As of June 29, 2021

Of the factors affecting the business and accounting conditions covered on this website, those that could seriously influence investors' judgments have been noted below. Statements regarding the future contained herein comprise the Toppan Group's (Toppan and its consolidated subsidiaries) views as of the end of the consolidated accounting year.

1. Human injury or physical damage caused by earthquakes, storms, flooding, other natural disasters, or infectious diseases

Overview

The Toppan Group implements earthquake-resistance measures and regular inspections as well as emergency drills at its operational sites. However, should a natural disaster such as an earthquake or typhoon occur, equipment and employees could be severely damaged or injured, partially or entirely interrupting operations and delaying both production and shipment. Repairing damaged equipment could require significant expenditure, which in turn could adversely affect the Toppan Group's business operations, performance, and financial condition.

The COVID-19 pandemic has caused a rapid decline in economic activity. Restrictions on logistics and movement, the cancellation and postponement of events, changes in demand associated with changes in consumer behavior, and other factors are having an impact on the business activities of the Toppan Group. If the impact of COVID-19 is prolonged and leads to further worsening of the global economy, it could affect the performance of the Toppan Group.

Main countermeasures

In order to respond to wide-ranging risks, in 2018 we revised the Basic Plan for Countermeasures Against Earthquake Disasters formulated in 1997 into the Basic Plan for Countermeasures Against Disasters, adding measures to respond to other natural disasters, such as water damage caused by typhoons and torrential rain, to those already in place for earthquakes. The Toppan Group places the highest priority on the safety of employees and takes measures to prevent secondary disasters. To enable the continued provision of services by promptly restoring operations, we take thorough measures, such as regularly reviewing procedural manuals for disasters and conducting simulation drills to verify the effectiveness of the procedures devised. The BCP Promotion Office in the Legal Affairs & Intellectual Property Division plays the central role in driving business continuity management (BCM) activities. In addition to conducting activities in collaboration with the business continuity planning (BCP) staff appointed in each Head Office division and business divisions throughout Japan, the BCP Promotion Office holds regular liaison meetings and disseminates relevant information. In order to ensure a swift response in the case of a disaster, a disaster preparedness-themed website was launched in 2020 to enable every employee to learn what they should do in such a situation. In consideration of the importance of the supply chain in business continuity planning, we hold supplier workshops conducted by external experts once a year to bolster efforts. We acquire ISO 22301 certification for businesses that require particularly stringent business continuity planning and are advancing improvements based on continuous PDCA activities.

2. Climate change risk

Overview

The Toppan Group focuses on risks to business presented by climate change and supports the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The impact of climate change worsening year by year is significant and could affect the performance of the Toppan Group should we be unable to respond appropriately to transition risks, such as the tightening of environmental regulations or the need to engage in low-carbon business activities or use alternative materials, or to physical risks, such as damage to operational sites caused by flooding or other serious disasters or difficulties in procurement caused by disruption of the supply chain.

Main countermeasures

The Head Office’s Manufacturing Management Division is central to the structure for managing these types of risk. To address transition risks, we have set SBT-approved targets for the reduction of greenhouse gas emissions beyond levels required by environment-related legislation and implement the PDCA cycle with regard to energy saving initiatives and the introduction of renewable energy. For physical risks, BCP measures include preparation for the impact of disasters, measures to mitigate damage (windproofing, waterproofing), and maintenance of supply capabilities through the creation of backup structures for manufacturing and procurement.

In terms of the TCFD, we are analyzing risks from a long-term perspective and advancing countermeasures internally.

3. Characteristics of the printing business

Overview

Advances in information technology and networks are changing the printing market environment and requiring the printing industry to create new business fields and strengthen price competitiveness. Should the Toppan Group fail to increase sales in new business fields and improve price competitiveness through cost reduction measures, the Group's performance could be affected.

