to challenge themselves to solving social issues and generating new value on their own initiatives.
[Reference: FY2017 progress]
  • (1) Increase in the number of TOGA projects designed to solve social issues
  • (2) Ratio of non-Japanese in managerial positions overseas: 49%
  • (3) Identified 10 management issues from engagement survey results

Diversity and Inclusion

OMRON’s Initiatives

<Promotion of diversity>

  • Empower and expand the role of women (OMRON Group in Japan)
  • Empower and expand the role of people with disabilities
FY2020 Goals/KPIs
  • (1) Ratio of women in managerial roles (OMRON Group in Japan): 8%
  • (2) Employment of people with disabilities: Expand employment to exceed legal requirements
Social Value Build a workplace in which a diverse group of people can demonstrate their talents and maximize their potential at work without regard to gender, disability, or other personal differences
[Reference: FY2017 progress]
  • (1) Ratio of women in managerial roles: 3.6% (OMRON Group, Japan)
  • (2) Ratio of employees with disabilities: 2.6% (OMRON Group, Japan)

Wellness Management

In red: targets updated or added
OMRON’s Initiatives

<Promotion of health management in Japan>

  • OMRON Health Management Declaration
  • Employee education
  • Initiatives intended to remove factors that negatively affect health
FY2020 Goals/KPIs
  • Improve awareness of wellness management
    (Start of Boost5* at OMRON group in Japan)
Social Value Support employees’ health promotion and management to enhance their productivity and creativity while reducing medical expenditures. This is intended to help each employee find fulfillment in work and life.
  • * Boost5: Five areas of physical and mental health: Exercise, sleep, mental health, nutrition, and smoking
[Reference: FY2017 progress]
  • Published the OMRON Health Management Declaration
  • Health information seminars for employees

Occupational Health and Safety

OMRON’s Initiatives

<Establishment of a management system and continuation of improvements>

  • Promote acquisition of international certification for occupational health and safety at main production sites
  • Train and develop OH&S promoters
FY2020 Goals/KPIs
  • (1) International OSH (Occupational Safety and Health) certifications: At sites representing 80% of production capacity
  • (2) Sites with OSH promoters in place: All target sites
Social Value Allow all OMRON Group employees to put their capabilities to full use by creating a workplace that is comfortable and safe in both physical and mental aspects, in compliance with applicable laws and regulations
[Reference: FY2017 progress]
  • (1) Six production sites earned the international OSH certifications
  • (2) Allocated promoters at all target sites. Held a global conference to offer group education to enhance specialized skills

Respect for Human Rights and Labor Practices

OMRON’s Initiatives

<Establishment of a management system and continuation of improvements>

  • Establish a management system (Human Rights Policy and an organizational system)
  • Analyze risks in production sites and take corrective measures
FY2020 Goals/KPIs
  • (1) Define and adopt due diligence process
  • (2) Human resources risk analysis and corrective actions at production centers
Social Value Create a better workplace environment that ensures that the rights of all people working at the OMRON Group are properly respected
[Reference: FY2017 progress]
  • (1) Revised global code of conduct and structure system for human rights
  • (2) Risk analysis based on RBA* self-assessment questionnaires: Performed at 16 production centers (8 in Japan, 4 in China, 3 in Asia Pacific, and 1 in Europe)
    • Third-party RBA gap analysis: 1 production site in Malaysia
    • Fact-finding surveys on foreign labor: 2 production sites in Japan
  • *RBA: Responsible Business Alliance. Global CSR alliance for the electronics and other industries.

Manufacturing

By putting the OMRON Principles into practice in a way that complies with its Manufacturing Policy*, OMRON will create social value and strives to contribute to sustainable manufacturing. In conformance with OMRON’s Purchasing Policy, OMRON also seeks to achieve sustainable procurement together with suppliers through purchasing practices that conform to our guidelines.

  • * OMRON’s manufacturing policy comprises three principles-Quality First, 3F (Front-loading, Flowing & Flexible), and H&E (Human-oriented & Eco-manufacturing). The "3F" policy refers to the creation of the value sought by customers in the upstream of the development process. This value is built into products and services so that we can deliver what customers require in the needed quantities and at the needed times. In this way, the policy addresses the creation and delivery of customer value. The H&E policy aims to achieve the best match between people and machines and promote humanity-focused, environmentally friendly manufacturing to use limited resources.

