LIXIL’s Material Issues

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LIXIL is committed to its purpose to "make better homes a reality for everyone, everywhere." To this end, we position key sustainability challenges as our material issues to ensure our sustainable growth and enhance corporate value. These material issues are defined based on two perspectives: the impact on the environment and society, and the impact on our financial performance over the short, medium, and long term.

Identifying, Assessing, and Validating Material Issues

LIXIL identifies material issues based on LIXIL's Purpose, Value Creation Process, management direction, Impact Strategy, stakeholder needs and expectations, and current social circumstances and challenges. We then assess material issues based on impact, risks, and opportunities (IROs) and determine issues in terms of both business activities and social impacts. To ensure a robust and regular evaluation of our approaches to our Impact Strategy, we also take into account the complementary nature and integration of our enterprise risk management (ERM) and material issue review processes.

LIXIL reviews material issues at least once a year, focusing on the most relevant IROs, and identifies and assesses roughly once every three years. LIXIL carried out this identification and assessment process in FYE2025.

Material Issue Assessment Process

LIXIL’s assessment process in FYE2025 considered a double materiality approach based on the European Sustainability Reporting Standards (ESRS). These standards outline the disclosure requirements under the Corporate Sustainability Reporting Directive (CSRD). LIXIL has begun with a high-level review to prepare for future CSRD compliance.

Identification and assessment of material issues were supported by stakeholder engagement. We then proceeded with validation by the Impact Strategy Committee and approval by the Board of Executive Officers before disclosure.

Double Materiality Assessment Process

Double Materiality Assessment Process

Our Material Issues

Environmental Management Strengthen our foundation for executing environmental strategies to improve environmental performance by enhancing environmental governance systems, conducting environmental audits, and providing environmental education. Also, to comply with international environmental treaties, laws and regulations in regions we operate, and with our higher voluntary standards including social norms, work with business partners to properly manage and reduce the use of chemicals, thereby suppressing the emission of environmentally harmful pollutants.
Climate Change Aiming for net-zero CO₂ emissions by 2050, work on reducing energy consumption in business processes, transitioning to renewable energy, and fuel switching. Additionally, through the provision of environmentally friendly products and services and collaboration with stakeholders, contribute to reducing CO₂ emissions across society and to mitigating and adapting to climate change by minimizing damage from natural disasters and rising temperatures.
Global Sanitation & Hygiene Aim to enhance access to improved sanitation and hygiene, through product innovation and market ecosystem development with partners, enhancing health, economic opportunities, and quality of life in the communities that we serve.
Cyber Security To protect LIXIL's information assets and ensure efficient and secure business operations from the threat of cyberattacks, implement risk management and security measures. Moreover, conduct employee education and awareness activities to ensure that everyone working at LIXIL can take preventive measures and respond promptly to risks in all aspects of business activities.
Circular Economy For the sustainable use of limited resources, promote designs that facilitate reducing environmental burden throughout the entire lifecycle, and work on reducing the use of raw materials, utilizing recycled and renewable materials, and providing products and services that can use resources more efficiently and for longer periods. Additionally, reduce waste from business processes and recycle products after use in collaboration with stakeholders, and also contribute to the reduction of environmental burden across society by addressing solutions for wastes that are difficult to recycle.
Human Rights Grounded in the LIXIL Code of Conduct and the LIXIL Human Rights Principles, respect human rights of all stakeholders, work to identify and rectify risks and take remediation actions through continuous due diligence and a concern-raising system. Additionally, require suppliers to act ethically, including respecting human rights, based on the Supplier Code of Conduct and monitor the progress in suppliers.
Talent & Development Recognizing that employees are the driving force behind value creation, systematically work on human resource development and support each employee's voluntary career development. Moreover, to mitigate the adverse impact on business activities due to aging workers and the shortage of skilled workers worldwide, invest in human resource development programs within the value chain and school education and vocational training aimed at training skilled workers.
Product Innovation With the aspiration to pursue the highest quality manufacturing and services, create a workplace environment that promotes innovation, solving daily life challenges, and providing innovative products and services that impact (positively) the environment and society. Implement the intellectual property strategy that ensures sustainable innovations and value creations.
Conservation of Biodiversity Address the effects of nature loss and changes and promote the sustainable use of nature by identifying our dependence and impact on natural capital and biodiversity as well as risks and opportunities in business activities. In addition to disclosing appropriate information and providing products and services aimed at avoiding and minimizing nature losses in the value chain, promote initiatives to restore and regenerate nature, building in collaboration with stakeholders business models that contribute to biodiversity conservation.
Diversity & Inclusion Promote a culture of diversity and inclusion. Address disparities, including gender inequity, providing a workplace environment and equal opportunities where everyone can maximize their abilities. Additionally, identify risks in business partners and support efforts for improvement.
Business Conduct Practice the LIXIL Code of Conduct and LIXIL Behaviors in all aspects of our business activities. Furthermore, to prevent and address misconduct and violations early, operate the concern-raising system ensuring whistleblower protection. Additionally, to address challenges in the supply chain, we promote strengthening collaboration with suppliers through the dissemination of the Supplier Code of Conduct and continuous dialogue.
Water Sustainability As a leading company in water-related products, pursue water sustainability through products and services with high water-saving performance and the provision of safer and better-tasting water. Also, identify water risks in business operations and implement water management programs focusing on locations with water shortages, including reducing water usage, managing wastewater, and introducing a water circulation system, thereby promoting responsible water use through improved usage efficiency.
Workforce Wellbeing Promote health management and improve labor safety and health management indicators for our workforce. Additionally, to realize diverse and flexible working styles, introduce employee support systems that meet business needs and social needs, ensuring appropriate wage payments and addressing long working hours. Furthermore, identify risks at business partners and support efforts for improvement.

Preparing for Mandatory ESG Reporting

Our operations in Europe will be required to adhere to the CSRD and present the material data and information in line with the ESRS. This comprehensive set of disclosure requirements encompasses a variety of environmental, social, and governance issues, and we are preparing to report in accordance with CSRD requirements.

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