Main countermeasures

Towards the creation of new business fields, we have identified and are advancing three priority initiatives as part of transformation of the business portfolio. These are driving the DX business, expanding the Living & Industry business overseas, and creating frontier businesses. To drive the DX business, we will aim to use marketing technology to support the customer experience (CX) provided by client companies, create a BPO business based on leveraging data and combining digital technologies with advanced operational know-how, and expand the security business overseas. In expanding the Living & Industry business overseas, we will respond to rising worldwide demand for sustainability by leveraging barrier films developed in Japan to expand sales of sustainable packaging globally with an eye on M&A as a means to do so. With regard to frontier businesses, we will concentrate efforts on the growth areas of next-generation computing technologies, 5G and 6G networks, and digital platform businesses. In terms of our four growth fields of Healthcare & Life Sciences, Education & Cultural Exchange, Urban Space & Mobility, and Energy & Food Resources, we will concentrate efforts on healthcare in particular and aim to promptly establish effective revenue models in the sector.

To enhance price competitiveness, we will leverage DX to enhance our competitive edge, and drive greater efficiency and sophistication in both sales and operational functions. We will also advance smart factories and target overall optimization and enhanced cost competitiveness by taking advantage of AI for automation and labor saving as well as next-generation manufacturing execution systems (MES).

4. Risks associated with strategic partnerships, investments, and acquisitions

Overview

The Toppan Group engages in many activities through strategic partnerships, joint ventures and investments, and may acquire other companies in the future. These activities comprise an important means of acquiring new technology, launching new products, and entering new markets. However, should we be unable to maintain these partnerships or achieve the anticipated results for any variety of reasons, the Toppan Group's performance could be affected.

Main countermeasures

For investments, decisions are made following formal approval processes involving decision-making bodies such as the Small-scale Investment Review Council, Investment & Legal Review Council, and Management Committee. Once investments have been made, they are regularly monitored. In the case of investments in start-up companies or overseas companies in particular, care is taken to ensure that the investment is executed only after sufficient due diligence has been conducted. It if is determined that the initially expected results (investment recovery) cannot be achieved, an improvement plan is devised and measures are taken to accelerate recovery of the investment. However, if it is subsequently deemed that results can still not be achieved, we may have to sell shares or liquidize assets. Even in cases of failed investments, analysis will enable us to acquire insights and know-how that can be leveraged for efforts to enhance risk management and the probability of success for future investment projects.

5. Risks associated with research and development

Overview

The Toppan Group invests in the development of new products in each of its business fields and in research and development to lower costs and reduce quality loss and errors. We also invest in research and development in collaboration with other companies, public sector organizations, and academic institutions to create new businesses that will be core revenue sources in the medium to long term. However, if we are unable to achieve sufficient results from research and development investment due to changes in the market that exceed expectations, the worsening of the performance of alliance partners or companies in which we have invested, or delays in the timing of commercialization or sales launch, the performance of the Group could be affected.

Main countermeasures

The Toppan Group’s research and development is conducted primarily at the Toppan Technical Research Institute. Under a medium-to-long-term schedule, measures such as detailed progress confirmation, decisions on moving to the next stage, and risk identification are taken to prevent delays in research and development under respective themes. We also regularly conduct research and analysis on matters such as market conditions, technology trends, and the patents of competitors to enable appropriate decisions on investment and on whether there is a need to change the direction of any research and development theme.

6. Securing the human resources to support growth

Overview

The Toppan Group recognizes the importance of improving the quality of existing products and developing new products and services through the introduction of advanced new technologies to achieve continuous growth in the future. For this purpose, exceptional human resources with advanced technical and planning abilities are essential. The Toppan Group focuses on systematic recruitment and training, but should we be unable to secure or train outstanding human resources, the Group may be unable to continue growing in the future.

Main countermeasures

The Toppan Group strives to form a population of human resources with an interest in the Group through effective recruitment advertising and recruits a wide range of human resources by creating various channels for both recruitment of recent graduates and that of mid-career personnel. We regularly update in-house human resource development programs and provide opportunities for comprehensive learning from basic capabilities to practical skills to foster human resources that will lead business efforts. We also work to enhance employee engagement though personnel treatment and changes in working styles. In addition, we are strengthening our business foundations in terms of personnel through rotations and shifts of human resources to priority businesses.

