Materiality

Materiality of MHI Group

To enhance corporate value and grow in the medium to long term through solutions to social issues, MHI Group has identified materiality it should be addressing.

In response to the increasing importance of sustainability in international standards and guidelines, as seen in recent years in the Sustainable Development Goals (SDGs) adopted by the United Nations, growing ESG Investment, and the EU taxonomy and subsequent changes in megatrends influencing the MHI Group, in 2020 we reviewed the materiality identified in 2015 and added five new items as noted below.
The materiality we identified is reflected in the 2021 Medium-term Business Plan announced in October 2020 and targets have been set for each, with progress regularly monitored as part of the Group's non-financial management indicators.

Materiality Social issues SDGs
Foundation to Support Business (Corporate)
Provide energy solutions to enable a carbon neutral world
  • Mitigate climate change
  • Reduce GHG emissions
  • Stable energy/electricity supply
  • Improve energy efficiency
  • Popularize renewable energy
  • Promote 3Rs/circulation economy
SDGs
SDGs
Transform society through AI and digitalization
  • Promote AI/digitalized society
  • Enhance productivity in response to labor shortages
  • Update outdated facilities
  • Enhance transportation safety/convenience
  • Decarbonize mobility
  • Diversify transportation needs
  • React to increased logistics
SDGs
SDGs
Build a safer and more secure world
  • National security by defense
  • Adapt to climate change
  • Enhance function/durability of infrastructure
  • Rationalize infrastructure
  • Interfere with cyber attacks on industrial systems/IoT
  • Prevent pandemics and take appropriate measures
SDGs
SDGs
Business Contribution (Business)
Promote diversity and increase
employee engagement
  • Nurture/secure workforces
  • Respect human rights
  • Promote diversity
  • Enhance labor productivity
  • Labor safety and hygiene
  • Promote health management
SDGs
SDGs
Enhance
Corporate Governance
  • Corporate governance
  • Comply with laws and regulations/international standards
  • Fair competition/business practices
  • Understand and manage overall corporate risk
  • Timely information disclosure
SDGs
SDGs

Processes Defining Materiality

In redefining materiality, we first took an inventory of the Group's businesses, then linked them to a list of social issues prioritized in line with international frameworks, including the SDGs, the Global Reporting Initiatives (GRI) Standards, ISO 26000, the SASB Standards, and the EU taxonomy.
We then mapped the issues with consideration both to their level of impact on society and from the viewpoint of their importance to the Company.
Additionally, a series of reviews were conducted, primarily by the CSR Committee, and opinions obtained through dialogue with outside experts were also reflected in the selection, which was finalized upon approval of the Executive Committee and the Board of Directors.
Going forward, company-wide targets will be set for each of the five issues of materiality thus identified, along with indices (KPIs) for monitoring progress, as we work to promote sustainability management by steadily continuing related activities.

Step1 Prioritizing Social Issues
We inventoried the Company's businesses and initiatives, linked them to a list of social issues prioritized in line with international frameworks--including the SDGs, the Global Reporting Initiatives (GRI) Standards, ISO 26000, the SASB Standards, the EU taxonomy and others, and identified 37 social issue themes related to MHI Group.
Step2 Mapping Materiality
  • Importance of social issues assessed and mapped along two axes
    (Vertical axis: degree of impact on society; Horizontal axis: importance to the Company)
  • Nine materiality postulated based on the materiality map
Step3 Verifying Appropriateness
  • Discussion held at materiality review meetings (consisting of CSR Committee members), and materialitynarrowed down to six items
  • Dialogue held with three outside experts
Step4 Identifying Materiality
CSR Committee members narrowed materiality down to five issues, which were formally finalized after Executive Committee and Board of Directors meetings in September 2020.
Step5 Company-wide materiality targets and KPIs for monitoring progress set
Company-wide materiality targets and KPIs for monitoring progress reviewed and set
(To be disclosed on the MHI website, etc. after being set in fiscal 2020)

Approach to Identifying Materiality

Approach to Identifying Materiality

Dialogue held with experts to discuss identifying materiality

On September 4, 2020, a dialogue was held with three experts to discuss identifying materiality. Valuable opinions were offered by the three based on their knowledge of their respective areas of expertise.

