Materiality | Sustainability Management

Material Issues

The HIMACS Group has identified issues that it needs to address as priorities by considering their importance to stakeholders, including customers, employees, business partners, shareholders, investors, and local communities, as well as their relevance to the Group’s management strategy. The Group identified its material issues through the following process.

1. Identification of Social Issues

We then prepared a long list of social issues that HIMACS should address, based on issues identified from international guidelines,* ESG rating criteria, and other sources.

* GRI Standards, SASB, ISO 26000, SDGs, and other frameworks

2. Prioritization of Social Issues

We created a materiality matrix by evaluating the social issues on the long list based on two axes: importance to stakeholders and importance to HIMACS. We then prioritized the issues accordingly.

3. Organization of Material Issues

The selected social issues were organized into four categories based on their content and the direction of our initiatives, and a draft set of material issues was prepared.

4. Validation and Identification of Material Issues

We exchanged views with management on the draft material issues and the development process, and validated their appropriateness.
The material issues and grouping were approved by the Board of Directors and identified as HIMACS’s material issues.

In identifying its material issues, the Group evaluated social issues along two axes: “importance to stakeholders” and “importance to HIMACS,” and created a materiality matrix.

The HIMACS Group has identified issues that it needs to address as priorities, or material issues, by considering their importance to stakeholders, including customers, employees, business partners, shareholders, investors, and local communities, as well as their relevance to the Group’s management strategy. Through initiatives to address these material issues, the Group aims to contribute to achieving the Sustainable Development Goals (SDGs) established by the United Nations.

The material issues identified by the Group, together with an overview of related risks and opportunities, impact, time horizon, and main initiatives, are as follows.

Material Issues	Sub-Materiality	Impact *1	Time Horizon *2	Risks and Opportunities	Main Initiatives
E: Environment 1. Responsible Action on Climate Change	GHG Emissions Reduction	Low	Short to Long	Risks - Delays in responding to climate change may prevent the Group from meeting customer requests or addressing stronger regulations, leading to declines in profitability, corporate value, and competitiveness. Opportunities - Responding to climate change may expand opportunities to provide Digital Transformation-related (DX-related) services and improve stakeholder trust.	- Co-creation with customers - Enhanced ESG information disclosure - Enhanced resilience of business activities - Development of DX human resources
	Introduction of Renewable Energy	Low	Medium to Long
	Strengthening Initiatives Across the Supply Chain	Medium	Short to Long
	Disclosures in Line with TCFD and Other Frameworks	Medium	Short to Long
S: Social 2. Creating a Healthy and Rewarding Workplace by Strengthening Human Capital	Recruitment and Development of Human Resources and Support for Career Development	Medium	Short to Long	Risks - Insufficient recruitment, development, or utilization of human resources may weaken the Group's ability to execute its business strategy and result in a loss of competitiveness. Opportunities - Sustained investment in human capital may lead to the recruitment, development, and retention of human resources capable of flexible strategy execution, supporting sustainable growth. - Development of DX human resources may create new business opportunities and services.	- Fair, equitable, and transparent HR system - Development of a career development framework - Enhancement of training programs - Development of project leaders (PLs) - Development of DX architects - Support for qualification acquisition - Employee engagement - Initiatives to promote health and optimize working hours - Support for balancing work and childcare - Support for balancing work and nursing care - Remote work system
	Promoting Diversity	Medium
	Improving Health and Productivity Management and Employee Satisfaction	Medium
S: Social 3. Enhancing Competitiveness by Strengthening Human Resources, Technologies, and Partnerships	Promoting Technological Innovation Through the Development of DX Human Resources	Medium	Short to Medium
	Building a Sustainable Value Chain	Medium	Short to Medium
G: Governance 4. Practicing Sound Governance and Ethics	Strengthening Corporate Governance Framework	Medium	Short to Medium	Risks - Inadequate governance and ethics systems may lead to a loss of stakeholder trust. - Cyberattacks or information leaks may create business continuity risks and reduce customer trust. Opportunities - Strengthened governance may help earn stakeholder trust and enhance corporate value.	- Board of Directors composition that ensures independence and diversity - Development and operation of internal control systems - Implementation of compliance education - Implementation of information security education and training - Acquisition of third-party certification for information security
	Embedding Compliance and Corporate Ethics	Medium
	Strengthening Risk Management and Information Security Framework	Medium

Notes:
1. Impact: High (significant), Medium (important), Low (minor). Overall assessment considering the likelihood of occurrence and other factors.
2. Time horizon: Short term (2026–2028, the current medium-term management plan period), Medium term (through 2030), Long term (2031 and beyond).