7. Securing financing

Overview

The Toppan Group considers capital expenditure to be necessary in terms of expanding business and responding to rapid technological innovation. We secure financing from external sources in accordance with our business plans, but there may be times when we are unable to secure sufficient, necessary additional financing under fair conditions for reasons such as substantial changes in interest rate conditions.

Main countermeasures

To enable smooth procurement of financing based on business plans, the Toppan Group appropriately diversifies the means and timings of financing.

To ensure that it is possible to procure necessary financing for business continuity even in the case of an emergency, we strive to maintain and reinforce a sound financial standing that contributes to the maintenance of ratings. In addition, we review financial plans when necessary based on the latest information on financial market trends and analysis of the business environment.

8. Risks associated with control of the Group

Overview

We recognize that implementing effective control throughout the Toppan Group is vital because the Group includes a large number of group companies both in Japan and overseas. Based on our basic policy on the construction of a system of internal control, we have therefore established and operate internal control systems, including internal control related to financial reporting. However, if a group company makes an important decision without prior approval, violates laws, or incurs a significant loss, the Toppan Group’s social credibility could be damaged and its performance could be affected.

Main countermeasures

While respecting the independence and autonomy of group companies for the operation of their businesses, the Toppan Group has set out procedures for reporting on each management item in the Related Company Administration Regulations and receives reports accordingly in order to ensure the appropriateness of the execution of duties by directors of group companies.

The Toppan Group has established the Toppan Group Conduct Guidelines as a set of fundamental rules for compliance and ensures the legality of the execution of duties by employees by making sure that they are fully informed of the Conduct Guidelines. To achieve this, the Compliance Department in the Head Office’s Legal Affairs & Intellectual Property Division leads efforts in collaboration with the legal and other relevant departments of group companies to ensure legal compliance and the observance of corporate ethics throughout the Group. Activities to ensure that employees at each workplace are kept informed are conducted under the Conduct Guidelines Promotion Leader system.

Internal audit departments regularly audit the execution of operations at business divisions and group companies. The results of such audits are reported to the representative directors, other relevant directors, and audit & supervisory board members of Toppan and group companies as necessary.

In addition, the Toppan Group has established the Toppan Group Helpline as a common internal reporting system within the Group to promptly identify and respond swiftly and appropriately to any legal violations.

9. Risks associated with overseas business

Overview

The Toppan Group engages in business operations in the U.S., China and countries in Southeast Asia and Europe. In the future, we may establish new operations overseas, including developing countries. The Toppan Group’s business activities and performance could be affected by political or economic instability, epidemics, large-scale disasters, labor disputes, or conflicts in the countries and regions in which we operate. The performance of the Toppan Group could, due to insufficient governance or inadequate internal management at overseas subsidiaries, also be affected by issues such as legal or regulatory violations, misconduct such as bribery of public officials of foreign countries or international cartels, misappropriation by local employees, improper accounting, changes to tax laws, or inappropriate tax filings.

Main countermeasures

To reduce the level of risk associated with overseas business, we believe that it is important to establish governance structures at each overseas subsidiary and ensure their effective implementation. The Toppan Group therefore sets out an ideal vision for elements such as overall management, compliance, information security, personnel management, health and safety, accounting, tax, quality, the environment, and procurement, and works in close collaboration with the subsidiaries to advance the establishment, observance, operation, and practical implementation of structures and schemes at each overseas subsidiary based on the ideal vision. We strive to create even more effective governance structures by conducting internal, accounting, and tax audits and providing guidance for improvements based on the findings and recommendations of such audits. In addition, we also implement training on safety and risk/crisis management for employees before they set out on business trips or overseas assignments.

10. Intense market competition and price competition

Overview

The Toppan Group endeavors to continuously develop and market new products and services whilst reducing the costs of existing products. However, product development and price competition with rival companies has intensified in recent years. Should our products and services fail to maintain their competitive advantage in the market or fierce competition causes prices to drop, the Toppan Group's performance could be affected.

