Material Issue Evaluation and Identification Process

Background of Material Issue Settings

The future is difficult to predict in a complex world characterized by population growth, developed countries with declining birthrates and aging populations, rapid digital transformation, increasing use of biotechnology, multipolarity in international relations, and a worsening climate crisis. Given the uncertainty the world faces, Konica Minolta has decided to identify the social and environmental issues it must help address. While reaffirming its corporate DNA, the Company clarified the issues to be addressed by 2030, and then backcasted from that year to determine the targets it must tackle immediately.
Konica Minolta believes that a sustainable and decentralized society with greater individual autonomy is on the horizon. When it arrives, organizations and individuals will be creating all kinds of value utilizing an explosively expanding amount of data. Along with greater prosperity based on individualization and diversification, countries will be able to solve many pressing social and environmental issues. Advanced technology will be required both for achieving greater prosperity and for addressing these issues.
After gaining insight into social and environmental issues expected to be critical by 2030 by examining the UN Sustainable Development Goals (SDGs), macro trends, and various stakeholder requirements, Konica Minolta conducted a materiality analysis from the perspectives of social issues that must be resolved and Konica Minolta's business growth. This led to the identification of five material issues for Konica Minolta to tackle. By addressing these five material issues, Konica Minolta will support the human quest for purpose in life and contribute to global sustainability.
The validity of the material issue settings is periodically reexamined during the formulation of the medium-term business plan every three years.

Evaluation and Identification Process

Step 1. Issue Awareness

First, Konica Minolta made a list of diverse environmental, social, and economic issues by referencing international frameworks and guidelines such as the GRI Standards and SDGs, as well as macro trends in each specialized field.
The list was prepared by referring to the Wedding Cake Model of the SDGs. This structural model was developed by the Stockholm Resilience Center* as a way to understand the SDGs, and it helps to clarify the relationships among the SDGs. With this model, the 17 goals are divided into three layered categories, like the tiers of a wedding cake. These tiers, from bottom to top, are biosphere, society, and economy. The model illustrates that achieving the biosphere and society-related SDGs can help to build a sustainable economy and society, upon which companies can help build the foundation for a sustainable economy. With this relationship in mind, Konica Minolta identified the issues of greatest importance to its business.
During this identification process, Konica Minolta also considered social and environmental changes, regulatory and policy trends, and stakeholder requirements, all in light of the Company's current and potential business areas, as well as the corresponding supply and value chains.

※ Stockholm Resilience Center

Frameworks and Guidelines referred to:

GRI Standards
Sustainability Accounting Standards Board (SASB)
ISO 26000
Sustainable Development Goals (SDGs)
The Ten Principles of the UN Global Compact
OECD Guidelines for Multinational Enterprises
Task Force on Climate-related Financial Disclosure (TCFD)
Macro trends in various climate change and other specialized fields (the Paris Agreement, the European circular economy, etc.)
International Integrated Reporting Council (IIRC), International Integrated Reporting Framework
Stockholm Resilience Center’s Wedding Cake Model for the SDGs

Evaluations, dialogues and requirements for Konica Minolta from stakeholders

Dialogue with investors and other stakeholders at IR briefings, business briefings, etc.
Dialogue with CDP and other international NGOs and NPOs
Items requested in various ESG surveys
Dialogue with customers on Green Marketing activities
Dialogue with companies participating in the Environmental Digital Platform
Dialogue with investors and other stakeholders at the TCFD Consortium Roundtable

Step 2. Issue Identification and Prioritization

From the initial list of issues, Konica Minolta identified fields that are particularly relevant to its business, and then conducted a prioritization process.
Konica Minolta's materiality analysis is unique in that it assesses both risks and opportunities. By evaluating both aspects, the Company aims to fulfill expectations for enterprises to tackle the SDGs. The expectation is that companies treat social and environmental issues as opportunities to grow their businesses while helping to solve issues through their business activities.
In performing the materiality analysis, Konica Minolta evaluated and prioritized the issues based on two perspectives: importance to stakeholders and importance to the business.
Customers, business partners, shareholders, investors, and employees were defined as part of the analysis. Importance to stakeholders was quantified by scoring each issue from one to five. To analyze financial impact and importance to the business, each issue was similarly scored based on the amount of potential earnings for opportunity issues and the amount of potential loss for risk issues.

【Opportunities for Each Material Issue】

Improving fulfillment in work and corporate dynamism	Improving productivity of customer organizations and increasing time for creativity by providing work-style solutions using digital technology
	Improving productivity and enhancing workplace motivation in the supply chains of customer organizations by providing products and services that transform the workflows of frontline workers
	Realizing the full potential of human resources, who are the source of new value, and creating workplaces organizations where individuals thrive
	Eliminating labor shortages and strengthening cyber security by eliminating the gap in IT access faced by small and medium enterprises
Supporting healthy, high-quality living	Transforming caregiver workflow with imaging IoT-based systems and onsite consulting services, and creating a labor pool in the caregiving industry
	Promoting disease prevention and early detection by providing high value-added medical services, and reducing medical expenses
	Streamlining drug development by promoting innovation in drug discovery processes utilizing genetic testing technology
	Improving healthcare accessibility in developing countries
Ensuring social safety and security	Improving safety and security at client sites and for society by providing products and services such as gas leak monitoring services
Ensuring social safety and security	Supporting the quality produced by corporate clients by offering products and services that facilitate high-tech measurement and inspection
Addressing climate change	Reducing energy consumption and CO₂ emissions of customers and society by providing manufacturing process solutions
	Promoting a paperless and ubiquitous computing society by providing solutions for work style reform
	Contributing to drastic CO₂ emissions and cost reductions by helping business partners to reduce their environmental impact using DX technology
Using limited resources effectively	Constructing efficient supply chains for client companies using on-demand production
Using limited resources effectively	Reducing workflow and supply chain loss for client companies

Cross-cutting opportunities	Fostering a corporate culture that encourages role models for the generation of SDG innovation
	Improving ESG relations with investors
	Enhancing customer relations by making the most of ESG initiatives

【Risks for Each Material Issue】

Improving fulfillment in work and corporate dynamism	Mismatches between employee skills and their work due to rapid changes in systems and environments
Improving fulfillment in work and corporate dynamism	Declines in employee diversity, independence, and ability to innovate due to stagnated efforts to create workplaces that promote diversity
Ensuring social safety and security	Loss of public confidence in the event of a product or service-related accident that results in death or injury to a user
	Loss of public confidence in the event of a serious information security accident related to a product or service, which results in a personal data leak or privacy infringement
	Impacts on operations and product shipments due to the use of substances that pollute ecosystems and pose human health hazards
Addressing climate change	Skyrocketing energy prices, increased material costs due to raw material shortages, and supply instability
	Greater use of paperless systems due to skyrocketing energy prices and raw material shortages
	Supply chain disruptions due to abnormal weather
Using limited resources effectively	Decline in competitiveness due to delayed participation in the circular economy
Using limited resources effectively	Production or shipment delays due to water-related risks and water resource depletion

Cross-cutting risk

Decline in public confidence due to lack of governance at business partners

Step 3. Identification and Validation

Konica Minolta holds a meeting to promote the sustainability aspect of its Medium-term Business Plan. The meeting verifies the validity of the evaluation process and analysis results for these material issues and identifies which issues should be prioritized. The identified material issues are then deliberated by senior management and approved by the Board of Directors.
This material issue identification process is reviewed as necessary during the development of the Medium-term Business Plan to ensure the validity of the issues and plans.