Product Safety and Quality

In red: targets updated or added
OMRON’s Initiatives

<Promotion of Group-wide quality management>

  • Conduct Group-wide quality management reform
FY2020 Goals/KPIs
  • (1) Product safety assessments for newly developed products: 100%
  • (2) Improve product safety assessments
Social Value Achieve sustainable manufacturing by incorporating quality, safety, environmental friendliness, and consideration for human rights into products and services
[Reference: FY2017 progress]
  • (1) Product safety assessments: 100% implementation

Supply Chain Management

OMRON’s Initiatives

<Engagement with partners>

  • Hold global partner conference
  • Promote sustainability self-assessment*1 at suppliers
  • Introduce supply chain management in conformance with RBA*2 and maintain and improve it
FY2020 Goals/KPIs
  • Sustainability self-assessments by important suppliers: Implementation ratio: 100%, Score of 85 or higher
Social Value Achieve sustainable production and consumption in society by solving social issues in supply chains together with suppliers
  • *1 Sustainability self-assessment: Assessment by suppliers on their own. In the form of questionnaire. On their initiatives in labor, safety and health, environment and other categories. Score of 85 or higher is regarded as low in risk, and 65 or higher as high in risk. Conforms to Responsible Business Alliance, or RBA.
  • *2 RBA: Responsible Business Alliance, a global CSR alliance for the electronics and other industries.
[Reference: FY2017 progress]

Sustainability self-checks at major suppliers: No companies scoring below 65 points

Reduction of Greenhouse Gas Emissions

In red: targets updated or added
OMRON’s Initiatives

<Promotion of Green OMRON 2020>

  • Reduce CO2 emissions through more effective use of electricity and introduction of renewable energy
FY2020 Goals/KPIs
  • (1) Reduce GHG emissions by 4% (vs. fiscal 2016, SBT conformity*)
  • (2) Environmental contribution > CO2 emissions from global production sites
Social Value Build a low-carbon society by reducing greenhouse gas emissions, thereby contributing to sustainable manufacturing
  • * SBT: Science Based Target.
[Reference: FY2017 progress]
  • (2) Environmental contribution of 659k tons of CO2 saved vs. 204k tons of CO2 emissions from production centers

Appropriate Management and Reduction of Hazardous Substances

OMRON’s Initiatives

<Promotion of Green OMRON 2020>

  • Stop use or reduce the use of harmful substances in accordance with societal demand
  • Build a framework for management of chemical substances used in manufacturing process
FY2020 Goals/KPIs
  • (1) Reduction of mercury through the prevalence of digital thermometers and digital blood pressure monitors: 69 tons/year
  • (2) Stop use of CFCs in FY 2018. Stop use of HCFCs and mercury (fluorescent lamp use) in FY 2020
Social Value Create a low-carbon society that is in harmony with nature by reducing harmful impact of hazardous substances on people, living creatures, and the environment
[Reference: FY2017 progress]
  • (1) Reduced mercury through the adoption of digital thermometers and digital blood pressure monitors: 51 tons/year
  • (2) Reduced CFC-using equipment by 39%, HCFC-using equipment by 25%, and fluorescent lamp use by 26%

Risk Management

OMRON promotes risk management that integrates all risk-related activities at the global level, in order to ensure business continuity and the achievement of goals, while also fulfilling its social responsibilities. By disseminating the polices and rules established in-house, OMRON seeks to build long-term relationships of trust with stakeholders while helping employees engage in work and business with pride and a sense of security.

Fair Business Practices

OMRON’s Initiatives

<Reinforcement of compliance programs>

  • Review OMRON Group Rules for Ethical Conduct on a regular basis in order to reflect laws/regulations and societal demand in countries throughout the world
  • To maintain awareness of compliance and instill provisions stipulated in rules:
    Offer necessary training and education periodically and continuously
  • Assess issues using the whistle-blower system and promptly take corrective actions
FY2020 Goals/KPIs

Continuous evolution in group governance

  • (1) Consistent promotion of OMRON Group Rules* at all global sites
  • (2) Global training regarding the OMRON Group Rules for Ethical Conduct
Social Value Implement proper anti-corruption initiatives reflecting political, economic, and cultural background of each country in order to contribute to preserving an orderly and sound society based on law.
Ensure fair business practices in conformance with applicable laws of respective countries and global rules, thereby contributing to the creation of a society that allows fair and free competition.
  • * OMRON Group Rules: Internal rules to ensure OMRON management transparency, fairness, and global perspective that serve as a foundation for proper and timely decision-making. OMRON Group Rules encompass 24 separate topics, including ethical conduct, risk management, unauthorized control, information security, security export control, IT controls, accounting and funding, labor and occupational health, environmental management, procurement, and brand management.
[Reference: FY2017 progress]
  • (1) Launch of global web-site to thoroughly promote OMRON group rules, and system for training and monitoring
  • (2) Training offered to 30 thousand employees in 25 languages

Privacy and Data Security

OMRON’s Initiatives

<Build a new information security system>

  • Comply with privacy-related laws revised or newly enacted in various countries across the world
  • Strengthen technologies to combat recent increase in cyber-attacks
  • Review information security education program and continue education
FY2020 Goals/KPIs

Continuous evolution in group governance

  • Consistent promotion of OMRON Group Rules at all global sites
  • Build a new information security system
Social Value Enable appropriate management of confidential data and personal information to help conduct business safely and securely in a digitized society
[Reference: FY2017 progress]

Launch of global cyber security meeting and Computer Security Incident Response Team

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