With the continued humanitarian situation in the Middle East, urgent sanitation and hygiene needs have escalated. In response, SATO supplied sanitation kits and handwashing solutions to our key strategic partners to provide essential sanitation infrastructure. We will continue to work closely with all our partners to increase access to sustainable sanitation around the world, to ensure that no one is left behind in emergencies and humanitarian situations.

As you edge closer to meeting the 100-million target, do you feel that you’ve achieved enough? What’s your plan for FYE2026 onwards?

Seto: We are still in the process of discussing our next target, but I can safely say that reaching 100 million is not the end but just one milestone in our ongoing journey. The target was set at an intentionally ambitious level, aiming to challenge ourselves to develop innovative business models at scale that maximize our impact toward the UN SDG Target 6.2 — achieving access to adequate and equitable sanitation and hygiene for all and ending open defecation by 2030. I am proud of the progress we have made thus far. However, the stark reality is that, as of 2024, 3.4 billion people still lack access to safely managed sanitation, and roughly 1.7 billion people do not have basic hygiene services at home. This includes 611 million people who still have no handwashing facility, and an additional 1 billion people with only a limited service, lacking soap and/or water. We need to continue speeding up and scaling up our efforts, and we surely cannot do this alone. Our focus, therefore, remains on building a sustainable ecosystem of local manufacturing, sales, and installation that creates jobs and fosters prosperity in each region, in collaboration with our external partners, and driving further innovations to address specific local needs. Ultimately, our ambition is to transform the global sanitation crisis from a cost burden into a thriving sanitation economy.

Could you share a noteworthy innovation in sanitation and hygiene?

Seto: Yes, let me introduce a recent addition to the SATO lineup. The SATO SuperStructure is a durable and easy-to-install toilet shelter. A vital part of safe sanitation is to provide privacy and dignity, which can be a challenge in underserved communities and disaster relief settings. SuperStructure’s modular design integrates with other SATO products to provide a complete sanitation solution, so it is a fast and reliable solution to transform sanitation access. It can be assembled with minimal tools, making it ideal for humanitarian settings. We will continue our focus on innovations to enhance access to safe and dignified sanitation and hygiene around the world.

WATER CONSERVATION & ENVIRONMENTAL SUSTAINABILITY

What progress have you made toward your environmental sustainability goals? Did you have any challenges in meeting your targets?

Montesano: Guided by the LIXIL Environmental Vision 2050, we are striving to reduce our environmental footprint across our entire value chain. I am pleased that we have made substantial progress across many of our environmental commitments. However, we regretfully fell short of our ambitious goal to achieve a total annual water savings of 2 billion cubic meters through water-saving products by FYE2025. Sales of relevant products were lower than projected, resulting in a contribution of 1.6 billion cubic meters of water. However, this challenge only strengthens our resolve. We remain deeply committed to water conservation and are expanding our efforts to achieve an annual reduction of 2 billion cubic meters of water, with a revised target year of FYE2031.

Could you highlight some recent innovations in the field of environmental sustainability?

Seto: Absolutely. In FYE2025, we launched two environmentally focused products in Europe from GROHE. Everstream, a water-recirculating shower, achieves up to 75% reduction in water usage and up to 69% reduction in energy consumption compared to conventional showers by hygienically treating, reheating, and reusing drained water. The other new product, Rapido Heat Recovery shower system, is a simpler yet effective mechanism that cuts energy costs and CO₂ emissions by up to 48% by recycling just the thermal energy of the warm wastewater.

Two years ago, LIXIL endorsed the Taskforce on Nature-related Financial Disclosures (TNFD) and registered as a TNFD Early Adopter. Can you comment on the progress made regarding reporting based on TNFD recommendations?

Montesano: We issued our second and latest disclosure report in June 2025, and I’m pleased to say that we have made significant progress in our analysis based on the TNFD’s LEAP (Locate, Evaluate, Assess, Prepare) approach. Specifically, for the key raw materials used in our Water Technology and Housing Technology businesses, we expanded the analysis from last year’s focus on aluminum and wood to also include copper and ceramics, completing the assessment of over 90% of the raw materials listed in the Science Based Targets Network (SBTN)’s “High Impact Commodity List (HICL)”. Through a comparative analysis, we also examined closely how our use of raw materials, such as metals, affects the environment. It is clear that by increasing our use of recycled raw materials, such as aluminum and copper, we can significantly lessen our reliance on natural resources. We will incorporate the findings into our environmental strategy to further contribute to society by tackling environmental challenges through innovation.

DIVERSITY & INCLUSION

How is LIXIL staying true to its D&I initiatives?

Montesano: At LIXIL, we believe that fostering an inclusive and empowering workplace where every employee can thrive is crucial for our sustainable growth. An inclusive culture for everyone is what will make it possible for us to advance our Purpose. As a global company present in 150 countries, diversity is a fact—it’s who we are. We all come from different backgrounds, different life stages, have unique perspectives, and fill many roles at work and at home. Inclusion is the action—creating opportunities for all, welcoming differences, and fostering equity. It means empowering people to bring their full selves to work. We strive to create a culture where everyone feels valued and supported, and everyone has opportunities to grow and succeed.

I believe we have come a long way since launching our D&I initiatives, and I am pleased to see that the mindset of our employees is changing in the way they collaborate not only with each other but also with our business partners. We have also made encouraging progress towards our D&I goals, with an uptick in the ratios of female directors and executive officers to 37.5%^*, female managers to 17.4%, and female new graduates to 47.8% as of FYE2025. Results of our FYE2025 employee feedback survey, LIXIL Voice, reflect the engagement level of our employees, with a high engagement score of 72% and a remarkable response rate of 90%.

While we are proud of our progress, we cannot be complacent. Our assessment of material issues shows that demographic shifts are significantly changing the global workforce. A strong corporate culture and proactive talent management will be essential for navigating the challenges and opportunities of the next decade. Our employees are our most valuable asset, so prioritizing employee wellbeing and creating a positive work environment that promotes engagement and productivity will be increasingly crucial for LIXIL to retain talent and remain competitive. It’s also imperative that we take the lead in supporting our business partners’ efforts to improve diversity and inclusion towards creating a more inclusive society.

FURTHERING OUR COMMITMENT

Lastly, is our commitment to deliver on the Impact Strategy a key factor in differentiating LIXIL, our people, and our products and services from other firms?

Montesano: I totally believe so. While there is always room for improvement, overall, we have made significant progress, which is also affirmed by external recognition. The highlight of the various recognitions we received in FYE2025 was our highest-ever Top 1% S&P Global CSA Score in the S&P Global Sustainability Yearbook 2025—marking the first time LIXIL has achieved the top ranking in our industry. We also received a third consecutive AAA rating from MSCI ESG and a Gold rating in the PRIDE Index 2024.

Seto: The achievements Jin mentioned are a testament that our strategies, commitments, and actions are aligned with the increasing expectations of our stakeholders, and I am very proud of the progress we have made. The fact that we are recognized globally in our achievements not only instills a sense of pride in our employees and business partners, but is also crucially important for us to become the employer of choice for future talent recruitment and the partner of choice for future business opportunities. We remain focused on further integrating our Impact Strategy into our business to help resolve social and environmental issues through our business activities.

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From the Impact Strategy Office
We hope you enjoyed reading this year’s dialogue with our leaders. LIXIL’s commitment to making an impact starts from our leaders and is shared throughout the organization. The Impact Strategy Office is committed to ensuring that our leaders’ thoughts and passion are communicated to all our internal and external stakeholders, which ignites further drive and efforts to make an even stronger impact for the future.

*31.3% as of September 2025.