Sustainability Framework

Basic Policy on Sustainability

The Kawasaki Group has formulated the Kawasaki Group Policy on Sustainability Management to clarify the position of sustainability in management. To achieve our Group Mission, we consider our contribution to the sustainability of society and the environment through our products and services to be our mission as a company and will take on the challenge of creating and delivering innovative solutions to various social and environmental problems confronting humanity and our planet now and in the future. Also, through strengthening our responsible corporate behavior and management platform, we aim to realize a sustainable society and continuous improvement in the corporate value of the Kawasaki Group.

1. Fundamental Concepts
   Guided by our founder Shozo Kawasaki's philosophy of "contributing to the nation and to society through expertise," the Kawasaki Group for more than 120 years has been constantly taking on leading-edge technological challenges to contribute to social development through the provision of innovative products.
   
   Today, we promote the development of solutions and new frameworks toward the future under the Group's mission of "Kawasaki, working as one for the good of the planet," which was built on the above philosophy. Our initiatives to this end range from transitioning to hydrogen energy to advocating for novel workstyles supported by robotic technologies.
   To realize the Group's mission, this policy clarifies our long-term management approach in furtherance of our simultaneous pursuit of a sustainable society and ongoing improvement in corporate value. This pursuit will be underpinned by our efforts to create and deliver innovative solutions to various social and environmental problems confronting humanity and our planet now and in the future.
   In line with this policy, we will identify material issues based on the real-time assessment of the socio-economic environment and formulate management plans backed by well-grounded growth scenarios. Moreover, we will strengthen corporate governance and engage all our stakeholders in dialogue and collaboration to create new economic, social and environmental value.
2. Policy on Sustainability Management
   

   (1) Taking on the Challenge of Resolving Social Issues

   We will take on the challenge of delivering innovative solutions to issues faced by society in the environmental, energy, and resource fields, as well as to other problems arising from ongoing societal changes on various fronts, with the aim of contributing to the well-being of people around the world and the good of the planet now and in the future. To this end, we will take full advantage of our technological capabilities, which we have developed over many years, while consolidating diverse insights both within and outside the Kawasaki Group. At the same time, we will continuously upgrade and transform the Kawasaki Group itself so that we remain capable of delivering new value as needed by stakeholders. Specifically, we will:

   (ⅰ) Develop and implement carbon-neutral energy technologies to support international efforts to curb climate change.

   (ⅱ) Deliver solutions that upgrade industries and daily living in various forms to help create a safe and secure society in which everyone can enjoy abundant life.

   (ⅲ) Establish a business model that effectively utilizes resources and thereby contribute to the realization of a circular society.

   (2) Responsible Corporate Conduct

   We will remain acutely aware of the social and environmental impact of our business operations and strive to enhance the sustainability of the entire value chain by implementing countermeasures in areas where our operations might pose a negative impact. Specifically, we will:

   (ⅰ) Strive to achieve net zero CO₂ emissions and, to this end, proactively work to reduce any forms of environmental burden attributable to our business activities.

   (ⅱ) Uphold international norms as well as laws and regulations enforced in countries in which we operate as part of responsible corporate conduct.

   (ⅲ) Respect the human rights of all people who come into contact with our business while taking a sincere approach to addressing human rights issues.

   (3) Strengthening Business Foundations

   We will continuously strive to enhance our corporate value through improved corporate governance, a high level of employee engagement, and dialogue and collaboration with stakeholders. Specifically, we will:

   (ⅰ) Strengthen corporate governance as the basis for sustainability management.

   (ⅱ) Enhance employee engagement and organizational resilience by fostering a corporate culture that encourages employees to take on challenges and promoting active diversity.

   (ⅲ) Develop solid and trusting relationships with stakeholders via timely and appropriate information disclosure and constructive dialogue and collaboration, in addition to reflecting their expectations in our management decisions.