Dialogue held with experts to discuss identifying materiality
Dialogue held with experts to discuss identifying materiality

Expert Profiles and Their Opinions

Expert Profiles Their Opinions
Mariko Kawaguchi

Specially Appointed Professor,
Graduate School of
Social Design Studies,
Rikkyo University

Mariko Kawaguchi

  • As the world shifts direction toward decarbonization, putting forth decarbonization rather than low-carbon goals is more in line with the times.
  • What about specifying your approach to adapting to climate change?
    Adaptation is one area in which we expect something of MHI.
    You can create a powerful message by reevaluating your approach with the understanding that disasters and climate change come as a set.
Toshihiko Goto

Chief Executive Officer,
Sustainability Forum Japan
Board Member

Toshihiko Goto

  • The current materiality represents a significant improvement over those announced in 2015 because they also encompass the Company's development strategy.
  • It is important to demonstrate the relationship between materiality and your medium- to long-term development strategy.
  • Materiality would be further improved by an outside-in perspective on your own business, based on the social issues.
  • Given that more than half of MHI's business is overseas, materiality needs to be compiled with an awareness of their relationship to human rights as well.
Ichiro Sakata

Professor, Graduate School of Engineering Special Advisor to the President Institute of Engineering Innovation,
School of Engineering, the University of Tokyo

Ichiro Sakata

  • If you can put forth ideas for overcoming the trade-off between the shift to smart technologies and increased energy consumption associated with the growing volume of information traffic, this should have an impact on your business strategy and materiality.
  • Taking issues of digitalization and data into consideration based on MHI's future growth might result in a more forward-thinking discussion.
    Those elements can provide a new driver toward efforts to achieve a better society.

Response to Opinions

Based on these dialogues, our materiality now reflects both decarbonization and energy issues in an effort to clearly set forth MHI Group's response to climate change.
In addition, based on suggestions regarding digitalization and data, we have incorporated an AI/Digitalization item as part of our business materiality. We have also positioned respect for human rights as a more important issue of materiality given the expansion of MHI Group's business activities around the globe.
With regards to the relationship between materiality and our medium- to long-term development strategy, we established our Medium-term Business Plan with an understanding of the materiality identified, and will conduct regular monitoring of our materiality targets.

MHI Group materiality established in 2015

  • Details of materiality established in fiscal 2015 are available starting on page 9 of the ESG DATABOOK 2019.

1. An Optimal Governance Structure Based on Our Corporate Culture

  • An optimized organization to continually contribute to society through our business
  • The assurance of fair operating practices and appropriate labour practices

[Objective]

・Ensure an organizational culture in which values are shared globally and universally

[KPI] Number of whistleblowing cases

We have provided two hotlines where any actual or potential breach of the Code of Conduct, and any other actual or potential breaches of ethics, including bribery and corruption, can be reported: the MHI Whistleblowing Hotline, which is available to all employees, including those of Group companies, and the MHI External Whistleblower Hotline. The Compliance Committee Secretariat promptly investigates all reports made to these hotlines, and takes appropriate remedial or preventive action where breaches are identified.

Number of whistleblowing cases, by type

Type FY2016 FY2017 FY2018 FY2019
Labour and the work environment 42 49 81 69
Overall discipline and breaches of manners 28 17 13 13
Transaction-related laws 11 11 15 12
Consultations and opinions 3 0 1 2
Other 34 36 32 44
Total (number of corrections and improvements) 118
(64)
113
(59)
142
(65)
140
(66)

2. The Use of Global Human Resources

  • The attraction and development of human resources with the ability to respond to globalization
  • Diversity and equal opportunity, including the empowerment of female employees.

[Objective]

・Be an organization that embraces diversity (Ensure that barriers to diversity are removed)

[KPI] Number of female managers

In July 2014, MHI has set a target to increase the number of its female managers, in positions of section manager and higher, threefold by 2020 from the level at that point. As a result of promotion for the active participation of women in the workplace in conjunction with its pursuit of diversity management, MHI has achieved the target as of April 1, 2020.

FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
85 102 126 149 171 204 258
  • People in positions of section manager or higher as of April 2020. Figures are for MHI and Mitsubishi Power, Ltd. (Coverage: 92% of employees)

3. Response to Mega Trends

  • Innovation and quality control to meet global needs
  • Enhanced safety and security, including improved information disclosure and transparency

[Objective]

・Enact strategic measures and business operations that meet the needs of global society

[Strategic KPIs]

  • Improvement in stakeholder evaluations (SRI surveys, customer satisfaction surveys and others)