Enhance Operational Framework

As our business continues to globalize, in order to fulfill our social responsibility to our diverse stakeholders, it is important that the entire Group, including our subsidiaries outside of Japan, work to strengthen our management base. For the Group to balance business operations and social responsibility, we are working on strengthening Group governance and risk management.

Related Sustainable Development Goals and Targets

The following are the priority topics and their related Sustainable Development Goals and Targets for one theme of the Sustainability Action Plan: Enhance Operational Framework.

Priority topic	Goal	Target
Strengthen governance	―	―	―
Ensure compliance	16. Peace, justice and strong institutions	16.5	Substantially reduce corruption and bribery in all their forms
Manage risk	11. Sustainable cities and communities	11.b	By 2020, substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change, resilience to disasters, and develop and implement, in line with the Sendai Framework for Disaster Risk Reduction 2015–2030, holistic disaster risk management at all levels
Ensure responsible procurement in the supply chain	8. Decent work and economic growth	8.7	Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms
	12. Responsible consumption and production	12.5	By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse
	13. Climate action	13.2	Integrate climate change measures into national policies, strategies and planning
	17. Partnerships for the goals	17.16	Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries
Strengthen information security	―	―	―
Ensure transparent information disclosure and strategic communication	17. Partnerships for the goals	17.16	Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries

FY2023 Achievements

The following are our fiscal 2023 achievements in each of the priority topics for the above theme of the Sustainability Action Plan, Enhance Operational Framework.

Sustainability Action Plan (PDF: 763KB)

FY2021-FY2023 Achievements of the Sustainability Action Plan (PDF: 539KB)

Materiality

Strengthen governance

To improve the effectiveness of the Board of Directors, we will continue to utilize the PDCA cycle to improve the issues identified in questionnaires and interviews. For fiscal years 2021 through 2023, we reached our goal of 300 total audits. We will continue to conduct audits using a risk-based approach, and we will strive to improve the quality of our audits.

KPIs	Scope	FY2023 targets	FY2023 results
Improving the effectiveness of the Board of Directors	Global	Carry out efforts to improve effectiveness	Newly appointed a foreign national outside director and expanded the diversity of the composition of the Board of Directors Promoted discussions on improving business management sophistication and profitability
Enhancing internal perceptions		Implement measures to propagate the Group Code of Conduct globally	Explained the Group’s Code of Conduct and Compliance Guidebook at a variety of training sessions in Japan Introduced initiatives for the Compliance Awareness Month at the Global Sustainability Meeting Distributed a message from the president regarding compliance during the Compliance Awareness Month
Carrying out sound internal audits		Carry out internal audits in Japanese business units and global subsidiaries (total 300 cases, 3 years) and maintain compliance with internal evaluations	A total of 110 audits (324 over a 3-year period): 98 periodic audits (91 domestic, 7 at global subsidiaries), 8 follow-up audits (5 domestic, 3 global), 2 specified audits, 1 general international trade management, 1 security export control Internal evaluations determined the Group as compliant

Efforts to improve the effectiveness of the Board of Directors

We regularly review the composition and operations of the Board of Directors and annually assess its effectiveness. By addressing issues identified from the results of the assessment, we strive to continuously strengthen the functions and improve the effectiveness of the Board. For the fiscal 2023 Board of Directors effectiveness assessment, we sent a questionnaire to all directors (10) and all auditors (4), and interviews were conducted with one representative director and five outside directors. To ensure the objectivity and independence of the evaluation, we obtain the assistance of an external evaluation organization at key points in the assessment process.

Corporate Governance

Materiality

Ensure compliance

In fiscal 2023, we conducted an e-learning course on respect for human rights in corporate activities as well as a comprehension test to review past training courses on bribery, entertainment and gift-giving, and competition law. There was a total of 8,636 participants throughout the entire Group. Course materials were made available in 10 different languages to improve participants’ understanding.

Compliance

KPIs	Scope	FY2023 targets	FY2023 results
Carrying out anti-corruption training	Global	Carry out training and follow-ups for Japanese and global parties with authority to accept and place orders	Conducted an e-learning course on respect for human rights in corporate activities. A comprehension test including items on bribery was also administered, and it was taken by 90% of all Group employees.

Materiality

Manage risk

Significant risks that could affect the achievement of our management objectives are discussed and managed across the organization, led by the Risk Management Committee which is chaired by the President and CEO. In fiscal 2023, we conducted a company-wide risk assessment and identified significant risks. The committee met a total of five times to discuss issues and responses to the identified risks as well as decide on response policies and other matters.

Risk Management

KPIs	Scope	FY2023 targets	FY2023 results
Implementing countermeasures against major risks	Global	Carry out regular risk assessments Form a risk management policy and spread awareness of it Implement significant risk countermeasures Carry out risk response training	Conducted a company-wide risk assessment through questionnaires and interviews with management, employees at or above a rank of general manager, and persons in charge at subsidiaries Critical risks were selected by the Risk Management Committee based on the results of the risk assessment Formulated the Daifuku Group Risk Management Policy Established a cross-divisional task force to address the 2024 problem in logistics and implemented risk responses

Materiality

Ensure responsible procurement in the supply chain

In fiscal 2023, we completely revised the CSR Procurement Standards, which were established in 2017, and formulated the Sustainable Procurement Guidelines as a new standard for sustainable procurement activities. In order to disseminate these guidelines throughout the entire supply chain and identify and mitigate risks in the supply chain and with our business partners, we distributed explanatory videos to and requested agreement from our business partners. In fiscal 2024, we began requesting that our business partners respond to a self-assessment questionnaire (SAQ), and based on the results of the responses, we will identify risks and provide support for improvement.

Supply Chain Management

KPIs	Scope	FY2023 targets	FY2023 results
Establishing a CSR procurement system and expanding the range of operations	Global	Review CSR Procurement Standards and formulate new guidelines to be applied in Japan and abroad	Formulated the Sustainable Procurement Guidelines and distributed explanatory videos to suppliers Distributed the Sustainable Procurement Guidelines to suppliers and requested their agreement

Materiality

Strengthen information security

In fiscal 2023, we conducted information security education and e-mail training in accordance with our targets. Educational tools were made available in multiple languages, and the entire Group, including subsidiaries outside of Japan, were engaged.

Strengthening information security

KPIs	Scope	FY2023 targets	FY2023 results
Number of global information security education sessions	Global	4 sessions + follow-up training	4 sessions + follow-up training (e-learning)
Number of global e-mail training sessions	Global	4 sessions	4 sessions

Materiality

Ensure transparent information disclosure and strategic communication

We achieved our targets, including ESG-related targets, for the amount of dialogue with shareholders and investors. In terms of community contribution activities, a working team has been promoting activities based on annual activity plans, and more measures and events were carried out than in fiscal 2022.

Stakeholder Engagement

KPIs	Scope	FY2023 targets	FY2023 results
Number of companies with which dialogue meetings were held	Global	1,200 companies (ESG-related: 20 companies)	1,232 companies (ESG-related: 85 companies)
Enhancing communication with stakeholders	Japan	Implement measures to promote the brand based on the renewal of Hini Arata Kan Carry out events for science and engineering students Get employees to participate in social contribution activities	Conducted media coverage on the redevelopment of Shiga Works and secured article publication in 10 media outlets Manufacturing events for science and engineering students were postponed; alternatively, YouTube was used to distribute videos for job-hunting students Regularly conducted community contribution activities based on annual activity plans for the company as a whole as well as for each region