ESG Initiatives
We will fulfill our corporate social responsibility
at a high level across all aspects of environmental,
social, and governance (ESG) criteria.
On Environmental Issues
The wealth generated by industrial activities relies on the Earth’s natural resources and human labor. Their depletion through exploitation threatens the potential for sustainable growth. We conduct our daily operations with the awareness that preserving the natural environment is fundamental to our business itself. In this effort, we reminded the importance of consensus on recycled value. For instance, as the raw materials of brands offering precious metals products increasingly come from recycled sources, it has been crucial for us, as the supply side, to enhance transparency throughout the entire value chain. This transparency fosters positive attitudes toward the use of recycled resources among brand managers, employees, customers, and investors on the demand side. Moreover, market principles are pivotal in driving these initiatives forward. Through consensus on recycled value, the value of the green premium has emerged, and the recycling engines of Asahi Pretec in Japan and Asahi Refining in North America are operating at full capacity.
In natural mining, the principle is that if the metal value of the products rises, production can be ramped up by investing more in deeper mining. The same principle applies to urban and industrial mines, where the green premium accelerates this process, enhancing the competitive edge of recycling over natural mining. To put it in broader terms, we feel we are at a historic turning point in the transition to a greener global economy.
On Social and Human Rights Considerations
Our business model is tierless. While our ESG score still has room for improvement, it genuinely and transparently reflects our practices. We have traditionally placed a strong emphasis on human resources and labor practices. Whether it is sales, production, or management, all functions are directly handled by our employees. As a result, our employment structure is simple, flat, and transparent. We do not create subsidiaries to offload work to restrict wages or rights.
Additionally, we plan to minimize the use of temporary staffing and outsourcing of certain administrative tasks to specialized agencies, shifting away from traditional economic rationality and toward building a fair, single-layer employment platform.
Moreover, we strive to improve working conditions, prioritize safety and health, and promote fairness, diversity, and inclusion. Here are three recent initiatives that illustrate our commitment.
First, we have significantly increased starting salaries, with the entry-level salary for a master’s degree graduate joining in April 2024 set at 300,000 yen. We are planning another double-digit percentage increase in April 2026. Additionally, we are reviewing wage levels across all ranks, taking into account individual abilities and contributions.
The second is our dedication to employee health, demonstrated by recognition as a Health and Productivity Outstanding Organization in Japan for five consecutive years. We have established a comprehensive health check-up system that significantly exceeds legal requirements since the 2000s. Last fiscal year, we expanded our services by adding colonoscopy screenings for middle-aged and older adults and increasing support for re-examination costs.
The third key initiative is the enhancement of our engagement surveys. Since last fiscal year, we have increased the frequency of our surveys, with the support of external experts, to enhance both the physical and mental well-being of employees and improve labor productivity. We also conduct thorough follow-up sessions at the workplace based on the survey results to address and improve any identified issues.
The purpose of these human capital investments, so to speak, can only be fully realized through a unified and flat organizational structure, as previously mentioned. If we treat human resources merely as a cost and inclined to hierarchical or fluid employment frameworks, even with comprehensive health and wellness systems in place, only a select portion of the workforce would benefit within a group with shared objectives. From a human rights perspective, this fragmented approach is akin to a leaky bucket, compromising its overall effectiveness. We want Principles for Responsible Investment investors and young job seekers to understand our commitment to avoiding competition that undermines human rights or ecosystems.
On Corporate Governance
Our Board of Directors has earned recognition from financial institutions and other stakeholders for its advanced structure. However, this structure mustn’t be just a formality. We believe that outside directors must have access to sufficient management-related information, as any shortfall in this regard could be detrimental. To ensure this, we not only provide comprehensive materials well in advance of institutional decisions but also hold timely briefings on the specifics of our business and investments. Additionally, acknowledging the importance of firsthand experience, we organize site visits to both domestic and North American business locations. Through these initiatives, we aim to meet the expectations of stock exchanges by fostering management that is conscious of capital costs and stock prices, with continuous focus on improvement.
In the previous fiscal year, to strengthen our governance design with a focus on shareholder value, we implemented a new stock-based compensation system linked to Total Shareholder Return (TSR) for CEOs and corporate officers. This initiative was funded by reducing cash bonuses, which are short-term incentives. The new system provides medium- to long-term incentives through stock grants that fluctuate based on stock price and dividend changes. If there is a decline of 25% or more in both stock price and dividends over the specified period, the stock compensation will be zero. We believe this standard is stringent compared to Western norms.
To Our Stakeholders
We create shared value in social and
financial dimensions, thereby enhancing
corporate value through our unique business position.
Our purpose and unwavering belief are to be “Totally Committed to Protecting the Natural Environment and Preserving Resources.” While some U.S. state laws recognize the Public Benefit Corporation, which includes public welfare objectives such as addressing environmental and social issues in its articles of incorporation, Japan’s company law does not have such provisions. Nevertheless, we take pride in considering ourselves a Japanese version of a Public Benefit Corporation.
We continuously apply an inside-out and outside-in approach at the operational level by addressing societal challenges with what we can do and integrating societal issues into our business activities. In the recycling and production sector, we not only suppress CO2 emissions but also capture nitrogen oxides (NOx) generated during the acid treatment process and reuse them as nitric acid. In the waste treatment sector, we have been experimenting with decomposing organic fluorine compounds, such as perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA), using supercritical water.
Our mission is to continue growing with appropriate profits, as indicated by metrics such as ROE, while upholding our industry’s conscience of protecting the irreplaceable natural environment and resources of our planet. Our value manifests at the intersection of our business and societal problem-solving initiatives, addressing both social and financial dimensions. Our Medium- to Long-Term Plan & Aspiration, aimed at fiscal year 2030, outlines concrete measures to achieve this.
To realize growth that makes a meaningful impact toward a fair and sustainable society, we continue to seek the understanding of and support from all stakeholders.
November 2024
Tomoya Higashiura
Representative Director, President & CEO