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Materiality

We determined focus fields when we formulated the DENSO Group Declaration of Corporate Behavior (the predecessor to the DENSO Group Sustainability Policy) in fiscal 2007. Since then, we have been making periodic revisions to our material issues, taking into account social trends and stakeholder expectations.

In recent years, DENSO has reviewed and updated the material issues (Materiality), most recently last year, to reflect changes in social issues and the business environment surrounding its operations.
After comprehensively identifying social issues of high concern and disclosing them to stakeholders and the greater international community, we evaluated opportunities and risks from the perspectives of both the impact of DENSO’s business activities on society and their importance to DENSO, and conducted a quantitative assessment with the time horizon in mind. In considering the proposed material issues, we reflected on the views and expectations expressed by key stakeholders representing the value chain, including customers, business partners, investors, employees, and local communities, before finalizing these material issues.
Subsequently, following further deliberation by management, the issues were approved by the Board of Directors.

Process for Reviewing Materiality

Ensure comprehensiveness

Identification of Social Issues
We identified economic, environmental, and social issues while referring to the SDGs, the Global Risks Report produced by the World Economic Forum (Davos conference), sustainability disclosure frameworks and regulations, and evaluation items from ESG rating agencies. A total of 116 areas were selected for assessment.

Reflect DENSO’s uniqueness

Identification of Key Strategies and Issues for DENSO
In light of the increasing complexity in the business environment, we listed initiatives that DENSO should pursue Companywide and areas where its crisis response capabilities should be enhanced. A total of 22 areas were added as candidates for assessment.

Evaluate

Quantitative Assessment
For the assessment areas, we screened out opportunities and risks for DENSO and established evaluation criteria from the perspectives of impact on society and importance to DENSO. The impact on society was scored by severity (scale, scope, recoverability) and likelihood of occurrence, while corporate importance was scored by monetary impact and likelihood of occurrence, in the formulation of proposed material issues (Materiality).

Confirm expectations from society

Dialogue with Internal and External Stakeholders
We engaged in dialogue with representatives of stakeholders across the value chain to gather opinions on the proposed material issues (Materiality) and their expectations of DENSO. As a result of these exchanges, we revised the quantitative assessment of three areas.

Finalize

Discussion and Approval at Management Level
The proposed material issues (Materiality), revised to reflect stakeholder feedback, were discussed and approved by the Management Deliberation Meeting and the Board of Directors.

Dialogue with Internal and External Stakeholders

  • Dialogue with Internal and External Stakeholders

Comments from Stakeholders

Customers

The importance of respecting human rights throughout the supply chain is increasing, and it is also becoming a business risk. In light of its plan to request suppliers to step up their initiatives, we would also like DENSO to raise the priority of this issue and take action to minimize the risks.

Suppliers

Small and medium-sized enterprises are unable to tackle DENSO’s material issues at the same level of DENSO’s efforts. We therefore would like DENSO to determine an order of priority regarding which issues it can tackle together with suppliers. Also, we anticipate DENSO’s continued support, as many of these issues cannot be addressed by one company alone.

Institutional investors

The areas that DENSO selected are agreeable. Going forward, we would like DENSO to clearly communicate how Materiality contributes to enhancing corporate value, along with clarification of its medium- to long-term targets.

Integration with Management

We establish KPIs for each material issue (Materiality), incorporate them into Company targets, and follow up on and discuss their status at the Sustainability Meeting (starting in fiscal 2026), the Management Deliberation Meeting, and the Board of Directors’ meeting.
In addition, we are now setting targets with these material issues as the basis for 2030 Mid-Term Management Plan, while formulating action plans for each division and region.
Going forward, we will review our Materiality annually in light of changes in the sustainability landscape, and twice a year at the Sustainability Meeting, we will monitor the progress toward achieving each material issue.
Furthermore, the level of achievement for some KPIs is evaluated as a calculation index for executive compensation.

Management as Companywide Risks

Among our identified material issues, we have designated the environment (especially climate change), information security, and workplace safety as major risk areas in which the Risk Management Meeting should invest its resources and promote initiatives, based on their frequency of occurrence and level of impact. In this way, we are strengthening our Groupwide response to risks from the perspective of Companywide risk management.