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Striving to remain a company that “gives attentive consideration to both humanity and nature”

■Introduction

It has been two years since I became the President in June 2021. When I assumed the position of President, we were in the midst of the spread of COVID-19, and we were forced to first work on establishing a system that ensures both the safety of our employees and the continuity of business operations. Although we had a hard time because we could not go on business travel, this has led to the introduction of new ways of working that were not restricted by time or place, such as web conferencing and remote work. I feel that there were also such positive side effects from the perspective of human capital management practices.

Despite a hectic start, I immediately began discussions to revise the Mid-Term Business Plan after my informal appointment as the President, and by the time I took office in June, a clear policy for the new system had been established. In “Revisions to Mid-Term Business Plan (FY2021-2023),” we indicated for the first time the direction to be taken in the medium to long term as the “FY2030 Target Position,” which has been set as “Establish a Strong Corporate Structure Resilient to Change.” In order to achieve this target position along with KPIs of five items, we are currently proceeding with various initiatives.

■FY2030 Target Position  “Establish a Strong Corporate Structure Resilient to Change”

Based on our corporate philosophy of “To give attentive consideration to both humanity and nature,” we promote the creation of a company that can contribute to the realization of a sustainable society through its business activities, and aim for management that is trusted by all stakeholders.

■“Let's take on challenges.”

In order to create outcomes for each initiative and realize our “Target Position,” I believe that it is important to first build a foundation as a company and reform our corporate culture. Our company started its business in 1919 with the production of cotton transmission belts (flat belts), and since then, we have changed our business portfolio several times before forming our current business structure. Probably because we are in a niche industry where it is difficult for newcomers to enter, our corporate culture has been conservative, in terms of business plans, financial policies, information disclosure, and the temperament of our employees. The first thing we need to do is to change this. Since my appointment as the President, I have continued to say to all Group employees, “Let's take on challenges.” I hope to foster a corporate culture in which employees are appreciated for their willingness to seek higher goals with a challenging spirit, even if they fail to achieve them, rather than for achieving conservative goals.

I think that improving engagement with employees is also a major key point to foster a new corporate culture. At the end of last fiscal year, our company organized its Corporate Philosophy, Management Principle, etc. into a “philosophy system.” This philosophy system positions our Corporate Philosophy as “our values,” our Management Principle as a “mission to be fulfilled,” and our motto as the “basis of our actions.” By sharing and empathizing with these values with employees, I hope to improve engagement with them.

■To be a company that “chooses and is chosen by” all stakeholders

One of the major changes in direction since I became the President is deepening ESG management. Previously, our company had only been able to carry out conventional CSR activities, such as “making social contributions outside of our business activities.” In today's world, where companies have an increasingly important role to play, I recognize that it is necessary for us to aim for a “trade-on” between economic value and environmental/social value, and also to clearly demonstrate what kind of value we can provide to society. For this reason, we have started our initiatives from strengthening our sustainability promotion system by establishing a Sustainability Promotion Committee, which I myself chair, and setting up a specialized department to deal with sustainability issues.

Generally, a Sustainability Promotion Committee meeting is held once a quarter, but the Committee in our company meets once a month in principle. I was well aware that our company's ESG initiatives have been lagging behind, and in order to be a company that “chooses and is chosen by” all stakeholders, I had to strongly promote ESG management with my unflagging resolve. In FY2022, the first year when the Sustainability Promotion Committee was established, we first discussed the identification of our materiality, and then moved forward with various initiatives to achieve the identified materiality and its KPIs.

Regarding environmental initiatives, especially those on climate change, we have set interim targets for FY2023, FY2025, and FY2030 to achieve carbon neutrality by 2050, and are stepping up such initiatives as expanding the number of offices/plants with solar power generation systems and switching to LNG gas, which has a lower environmental impact than heavy oil.

Additionally, in December 2022, we announced our support for the Task Force on Climate-related Financial Disclosures (TCFD) and joined the TCFD Consortium, which finally enabled us to disclose information in line with its recommendations.

In parallel with our decarbonization efforts, we also focus on strengthening the development of eco-friendly products in order to contribute to the realization of a circular economy. Our company has been developing and selling various belts that can contribute to improving the fuel efficiency of automobiles and saving energy in equipment, and we are currently developing a next-generation belt that will add the perspective of circular economy to such existing products. Specifically, we intend to develop a belt in which the ratio of non-fossil-derived and recycled materials is increased to 70% by 2030, and to gradually expand the lineup of products under this concept.

