At the Idemitsu Group, we value contributing to society through our business. Our mission is to continue supplying energy, which supports people’s lifelines, while contributing to social development. In recent years, the environmental impact of energy use has become a major social issue, and we recognize that harmony with the global environment and society is a pressing issue. Accordingly, with a long-term perspective, we have identified materialities to prioritize during the Medium-term Management Plan. The entire Group will work as one to resolve these, with the aim of achieving sustainable development with the global environment and society. We analyze the risks and opportunities when promoting our materialities from the perspective of the impact on the Group as well as on society as a whole.

Materiality	Major initiatives	Main relevant SDGs	Risks and opportunities ( : Impact on society; : Impact on the Idemitsu Group)
Structural reforms to core revenue-generating businesses Build a strong supply chain and further strengthen stability and competitiveness through collaboration with partners in the core revenue-generating businesses centered on petroleum products and chemicals.	Pursuing profits in the petroleum business (maximizing integration synergies, making refineries more reliable) Enabling Nghi Son Refinery to contribute to profits Utilizing the Pacific Rim supply chain to capture growing demand in Asia Gas development in Southeast Asia		Risks Increased use of resources (energy, water, materials and land) by businesses may lead to the consumption of natural capital Stagnant energy demand and lower resource prices due to greater energy conservation and economic deceleration caused by, for example, U.S.-China trade tensions Unforeseeable events, such as large-scale disasters or pandemics, impacting the supply chain Lower profitability due to higher social demand for climate change action Opportunities Reduced GHG emissions through the development and promotion of renewable energy Contribution to local communities through the stable supply of energy and the job creation on a global scale Increasing energy demand in Asia region backed by population growth and economic development Higher demand for petrochemical products due to lifestyle changes in Japan and expansion of new markets Enhanced competitiveness and realization of stable energy supply through the business integration
Expansion of growth businesses Expand business scale and scope by strengthening R&D in growth fields such as functional materials and renewable energy, which are becoming increasingly necessary in the world.	Expansion of business scale and domains (M&As on a scale of ¥100 billion during the Medium-term Management Plan period) Increasing the share of functional materials business to 30% by 2030 Increasing total power generated from renewable energy overseas to 5GW by 2030 (of which, 4GW is renewable energy) Transformation of solar-power business Black pellet development (biomass fuel) Strengthening development of functional materials utilizing open innovation		Risks Consumption of food and plant resources due to development and promotion of biofuels derived from edible sources Delayed development of renewable energy due to changes in government policies and programs in Japan and overseas Delayed adaptation to changes in the demand structure due mainly to technological advancements and the emergence of new products Opportunities Changes in consumption reflecting the creation of high-performance and environmentally friendly products attributable to government policy incentives and technological innovation Growing need for energy-efficient products against the backdrop of climate change Growing demand for functional materials geared toward EVs, electronic components, AI, and IoT devices
Creation of next-generation businesses Accelerate technological innovation and innovation beyond organizational frameworks to create new businesses with an eye to the future.	Creating new businesses with an eye on social changes, diversifying customer needs, and lessening environmental impact Development of next-generation service stations business Distributed energy business Circular business		Risks Delayed action on social issues due to increasing difficulty of market entry by changes in government policy and programs in Japan and overseas Potential inability to contribute to industrial and social transformation due to delayed action on technological development and open innovation Deterioration in value of new investments due to rapid changes in the business environment Opportunities Solutions to social issues through new products and services created through revolutionary R&D and innovation Launch of regional revitalization activities leveraging the growing social need for distributed energy, such as a more resilient energy supply in Japan, local production for local consumption, and home energy generation and consumption New business development at service stations in Japan that serve as local hubs for day-to-day life Ensuring employee growth and job opportunities
Harmony with the global environment and society low-carbon and circular economy in consideration of climate change risks, and promote diversity and inclusion in partnership with business partners, communities, and employees.	Efforts to reduce GHGs (2030: ▲2 million t-CO2 compared to 2017) Contributing to the areas where we operate business Implementing diversity and inclusion initiatives Making work more rewarding for employees SDGs educational activities		Risks Delayed response to drastically stronger environmental regulations, including on GHG reduction Possible difficulty in ensuring a stable supply of energy due to supply chain disruptions caused by large-scale disasters Delayed environmental action due to stalled international cooperation and the increased cost of addressing social division Impact of increasingly competitive labor market on challenges the Company faces in hiring and retaining employees Opportunities Promoting solutions to social issues by advancing the SDGs Creating businesses and contributing to solutions through cooperation with local communities Expanding business opportunities due to social demand for low carbonization Seizing business opportunities by acquiring excellent personnel who support the Group’s vision and policies
Progress in governance Strengthen governance functions to maintain the trust of shareholders and all other stakeholders.	Enhancing the roles and functions of the Board of Directors		Risks Potential reputational damage if efforts to introduce appropriate governance functions are abandoned Opportunities Enhanced corporate value through highly transparent and fair management Business expansion enabled by swift business execution seizing various opportunities Appropriate promotion of sustainable growth and the medium-term management plan
Acceleration of digital innovations  Capitalize on evolving digital technologies to transform existing business processes and management in response to the business environment and customer needs.	Utilizing digital technologies to create new value		Risks Growing risk of data leaks due mainly to computer viruses and hacking Rising initial investment costs due to the introduction of new systems and troubles during the transition Opportunities Solutions to social issues through technological innovation Lower costs through more efficient operations and higher added value by freeing up time

When considering the effect on the SDGs of key initiatives that impact materiality, we took into account the fact that each SDGs is interconnected. Rather than being confined to one specific goal, the impact of any business activity targeting materiality will, to varying degrees, extend to all the SDGs. That said, we believe we can especially contribute to the achievement of the following three SDGs on the right through our business activities.

Our efforts to achieve these goals may lead to increased environmental burden in the form of higher resource consumption and GHG emissions. Recognizing that our business activities might impose a burden in the following five areas and keep us from achieving the goals, we realize the necessity of making serious efforts to address this. We are considering measures to minimize or eliminate the negative impact of our operations on these social issues. Specifically, we will set reduction targets for GHG emissions related to the use of petroleum resources and the risk of climate change, and will consider measures to achieve them. The entire group will also work together to promote the recycling of solar panels and petrochemicals, including plastics.