Sustainability Policy

Sustainability Policy

We believe a business should create value for society through its key practices.
We are committed to sustainably increasing our long-term value by putting Our Mission and Values into practice.

We uphold a long-term vision in our business practices to create solutions to society's needs.
We operate as a truly global company through our fair and transparent management practices.
We cultivate strong relationships with all of our stakeholders through responsible engagement.

* OMRON’s Sustainability Policy reflects the same meaning and content as declared by our Management Philosophy based on the OMRON Principles. Namely, "We are committed to sustainably enhancing our long-term corporate value by putting the OMRON Principles into practice."

Fundamental Policy

OMRON's reason for being is to create social value through business and continue to contribute to the development of society. To achieve this, we believe it is important for OMRON to identify material sustainability issues on which to focus, incorporate them into our medium-term and long-term strategies, set specific initiatives and targets, and implement them through our business. For OMRON, sustainability means pursuing both social and corporate sustainability. By fully integrating our key sustainability issues with our Long-Term Vision and Medium-Term Management plan, we will continue to strive for the sustainable development of society and the sustainable growth of OMRON.

Company-wide Management Structure to Promote Sustainability Goals

The OMRON Group has established a company-wide management structure to implement sustainability initiatives on a global basis. The status of initiatives to address material sustainability issues is regularly reported to the Executive Council, where progress status and issues are discussed.
In fiscal 2023, we appointed Directors in charge of the environment and human rights to strengthen the monitoring and supervision roles of the Board of Directors for sustainability initiatives.
We also appointed the Sustainability Executive Officer, who has operational responsibility of promoting sustainability, with the aim of further strengthening sustainability governance for the entire Group.
In addition, we established the Environment Steering Committee and the Human Rights Steering Committee directly under the Sustainability Committee. Chaired by the Sustainable Executive Officer, the Committee members discuss and make decisions on how to address material sustainability issues on a first-line, practical basis and to monitor the progress of fiscal year plans. To the Committees, Directors in charge of the environment and human rights respectively attend as observers. In addition, Regional Sustainability Committees were established in each area to strengthen efforts focused on issues specific to each area.
From fiscal 2024, with a view to further strengthening sustainability initiatives on a practical operating basis, the Sustainability Office, which was previously positioned under the direct supervision of the Board of Directors, has been dissolved to enhance the organization for this purpose. Instead, we established the Sustainability Management Department as an operating division under the Global Corporate Communications & Engagement HQ.
These sustainability initiatives are regularly reported to the Board of Directors to further strengthen governance throughout the Group.

Since fiscal 2017, a sustainability evaluation based on the Dow Jones Sustainability Indices (DJSI) has been incorporated into the evaluation for medium- to long-term performance-linked compensation (stock compensation) for officers. In addition, the reduction of greenhouse gas emissions and the score of Sustainable Engagement Index (SEI) in an engagement survey for employees were newly added as a KPI that contributes to OMRON’s growth when the officer compensation system was revised in fiscal 2020. The adoption of third-party sustainability evaluation enhances fairness and transparency, and the disclosure of sustainability policies, targets, KPIs, and progress on the website and others enhances dialogue with stakeholders in order to evolve the initiatives.

Sustainability Management Overview

Corporate Governance Framework

Process for Identifying Material Sustainability Issues (Materiality)

We determined our material sustainability issues through a series of discussions amongst our management teams, based on suggestions from internal discussions and those with outside experts. This process has a key focus on the following three ideas. We proactively disclose information to our stakeholders and engage in responsible dialogue with them regarding our progress in achieving targets related to material sustainability issues, in accordance with our Sustainability Policy.

Key Focus Points in Identifying Material Sustainability Issues

Management Philosophy and reason for being
Backcasting from a society envisioned for 2030 and beyond
Calls on companies to contribute to environmental and social sustainability

Identification Steps

STEP 1

Exploring the Long-Term Vision

Utilizing practice of our Management Philosophy, our management compass, and backcasting from a society envisioned for 2030 and beyond to identify factors of social change that affect the sustainable development of society and the Company, and to explore the direction of our Long-Term Vision

STEP 2

Organizing Focus Points

Based on the direction of our next Long-Term Vision, organizing focus points in identifying material sustainability issues

Management Philosophy and reason for being
Backcasting from a society envisioned for 2030 and beyond
Calls on companies to contribute to environmental and social sustainability

STEP 3

Hypothesizing Material Sustainability Issues

Hypothesizing material sustainability issues along the following two axes:

Importance level in practice of the Long-Term Vision, based on Step 2
Stakeholder expectations and demands: Referring to international guidelines, e.g. The SDGs and the IIRC International Integrated Reporting Framework, as well as ESG assessment organizations

STEP 4

Discussion at Management Level

Frequent discussions at the Executive Council, chaired by the CEO and attended by Executive Officers

STEP 5

Dialogue with Stakeholders

Based on hypotheses, holding dialogues with institutional investors, experts, NPOs, etc. to confirm their expectations and demands on the Group and identify material sustainability issues

STEP 6

Set Long-Term and Medium-Term Goals

Formulating long-term and medium-term business and operational strategies and setting long-term and medium-term targets based on material sustainability issues

STEP 7

Discussion and Approval at Management Level

Deliberation and approval by the Board of Directors after discussions at the Executive Council, chaired by the CEO and attended by Executive Officers

*Every year, the Executive Council discusses the need for changes to the material sustainability issues, progress toward the long-term and medium-term targets for the identified key sustainability issues, and the establishment of single-year targets and progress toward those targets. These discussions are then reviewed and approved by the Board of Directors.

