In order to achieve the “Furukawa Electric Group Vision 2030,” (hereinafter, “Vision 2030”) we are promoting ESG management, which aims sustainable growth of the Group and medium- to long- term growth of corporate value. We have defined “material issues” as important management issues that the Group should address in order to achieve Vision 2030, and we defined material issues ^* in terms of both revenue opportunities and risks, in accordance with the process of identifying important management issues as mentioned below. We aim to achieve Vision 2030 by working on the material issues we have identified, considering that addressing the material issues on revenue opportunities help improve capital efficiency whereas addressing the material issues on risks help reduce the cost of capital. We will also contribute to the achievement of the SDGs, which are closely related to the material issues.
In FY2022, we have formulated a four-year Medium-term Management Plan “Road to Vision 2030: Transformation and Challenge” (hereinafter the “2025 Medium-term Plan”) toward achieving a goal for FY2025, the final year of the 2025 Medium-term Plan. In formulating the plan, we used backcasting to get us to the goal for FY2025, a halfway point to Vision 2030.

From the perspective of revenue opportunities, in order to help solve various social issues through the business activities of the Group, we found it indispensable to devise a transformation from the conventional “Product-Out” approach to “Outside-In” approach and identified the “creation of businesses that solve social issues” as a material issue. Examples of these include the “creation of businesses that support the next generation infrastructure,” which will serve as the foundation of the society anticipated in Vision 2030, and the “creation of environmentally friendly businesses,” which contribute to the realization of a carbon-free society and a recycling-based society. They are set as sub-material issues.

We also promote the “creation of social issue-solving businesses” through the slogan “Open, Agile, Innovative,” which reflects the desire to become a company that actively transforms itself, and the “Building partnerships with various stakeholders,” focusing on co-creation with others. We will also work on improving capital efficiency, including cost of capital.
On the other hand, from a risk perspective, in order to achieve sustainable growth, it is essential that companies develop business activities that take into account climate change, and we see this as a material issue for environment (E) risks. In addition, in order to become a company that actively transforms itself, we set the “strengthening of human capital and organizational execution abilities” as a material issue for social (S) risks. As for materiali issue of governance (G) risks, we focus on “building a governance system for strengthening risk management” including corporate governance, group governance and supply chain management as sub-material issues. We will strengthen the foundation of ESG management and reduce the cost of capital.

Identification and review of material issues was conducted through a process of Step 1 through Step 3. First, in Step 1, we identified social issues by referring to “external factors” and “internal factors,” adjusted duplicate items, and created a list of items (currently organized into 29 items). In Step 2, the two axes of “importance to shareholders and investors” and “importance to achieving Vision 2030” are evaluated for importance (high, medium, low) and prioritized. In Step 3, high-priority items are identified as material issues. The identified material issues are categorized by revenue opportunity and risk aspects and rearranged as important issues for achieving Vision 2030, and expressed as the material issues of three revenue opportunities and the material issues of the E (Environment), S (Social) and G (Governance) risks.

In the FY2023 material issues review, "biodiversity (land area/marine and river)" was re-evaluated as a medium area of “importance to achieving Vision 2030” in response to the increasing social demands for biodiversity and natural capital in recent years.

The Medium-term Management Plan 2022–2025 (the “2025 Medium-term Plan”) is positioned as a milestone toward realizing the Vision 2030. We will surely execute the 2025 Medium-term Plan, which is formulated by the dual approach of backcasting from the Vision 2030 and forward-looking from the present. In the 2025 Medium-term Plan, we defined the ideal state in FY2025 for each identified material issue, formulated measures to realize them, and set sustainability indictors/targets to measure the progress.

Furukawa Electric Group has enhanced capabilities for development and making proposals, without being limited to specific markets and with its four core technologies—metals, polymers, photonics and high-frequency—centered on capabilities to handle materials. Through these capabilities, we have gained the trust of customers.

For achieving the financial and sustainability targets set for 2025 Medium-term Plan, and for realizing sustainable growth of the Group and medium- to long-term growth of corporate value, we will strengthen and create businesses mindful of capital efficiency. In addition, we will build a new business model by enhancing our strengths through open innovation and co-creation with our partners, as well as utilization of intellectual property. Toward 2025, we will stabilize earnings in information, energy and mobility sectors, and realize growth through the strengthening of businesses that solve the social issues, whereby contributing to building a society with infrastructure integrating information, energy and mobility. In addition, toward 2030, we realize a leap through the creation of businesses that solve social issues including the “creation of businesses that support the next generation infrastructure,” which would serve as the foundation of the integrated society of Vision 2030, and the “creation of environment-friendly businesses,” which contributes to the realization of carbon neutrality and a circular economy.

As for the strengthening of the existing businesses, we will capture increased demand for optical fibers, etc., and strive for increasing sales of such high-value added products as rollable ribbon cables, for which we have worked on sales expansion. We will also expand the networking system business globally, taking advantage of the strength of the business model developed in Latin America. As for power cable system, we will achieve sales growth by enhancing our production capacity and construction capacity, and establishing a business foundation mainly focusing on submarine and underground cables for ensuring resilience of power networks in Japan and for renewable energy. To address the need for reducing vehicle weight alongside the shift to EV, we will take advantage of the superiority of aluminum wire harnesses, with which new types of vehicles are increasingly equipped, thus expanding the business and improving the profitability. Furthermore, since it is expected that demand for semiconductors will increase in the medium- to long-term, we started the construction of a new plant to begin commercial production of tapes for manufacturing semiconductors in FY2025, and aim at expanding sales by ensuring stable supply as a result of increased production capability and providing sophisticated high-quality products.

As for the creation of new businesses, while communication traffic volume is expected to increase towards a Beyond 5G society, we will take advantage of our capability to develop photonics products with high functionality by using the Company’s core technologies, namely, photonics technology and high-frequency technology, along with our broad readiness to the optical communication market, thus contributing to realizing the all-optical network and a society with highly efficient energy. Furthermore, in order to become carbon neutral in 2050, we will advance the development and production of green LP gas which does not rely on fossil resources. We also develop and produce high-temperature superconducting materials for nuclear fusion, which is expected to be a next-generation energy source, thus contributing to the supply of environment-friendly clean electric power.

In order for the Group to realize sustainable growth and increased corporate value over the medium- to long-term, we will strengthen the management foundation directed at reducing capital costs, while particularly recognizing climate change, human capital and organizational execution abilities, and building a governance system as material issues on risks.

In order to conduct business activities taking into account climate change that is mandatory for the transformation to a sustainable company, we will accelerate our efforts to become carbon neutral. In order to strengthen human capital, based on “Furukawa Electric Group Vision for Our People” which is shared beliefs on human capital at both Group and global levels, we will strive to strengthen “human capital and organizational execution abilities.” Specifically, we conducted a survey on human capital/organizational execution abilities, including elements related to employee engagement; and by using it as a monitoring tool, we will strengthen our efforts of human capital management, including the promotion of diversity & inclusion, leadership transformation activities, and measures for hiring, assigning, and developing people who contribute to carrying out management/business strategies. With respect to human rights management, we will proceed in accordance with three requirements in the UN’s Guiding Principles on Business and Human Rights. As for “human rights due diligence” among those requirements, we regard employees and suppliers as primary stakeholders, identify presumed human rights issues for each of them, and take measures to solve and/or prevent such issues. Furthermore, in order to realize CSR procurement, including the element of human rights in the supply chain, we will expand the scope of the Self-Assessment Questionnaire (SAQ) based on the Furukawa Electric Group CSR Procurement Guidelines from major supplies of the Company to major suppliers of the Group companies in Japan and abroad in a phased manner.