Sustainability Promotion System

Within the Kawasaki Group, the Board of Directors is positioned as the highest decision-making body that deliberates and decides fundamental sustainability policies and fundamental plans throughout the entire group. The Kawasaki Group adopts a system where the Sustainability Committee, as a committee of executives chaired by the President, is set up under the supervision of the Board of Directors to decide various measures based on the fundamental plans outlined by the Board of Directors and to report the progress of these measures to the Board of Directors. In addition, the Corporate Planning Division oversees sustainability to enhance the capacity to formulate plans relating to sustainability as well as to actively promote sustainability as an integral part of the management strategy.

For agenda items pertaining to sustainability, the Sustainability Committee deliberates and reports mainly on the following matters:

1. Measures contributing to the realization of the sustainability of both society/environment and the Kawasaki Group and the enhancement of the Kawasaki Group’s corporate value, as well as their practice and state of achievement
2. Measures to understand, reduce, and eliminate the negative social and environmental impact of the Kawasaki Group’s business activities, as well as their practice and state of achievement

The Sustainability Committee is composed of internal company presidents, the President of Kawasaki Railcar Manufacturing, the President of Kawasaki Motors, the director in charge of sustainability, the general managers of Head Office divisions, and others. Outside Directors attend meetings so that the committee can glean the benefits of their external expertise and opinions and reflect them in its decision-making process. Also, members of the Audit & Supervisory Committee participate in the committee as part of their auditing of the execution of business. The Sustainability Committee meets at least twice a year in principle. In fiscal 2023, it met three times, and is reporting to the Board of Directors.

Chair of Sustainability Committee: Yasuhiko Hashimoto, Representative Director, President and Chief Executive Officer
Director in charge of sustainability: Katsuya Yamamoto, Representative Director, Senior Corporate Executive Officer

The Board of Directors has established various Group policies, which clearly stipulate our fundamental concepts and specific policies. Since the formulation of Group Vision 2030, in addition to the Environmental Management Activities Plan and so on discussed heretofore, the Board of Directors also has held highly effective discussions on important topics relating to human capital toward the realization of our Policy on Sustainability Management, including reform and operation of the personnel system to strengthen the management foundation, the skills matrix for directors and succession plans, the diversity of human resources, and the employee engagement. Sustainability-related topics discussed and reported in the Board of Directors in recent years are shown in the diagram below.

The identification and assessment of risks pertaining to sustainability are carried out by the Sustainability Committee, which deliberates and reports on necessary actions to respond to changes in the business environment and stakeholder demands and expectations, in terms of both the risks and opportunities. In fiscal 2023, discussions focused mainly on human rights due diligence, climate change responses, and biodiversity. Furthermore, in the regular revision of material issues (materiality), the Sustainability Committee assesses the risks of each issue. The details of these assessments are reported to the Board of Directors at least twice a year, and the Board of Directors supervises actions taken regarding the sustainability issues.

Furthermore, in company-wide risk management undertaken by the coordinating risk management departments, assessments and monitoring are carried out on an ongoing basis by the departments responsible for specific risks for risks designated as being subject to monitoring, such as sustainability-related matters; matters pertaining to the global environment, in particular those aimed at the realization of a carbon-neutral and recycling-orientated society; as well as matters relating to the human capital responsible for providing new value. The details of these efforts are reported to the Board of Directors four times a year, and after discussions about the course of action, necessary feedback is provided to the departments that are subject to each risk.

In-house Sustainability Education and Awareness Building

Utilizing a variety of tools, such as educational seminars and the in-house intranet, the Kawasaki Group carries out education and awareness-building programs related to sustainability for its officers and employees.

Sustainability education and awareness building are provided through grade-specific training for such groups as new employees and newly appointed assistant managers, managerial staff, associate officers, and executive officers, as well as training for persons in charge of overseas businesses and mid-career hires. Furthermore, e-learning training on themes including the Sustainable Development Goals (SDGs), the environment, and business and human rights has been held since fiscal 2020.
In addition, to ensure that all Group employees are fully informed with regard to sustainability, we regularly provide information on sustainability via our Japanese-language Group newsletter Kawasaki and our Group-wide English- and Chinese-language newsletter Kawasaki On The Move.