In terms of social initiatives, we will develop human resources who will promote change, as I mentioned earlier. We will aim to enhance our personnel system, education and training system, and workplace environment to enable people maximize their capabilities and foster a corporate culture that respects diversity and values new ideas and a challenging spirit that is not afraid of change. We are also rapidly proceeding with initiatives on human rights. We completed the formulation of our human rights policy by last fiscal year, and this fiscal year, we are working on human rights due diligence, including in the supply chain, and revising our procurement guidelines. I believe that initiatives on human rights are an essential condition for developing sustainable business and contributing to society.

As part of our initiatives on governance, we are working to build a strong corporate governance system, with our first female director appointed in the last fiscal year and a ratio of outside directors exceeding one-third in the Board of Directors. While we strive to proactively disclose information to improve stakeholder engagement, I recognize that there have been many points in our previous efforts regarding information disclosure that need to be reflected on. We must make every effort to help our stakeholders learn more about the Mitsuboshi Belting Group.

For example, in the above-mentioned philosophy system, we have positioned our Management Principle, “To contribute to society by supplying goods of high performance, high precision and high quality” as our “mission to be fulfilled.” Although our products may not be readily visible to general consumers, our belts of various sizes support the comfortable lives of people around the world in invisible ways, such as in automobiles, motorcycles, agricultural machinery, machine tools and other industrial machinery, wind power generators, as well as washing machines, bread machines, printers, copiers, station service equipment, ATMs, vending machines, or warm-water washing toilet seats. However, I feel that we have not been able to convey to our stakeholders such “value with which the Mitsuboshi Belting Group can contribute to society.” By gaining their deeper understanding of our company, we aim to share our values with our stakeholders and build a relationship in which they will cooperate with us to realize a sustainable society.

■Striving to achieve FY2030 “Target Position”

This year is the final year of the “Mid-Term Business Plan (FY2021-2023).” During the three-year period of the Mid-Term Business Plan (FY2021-2023), the business environment has been extremely difficult, starting with the outbreak of COVID-19, followed by Russia's invasion of Ukraine, soaring raw material and logistics costs, low operation rates of customers caused by semiconductor shortages, and concerns about economic recession due to global inflation and rising interest rates. However, our results are expected to be higher than the target partly because of the weaker yen than assumed at the beginning of the fiscal year. During the period of this Mid-Term Business Plan, our performance has been solid, including that of automobile transmission belts, but we must work to acquire new markets including new businesses in the new Mid-Term Business Plan starting in FY2024 to achieve FY2030 “Target Position.”

In the automobile transmission belt field, we are working to expand sales of belts for non-internal combustion engines as we see the electrification of automobiles as an opportunity. Demand for belts for internal combustion engines will definitely decline in the future due to electrification. However, we are committed to achieving a “sales increase” rather than a “sales decrease” in the automobile transmission belt field in FY2030 compared to FY2022, by expanding sales of timing belts for electric units such as EPBs and EPSs, which are also used in electric vehicles, or belts for rear-wheel drives of motorcycles.

In the general industrial field, we are working to acquire demand to replace chains in various fields, taking advantage of the superiority of our lightweight, low-noise and oil-free belts. In the large agricultural machinery market, our share in the European and US markets is currently not high, and we see expanding our share in these markets as a great opportunity for our company. Furthermore, demand for next-generation belts with high environmental value, such as those with a higher proportion of sustainable raw materials, is expected to grow even more in the future, and by expanding sales of such belts, we aim to improve environmental value through our business activities.

In other business fields that we are involved in, we intend to actively take measures that are expected to generate synergistic effects, including M&A, for such businesses.

Although our ESG management has only just begun, we are determined to continue to be a company that can contribute to the realization of a sustainable society for the next 50 or 100 years.
Under our corporate philosophy of “To give attentive consideration to both humanity and nature,” we will continuously strive to develop for a prosperous future by actively engaging in dialogue with our stakeholders and promoting initiatives that contribute to improving environmental and social value through our business activities. I would like to ask for your continued support for our business activities.

July 2023
President
Hiroshi Ikeda