Sustainability of the Otsuka Group
“Otsuka-people creating new products for better health worldwide” That is our corporate philosophy. Guided by this outlook, we keep trying to address social issues, and we have continually pursued the achievement of our business growth and a healthy, sustainable society.
In recent years, social situations and business environments have been changing rapidly. Our group consists of 168 companies in 32 countries and regions globally, and it is a mandatory task for us to keep an eye on the changes and tackle them. Based on this background, we re-assessed our materiality (key areas that the Otsuka group should prioritize) in line with Fourth Medium-Term Management Plan (4th MTMP) that started in 2024. We recognize that this materiality is more clarified and integrated with our business strategy toward corporate growth and the promotion of sustainability.
The Achievement of Creating Additional Values With New Materiality
Contribute to the Health and Well-being of People Around the World
As a total healthcare company, the Otsuka group believes that it is quite important to contribute well-being, including by improving people's quality of life (QOL), and not just provide products. In addition to diagnoses and medical treatments, we provide seamless healthcare solutions including disease awareness, the overcoming of unconscious bias, and support for patients' return to work and social community. For example, in psychiatry and neurology area, we are committed to activities that support patients and caregivers, such as providing diagnostic and therapeutic support, and reducing the burden of care. In the Nutraceutical and the Consumer Products Businesses, we contribute well-being to people by creating products inspired by the medical field, then discovering yet-to-be imagined needs, and finally creating new categories. Our product POCARI SWEAT become widely known as “a drinkable I.V. solution,” which is a good concept from the medical field. Our efforts to communicate the importance of hydration and electrolyte replenishment through POCARI SWEAT also contribute to our initiatives to prevent heat disorder. All of these initiatives are based on our values: Ryukan-godo (By sweat we recognize the way), Jissho (Actualization), which then lead us to perform Sozosei (Creativity). We have continually pursued the creation of what had never been done and can only be done by Otsuka, and deliver well-being to people all over the world.
Develop Human Capital at Good Working Environment
In order for us to sustain consistent growth and strive towards the achievement of a sustainable society, the development of our human capital is paramount. As our business operations expand, the nurturing of our human resources should be prioritized within our corporate group. Furthermore, we perceive the development of talent—individuals who comprehend our corporate philosophy and possess the ability to actualize the philosophy through their creativity—as crucial. To build the foundation for such talent to thrive to their maximum potential, we are committed to creating a workplace where employees with diverse backgrounds gather and multiple perspectives intersect.
In addition, we intend to appoint candidates for the next generation of leaders who possess a broad perspective, team-building skills, and innovative thinking regardless of their backgrounds. In order to develop such human resources, it is desirable for them to experience at least two or more different departments or areas. For example, our talent can develop the ability to see things from a variety of perspectives through their experience across departments and areas such as production and headquarters, sales and marketing, U.S. and Japan, etc.,. In addition, the Otsuka group offers secondments to government ministries and agencies, recruits IT human resources from overseas universities and provides internships, and creates opportunities for employees within the group to gain experience in operating companies globally. In companies and departments where specialized knowledge is expected, we will steadily develop specialized human resources from a long-term perspective in accordance with the capabilities and characteristics of each employees.
Create More Sustainable Future With Business Partners
The Otsuka group aims to contribute to the solution of social issues through business activities with our business partners. We established and enacted the Otsuka Group Business Partner Code of Ethics in 2024 to articulate our uncompromising commitment to the highest standards of ethical conduct to be achieved in cooperation with our business partners, since we believe that both the results of our business activities and the creation of a sustainable future with our business partners are of equal importance. We will promote business activities in accordance with these standards and work to ensure that these activities harmonize the entire supply chain with all business partners.
In recent years, we have also focused on sustainable procurement, which aims to solve social issues through procurement activities, while also building a stable procurement system which is able to adapt to social changes. In 2024, we revised our Otsuka Group Procurement Policy and Otsuka Group Sustainable Procurement Guidelines to enhance our sustainable procurement. The Otsuka group is working together with its suppliers to achieve sustainable society and improve the corporate value.
Promote Positive Impact on Global Environment: “Net Zero,” 2050 Environmental Vision
The Otsuka group's 2050 environmental vision, “Net Zero,” aims to reduce environmental impact of all business activities to zero. Based on this vision, we tackle carbon neutrality, circular economy, and water neutrality. On top of these issues, we added biodiversity, considering the importance of maintaining and preserving ecosystems. We have revised and set medium-term goals for 2028 and 2030, and are working to achieve these targets.
Regarding carbon neutrality, we have completed the Otsuka group energy management building to expand the use of renewable energy and pursue the best group-wide energy mix. The Otsuka group promotes and organizes strategies to enhance integrated energy management, and is now starting trials of next-generation technologies.
Next, we have set a target of 100% use of recycled and plant-based materials used in PET bottles globally by 2030 in terms of circular economy. To achieve this goal, aligned with the implementation of recycled PET bottles, we are working with organizations, local governments, and business partners to establish a domestic resource recycling scheme for used PET bottles. In addition to domestic initiatives, PT Amerta Indah Otsuka in Indonesia, which is one of our subsidiary, has launched a sustainability program called OTSUKA BLUE PLANET, which aims to contribute to the global environment. This initiative aims at contributing to the environmental sector in Indonesia through recycling and raising awareness in cooperation with national and local governments, including support for the creation of communities so that they build customs regarding environmental consciousness, and manage waste disposal independently.
In addition, we identified biodiversity as a part of this materiality anew. We recognize that the conservation and sustainable utilization of biodiversity is essential for the sustainable growth of the Otsuka group, and we are assessing the impact and level of dependency of our business activities on biodiversity. Moreover, we have set targets for the procurement of raw materials that present a high risk of deforestation, and will continue to promote sustainable and responsible procurement.
Achieving our Sustainability Mission
Although the new materiality that we have re-identified should be prioritized, the concept of our sustainability is not limited to materiality. Based on the spirit of “Quality First,” we persistently pursue the pinnacle of quality at every stage of our value chain, from research and development, procurement, production, logistics, all the way to the delivery of our products and services to achieve a sustainable society from the perspective of human rights, the environment, and so on. In order to realize our sustainability mission, what our group should tackle is the task of maximizing corporate value. This can be achieved through the promotion of the overall strategy by Otsuka Holdings, and its subsequent implementation by the operating companies.
Moreover, strengthening our resilience is essential for our corporate governance so that we can quickly correct course if our overall management were to proceed in the wrong direction. Therefore, we will steadily reinforce our governance in line with the mandatory disclosure of sustainability information surrounding companies, including compliance with legislations and standards such as the Corporate Sustainability Reporting Directive (CSRD) in Europe and the disclosure standards developed by the Sustainability Standards Board of Japan (SSBJ).
We, from our 4th MTMP, have incorporated the achievement of external ESG-related evaluation indicators as non-financial evaluation indicators which was the one of the non-cash remuneration for the eligible directors, in order to focus on sustainability management. In addition, we have introduced a clawback clause* in contracts with them.
Our entire group will continue on a path of sustainable growth with enhancing each strategy and solving social issues for the achievement of well-being and a sustainable society.
- *A system to refund paid remuneration if any amendments are made to the consolidated financial statements of Otsuka Holdings within 3 years after the lifting of the transfer restrictions, etc.