Approach to Material Sustainability Issues

We identified five key sustainability issues that we judged to be particularly important for the sustainable development of society after assessing and confirming the expectations and requests of various stakeholders, including external evaluation organizations, our shareholders, including institutional and individual investors, customers, local communities, and NPO/NGOs.

Material Sustainability Issues (Materiality)

We at the OMRON Group have identified material sustainability issues, and incorporated them for the first time into our Long-Term Vision. Under SF2030, we aim to address the following five material issues.

Resolving social issues through our business
Creating social value by resolving social issues through our business
Maximizing capability to innovate driven by social needs
Evolving business models and expanding new business generation efforts
Generating diverse talent taking on the challenge of value creation
Evolving human resources management to bring out the capabilities and skills of OMRON's diverse talent
Achieving de-carbonization and lower environmental impact
By viewing climate change from the two aspects of opportunities and risks, practicing corporate social responsibility and building further competitive advantage
Respecting human rights in the value chain
As part of our corporate social responsibility, exerting our influence for the respect of human rights for workers in the value chain and at OMRON

Addressing Material Sustainability Issues and Maximizing Corporate Value

Under SF2030, OMRON is evolving and promoting integrated initiatives to business growth and sustainability issues. The creation of social and economic value is realized through the aim of “solving social issues through business.” In order to achieve this, it is essential to create new businesses by innovation driven by social needs and to develop diverse human resources to support these new businesses. These will also lead to “OMRON’s sustainable growth.” In addition, decarbonization, reduction of environmental impact, and respect for human rights in the value chain have become essential corporate social responsibilities to promote the “sustainable development of society.” By addressing these five key sustainability issues, SF2030 aims to maximize corporate value by creating both social and economic value.

Furthermore, because the material sustainability issues were identified to achieve OMRON's long-term vision, the PDCA cycle for sustainability issues is incorporated in our Integrated Risk Management system.

Medium-to-Long-Term Goals of Material Sustainability Issues (Materialities)

The degree of achievement of the medium-term targets for materiality issues is partly linked to the stock compensation of Directors (excluding Outside Directors), and Executive Officers.

Material sustainability issues	Medium-term targets (FY2024 targets)	Long-term goals (SF2030 targets)
① Resolving social issues through our business	Sustainability-related sales^1, an indicator of contributions to the resolution of the three social issues: +35% vs. FY2021*	The state of contributing to the sustainable development of society by resolving the social issues tackled Group-wide of achievement of carbon neutrality, realization of a digital society, and extension of healthy life expectancies from the social change factors focused on in SF2030: an aging population, climate change, and economic disparity among individuals
② Maximizing capability to innovate driven by social needs	New businesses created: Three or more	The state of continuously generating new businesses by demonstrating our capability to innovate driven by social needs in both existing and new business domains, through actions like evolving essential core technology development and incorporation into business models
③ Generating diverse talent taking on the challenge of value creation	Investment in human resource development: 6.0 billion yen Ratio of non-Japanese in key managerial positions outside Japan: 80% or more Increase the ratio of women in managerial roles on a global basis to: -^2 Hire disabled individuals at 28 bases outside Japan: -^2 Hire disabled individuals at Japan: 3% or more VOICE SEI^3：70P or higher*	The state of bringing diverse talent together where everyone can succeed, regardless of nationality, gender, or work style, where OMRON provides opportunities for its diverse talent to grow and evolves its human resources management to maximize their capabilities and skills
④ Achieving de-carbonization and lower environmental impact	Reduce total (direct/indirect) internal GHG emissions (Scope 1 and 2): 68% cut vs. FY2016 Achieve Carbon Zero at all 76 sites^4 in Japan* Implement energy-saving designs for new products in reducing GHG emissions from use of products sold (Scope 3) Implementing business model transformation, environmentally friendly design, collection and recycling, and sustainable procurement in response to transition to a circular economy	The state of building further competitive advantage while solving social issues through reducing greenhouse gas (GHG) emissions in the value chain and establishing a resource recycling model Long-term (2030) targets set for achieving OMRON Carbon Zero in 2050 Reduce total (direct/indirect) internal GHG emissions (Scope 1 and 2): 65% cut vs. FY2016 Reduce GHG emissions from use of products sold (Scope 3, Category 11): 18% cut vs. FY2016
⑤ Respecting human rights in the value chain	Conduct human rights due diligence in line with the UNGP^5 Build a human rights redress mechanism* into the value chain globally	In line with the UN Guiding Principles on Business and Human Rights, the state of exerting our influence for the respect of human rights for workers not only at OMRON, but also in the value chain, and establishing a culture and system that does not permit or cause human rights violations

*1Sales from focus businesses that contribute to "Achievement of carbon neutrality", "Realization of a digital society", and "Extension of healthy life expectancies"
*2This target was not defined as of our announcement on May 8, 2024. This is a new target for Japan.
In addition, we will not establish targets globally or outside Japan for fiscal 2024, as personnel structural reforms are ongoing in certain areas outside Japan.
*3Sustainable Engagement Index, OMRON's employee engagement survey
*413 production sites and 63 non-production sites (HQ, R&D, sales)
*5The UN Guiding Principles on Business and Human Rights