Materiality (Key Issues)
OSG Group's Materiality
In FY2024, OSG Group revamped our materiality, which are the key issues that we seek to address. Because the previous eight had either little relation to changes taking place in the business environment and our Medium-Term Management Plan or had already been realized, we reduced the number to four, amending them to be more relevant to our plans and programs. As we move forward, we will be conscious of how these are linked to our Medium-Term Management Plan KPIs. We will set out key themes and KPIs for each of these four and enhance our efforts to address all of them.
The Sustainability Committee deliberates ESG-related issues, policy and vision consistency, priority measures, and other matters, and regularly reports on its activities to the Board of Directors. Measures for promoting sustainability are implemented by department heads (ESG officers) and facilitators in each organization based on decisions made by the President, who chairs the Sustainability Committee. So that department facilitators maintain consistency in their understanding of what sustainability entails, they regularly provide progress reports on their activities, exchange views with colleagues, and promote initiatives for achieving solutions to key issues.
Process for Identifying Materiality (Key Issues)
- STEP1
Identifying issues for medium- and long-term enhancement of corporate value
- So that OSG may contribute to the manufacturing industry through our business and help resolve environmental and social challenges in accordance with our corporate philosophy of "Global Presence," we identified issues that are highly likely to have a significant impact on corporate value over the medium- and long-term. We analyze previous materiality issues and applied international guidelines, frameworks, and other standards to identify issues.
- STEP2
Evaluation & analysis of issue significance
- These issues were evaluated and analyzed along two axes: 'importance to stakeholders' and 'importance to OSG.' Those issues that have a particularly high impact on OSG Group's business were then prioritized to reassess our materiality.
- STEP3
Setting materiality, initiatives & targets
- Our evaluation and analysis of issues in STEP 2 identified a total of four new materiality issues that are key. We also set priority themes for each of the materiality issues as well as targets to be reflected in specific activities. Progress made in the initiatives toward reaching these targets will be disclosed in a timely manner.
- STEP4
Deliberation & approval of materiality
- The materiality issues identified in STEP 3 were deliberated and approved by the Sustainability Committee. Because these are also critical issues and metrics for promoting ESG management as touted in our Medium-Term Management Plan, they have been discussed and approved as challenges that we must address to grow our business.
Materiality and Specific initiatives
Contributing to the manufacturing industry through our business
Developing an environment where employees are respected and able to flourish
Contributing to a sustainable global environment
Maintaining and strengthening our governance structure so that we may achieve sustainable growth
Contributing to the manufacturing industry through our business
| Priority Themes | Initiative | Target | FY2024 results | FY2025 action plan |
|---|---|---|---|---|
| Expand the global market share for our core product taps | Global expansion of high-quality & high-value added product series | Global tap market share of 40% by 2027 | Global tap market share of 33% (OSG estimate) | Proactively launch new products |
| Optimize our business portfolio | Exploration of markets for micro and precision processing | Micro and precision processing sales percentage of 30% by FY2030 | Micro and precision processing sales percentage of 15% |
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| Expand new business and after-sales services | Global expansion of reconditioning & coating business | Reconditioning & coating sales ratio of 15% by 2027 | Reconditioning & coating sales percentage of 7% | Expand job coating service targeting non-tool products |
A-Brand Strategy
The OSG Group regards A-Brand, which is an all-around cutting tool demonstrating superior performance in a diverse range of machining conditions as well as with a multitude of workpieces, as a comprehensive premium brand developed by leveraging OSG Group's cutting-edge technologies. A-Brand products are a key part of our Medium-Term Management Plan strategy. We have promoted expansion of the A-Brand series, which are available along with our standard cutting tools (catalog items). Ever since A-Brand was announced in 2014, we have advanced development not only of taps, but also A-drills and A-end mills and expanded our product lineup. The A-tap, which spurred creation of the A-Brand, has contributed tremendously to boosting our reputation over many years and expanding tap sales. In addition, A-Brand products are used in a broad range of industries and have also contributed to increasing sales to the micro and precision machining sector, an area we are focusing on. We will continue to steadily expand the A-Brand and earn high regard for these series not only in Japan, but globally. In addition, we will also maintain our efforts to market A-Brand products, which satisfy our customers calls for high-quality and high-performance tools.
- Sales percentage of A-Brand within standard products
Micro and Precision Processing
A key strategy of our Medium-Term Management Plan has been to increase the share of taps, drills, and carbide end mills for micro and precision machining. In the 5G, semiconductor, robotics, automation, mechanical components, mobility, medical, and other industries where growth is forecast, there is considerable component machining which requires precision machining, and demand has risen in these industries for small-diameter tools. We launched a new sales organization to promote business development in these sectors, and our sales force has been actively working and successfully securing new users for our products. These marketing campaigns have not just been rolled out in Japan, but are also actively running globally. The market for micro and precision machining is anticipated to grow in the future. Our aim is for these sales to reach 30% of total sales by the fiscal year ending November 2030, the final year of Stage 3 (2028～2030) of our Medium-Term Management Plan. Through our global network which is one of the OSG Group's strengths, we will leverage our ability to turn sales calls into orders, offer outstanding service for manufacturing that meets our customers' deadlines, and provide on-site technical support, all of which will lead to securing a greater market share.
- Sales percentage of tools for micro and precision processing
Developing an environment where employees are respected and able to flourish
| Priority Themes | Initiative | Target | FY2024 results | FY2025 action plan |
|---|---|---|---|---|
| Increase employee engagement | Advancement of comfortable working environment and systems |
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| Promotion of safety and health management |
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Recognized as a 2024 'White 500' Excellent Health Management Company | Continue to be recognized as an Excellent Health Management Company | |
| Enhance the capabilities of our human resources and strategically assign personnel to assignments | Cultivation of next-generation and management leaders | Establish program for developing next generation managers | Management training implementation: 1/yr. ※Note: Targeting young leaders |
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| Encouragement of professional human resources | Use human resources data platform to effectively utilize personnel | Collected human resource data |
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| Respect diversity | Promotion of active roles for women and people with disabilities |
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| Respect human rights | Provide human rights training in line with the OSG Human Rights Policy and OSG Corporate Code of Ethics, and manage these such risks |
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Contributing to a sustainable global environment
| Priority Themes | Initiative | Target | FY2024 results | FY2025 action plan |
|---|---|---|---|---|
| Realize carbon neutrality |
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Achieve 10% carbon neutral by 2024 and 30% by 2030 | 21% cumulative CO2 emissions reduction (vs. FY2019) |
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| Reduce users'environmental footprint | Development of new eco-friendly products | Eco-products (OSG standard) target: 40 or more annually | Eco-products: 46 | Eco-products: 45 |
Disclosure based on TCFD recommendations Environmentally Conscious Product Development
Maintaining and strengthening our governance structure so that we may achieve sustainable growth
| Priority Themes | Initiative | Target | FY2024 results | FY2025 action plan |
|---|---|---|---|---|
| Maintain our corporate governance structure |
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| Construct a group governance structure | Strengthening of OSG Group governance based on relevant business management regulations |
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| Thoroughly manage risk and ensure compliance | Strengthening of information security measures | Eliminate major information security incidents | Rolled out security enhancement measures implemented at the head office in FY2023 to 22 important Group companies (9 in Japan and 13 overseas) |
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| Formulation of a business continuity plan & regularly conduct disaster prevention training | Instill the business continuity plan to minimize damage & pursue countermeasures |
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