A year of redefining “with a spirit of harmony and in good faith” and enhancing our responsiveness to change

Fiscal 2024 marked an important milestone as the half-way point of the Mid-Term Management Plan “Creating New Value for the Future (Stage 1)” (“CV-1”). Looking back fiscal 2023, the first year of CV-1, it was a year of transformation. To adapt to a rapidly changing business environment with greater agility and speed, we reviewed our existing workflows and took the first steps toward new ways of working. During the course of this process, I realized through discussions at various sites that our management philosophy may not yet be fully understood or embedded across the organization. In particular, there were various interpretations of the word “harmony” within the Group, and I felt the need to align them.

What is “harmony”? - I too confronted this question again during the transition from the first to the second year of CV-1. Although I have kept “with a spirit of harmony and in good faith” in mind as the Group’s philosophy since I joined the Company, I realized that I had not deeply considered its true essence. I reaffirmed that the “harmony” we strive for is not about simply getting along or yielding to peer pressure, but about openly sharing differing views, engaging in meaningful dialogue, and moving forward together toward a common goal.

So, in fiscal 2024, I visited more bases than in the first year of CV-1 and strengthened direct dialogue with employees, with an aim to embed our new work style while also returning to our roots. I listened to voices of on-site employees, clearly stated the aforementioned redefinition of the “harmony” and shared it with each and every employee so as to foster deeper understanding of our management philosophy. At the same time, I consistently emphasized the key concepts of “agility” and “flexibility” to embed them across the organization. The pace of change is accelerating not only in business but also in the area of sustainability. I firmly believe that leading in the coming era requires both agility in responding to immediate changes and the flexibility to continuously adapt to future ones.

Promoted sustainability as the core of our growth strategy – Review of the second year of the Mid-Term Management Plan

For Guideline 1 “Creation of value,” we promoted development of new products that added new value to existing products. We launched “Heavy-duty double cog belts,” the world’s first cellulose nanofiber-compounded rubber belt, and achieved both high weather resistance and reduced environmental impact with a new product of “BANDO GLANMESSE™,” a PVC film for displays. We started to provide the users of a swallowing movement monitor “B4S™,” our healthcare device, with a support tool for calculating “oral function improvement service fee” for free. We have also made steady progress in creating new value through joint creation with start-ups, including making investment in inaho Inc., a company providing farmers with products and solutions such as AI-equipped fully-automated harvesting robots, and signing a strategic partnership agreement with Canada-based Inmotive Inc. for 2-speed transmission for the two- and three- wheel electric vehicles. In fiscal 2025, we will further accelerate the evolution of new businesses and the enhancement of core businesses based on joint creation to expand growth domains and maximize cash generation.

For Guideline 2 “Creation of smart manufacturing,” we made progress toward realizing the ”Bando Dream Factory” and also focused on the development of digital human resources who will play an integral role in the development of smart manufacturing methods. With a view to realizing cost-competitive global optimal production, we determined to terminate production in Bando USA, Inc. in March 2025 and focus on its sales functions. In fiscal 2025, we will continue to ensure that our activities are carried out in accordance with “Returning to the basics of safety” and the “Safety and Health Policy” in pursuit of safe, secure, and eco-friendly manufacturing set forth in the “Bando Dream Factory.” Also, we will focus on developing technology and manufacturing methods to increase productivity and resource and energy efficiency as well as developing processes that use AI, IoT, and robot technology. In addition, we will work to deliver high-quality products and services and create earning power through enhancement of our on-site capabilities and the activities in line with the “quality policy.”

For Guideline 3 “Evolution of organizational capabilities for the future,” we conducted 360-degree feedback for general managers and above, including executives, which facilitated mutual understanding between supervisors and subordinates, driving both personal growth and the evolution of organizational capabilities. For the operational reform training, which was introduced at the Company in fiscal 2023, we enhanced quality and volume of operational reform and improvement by expanding the scope of participants to domestic consolidated subsidiaries and providing follow-up training for the second year. In fiscal 2025, as part of our efforts to restructure global organizational governance, we will select and concentrate on material issues to build a structure capable of executing initiatives globally. We will also focus on IT investment aimed at expanding sales and improving operational efficiency. In addition, we will work to improve engagement by accelerating our measures to encourage managers and leaders to change their behavior and our efforts to realize the organizational climate we aim for.

Recognition of external environment and risk response measures

The trend toward a VUCA* world, observed in Japan and overseas over the past several years, is expected to intensify further beyond 2025. Amid these circumstances, we plan to address risk through coordinated efforts across four key global regions (Japan, Asia, China, and Europe/North America) and a diversified approach, utilizing “short-,” “medium-,” and “long-term” perspectives to minimize potential risk impact and maximize opportunities. Specifically, in response to short-term factors such as tariff increases and supply chain fluctuations, we will swiftly make decisions based on the assessment of on-site conditions to restructure our supply chain from the perspective of what to produce, where to produce it, and where to deliver it for optimal efficiency and implement optimal measures with speed. Meanwhile, for medium- to long-term challenges such as technology and product development, we will take a steady and persistent approach to addressing them, aiming to achieve solutions that lead to meaningful outcomes.
* Volatility, Uncertainty, Complexity, and Ambiguity

[Sustainability activity themes]

Fiscal 2024 and current initiatives
In fiscal 2024, the seventh year under the “Sustainability activity themes (formerly, “CSR promotion themes”),” some progress was made in each theme.

[Products and services]
In fiscal 2024, the ratio of environmentally friendly products among the total newly marketed products was 71.8%, achieving the target of "50% or more" on a nonconsolidated basis. We registered five products as eco moving products, including “QUICK CHANGE ATOM™,“ a tool changer for collaborative robots that does not need pneumatic, electric or other power sources when coupling and uncoupling, and accessory drive power transmission belts for automobiles that reduced CO₂ emissions through the change of manufacturing methods. We have also initiated the calculation of the “CO₂ reduction contribution” for eco moving products that contribute to reducing our customers’ CO₂ emissions, including HFD system™.

[The environment]
As part of our initiatives for the realization of carbon neutrality by 2050 and the achievement of FY2030 targets (38% reduction of Scope 1 and 2 emissions compared to 54,703 tons in fiscal 2013 on a non-consolidated basis), we focused on the planned introduction of energy-saving equipment and measures to reduce energy loss. Our Thai subsidiary expanded its solar power generation system on its plant rooftop and started operation in December 2024. We also acquired a third-party certification for Scope 1 and 2 emissions on a non-consolidated basis. In fiscal 2025, we will set new reduction targets for domestic and overseas production bases.

[Labor/Safety]
In fiscal 2024, Nankai Plant achieved a “record of 12.5 million hours of accident-free operation,” and we participated in “Working RIBBON 80% Challenge” as a promotion partner of the Corporate Action to Promote Cancer Control and the Women’s health initiative Working Ribbon, both led by the Ministry of Health, Labour and Welfare. We also decided to introduce measures to prevent secondhand smoke from fiscal 2025. In addition, we were selected as one of the “2025 Outstanding Organizations of KENKO Investment for Health (large enterprise category) in recognition of our initiatives for health and productivity management. We also enhanced our initiatives to improve engagement by identifying employees’ career challenges and holding a roundtable discussion for young talent.

[Compliance/Human rights]
Based on the human rights policy developed in fiscal 2023, we implemented human rights due diligence and assessed the Group’s adverse impact on human rights across its value chain to identify human rights issues. Then, we conducted direct interviews with our raw material suppliers identified as having potential human rights issues and confirmed that no problems were present. To further strengthen compliance, we enhanced employee education by, for example, introducing e-learning courses for information security, compliance with the Subcontract Act, and security export control.

[Stakeholder communication]
We participated in “The Sixth Port Island Science Festival” held in November 2024 at Bando Kobe Science Museum (Kobe Science Museum) for which we have the naming rights. In addition, as part of our community-based biodiversity conservation activities, Kakogawa Plant grew boneset which is classified as an endangered species in Hyogo Prefecture, and our Thai subsidiary conducted a tree planting campaign. We also focused on educational support activities, and, for example, I personally gave lectures at a university in Kobe on our business activities and management strategies, and Ashikaga Plant participated in outreach internship programs at local high schools.

Next year, we will celebrate our 120th anniversary, a significant milestone. I believe our sustainable growth over such a long period of time has been made possible by our responsiveness to evolving social needs and our continued commitment to delivering new value required in each era. The business environment is expected to change at an even faster pace. Precisely because of such an environment, we are committed to deepening communication with all our stakeholders in order to “contribute to society as a whole with a spirit of harmony and in good faith,” as set out in our management philosophy, with sustainability embedded at the core of our growth strategy and business activities.

We appreciate continued understanding and support from our stakeholders.

August 2025

President and Representative Director, Bando Chemical Industries, Ltd.

Tomio Ueno