Main countermeasures

As digitalization accelerates in diverse fields, the Toppan Group will input resources into the DX business, taking stock of the technologies we have, and undertaking efforts to strengthen development capabilities, including entering alliances. We are aiming to maintain and strengthen our market competitiveness by creating opportunities to become proactively involved in the entire value chain of customers. These efforts include leveraging advanced security technologies and data management capabilities in the digital solution field in particular, driving marketing measures based on data analysis, and advancing proposals for business process reengineering (BPR). We will also work to expand sales in global markets by advancing sustainable mono-material packaging employing barrier films that have a leading position in the market.

With regard to existing businesses and those targeted for structural reform, we will advance smart factories through AI-driven automation and the introduction of labor-saving equipment, as well as consolidate bases and downsize equipment. We will also drive activities for comprehensive improvements by reviewing unprofitable transactions and using robotic process automation (RPA) and AI to enhance the efficiency of operations in sales and back-office departments. In the case of underperforming or low profit businesses where improvement has not been seen, we will proceed with review of the business portfolio, with withdrawal and downsizing considered among potential options.

11. Non-performing or long-term retained inventory assets due to inadequate asset management

Overview

If market prices drop significantly due to such factors as decreases in demand caused by changes in market conditions or if inventory assets degrade due to aging, appraisal loss on inventory assets could affect the performance of the Toppan Group.

Main countermeasures

We work to avoid the risk of non-performing or long-term retained inventory assets by making sure that sales, manufacturing, and administration departments work together to improve turnover efficiency and ensure that quality is maintained through regular checks of inventory quality and management status.

12. Risks associated with receivables (bad debt, customer bankruptcy, etc.)

Overview

The Toppan Group deals with customers in diverse industries. Should the collection of receivables of significant value become difficult due to factors such as financial concerns at customers caused by worsening operating conditions in certain industries, the Toppan Group’s performance could be affected.

Main countermeasures

The Toppan Group sets credit limits for each company it deals with based on a credit management policy and reviews credit regularly. We also work to avoid the risk of bad debt by taking prompt action to preserve receivables in the case of delays in collection or credit impairment.

13. Fluctuations in current value of marketable securities

Overview

The Toppan Group owns marketable securities. Therefore, fluctuations in equity markets, interest rates, and the like could influence the current value of securities and affect the performance and financial position of the Toppan Group.

Main countermeasures

We regularly examine the rationale of shareholdings for strategic purposes based on analysis in terms of business and value as an investment asset. We also endeavor to reduce risk by monitoring the financial condition of the entities in which we hold shares.

The status of such shareholdings is reported to the board of directors, where decisions are made to maintain or divest shareholdings based on the results of the verification of their rationale. Our policy is to work to reduce shareholdings that have decreased in relevance through divestment.

14. Fluctuations in foreign exchange rates

Overview

The Toppan Group has been expanding into overseas markets as the domestic printing market matures. Revenue and expense items for overseas subsidiaries that are denominated in local currencies are converted into yen to facilitate calculations when preparing the Group's consolidated financial statements, and could be affected by fluctuations in exchange rates at the time of exchange.

Fluctuations in exchange rates can be expected to affect the prices of locally sold Toppan products, the production and procurement costs of locally produced products, and selling prices in Japan. Accordingly, they could also affect the Toppan Group's performance.

Main countermeasures

The Toppan Group works to reduce foreign exchange risk throughout the entire Group by establishing risk management guidelines pertaining to exchange rate fluctuations. We endeavor to absorb exchange rate fluctuation risk occurring in the course of business within transactions themselves as far as possible and to minimize the risk by using hedging methods such as forward exchange contracts when appropriate.

15. Damage to brand image due to leaks or improper handling of information

Overview

The Toppan Group collects, stores, and operates confidential information and personal information received from customers as part of its operations. In the BPO business in particular, the volume of information handled is increasing due to our catering to outsourcing demand from the private sector and national and local governments. In the digital transformation (DX) business that the Toppan Group is advancing, the business model is based on providing products and services through data collection and analysis, and personal and other information is used. If information is leaked or handled inappropriately due to a malicious cyberattack from external parties or misconduct by employees of the Toppan Group or a subcontractor, it could have a negative impact on the social reputation of the Toppan Group and affect its operating results or financial position.

Main countermeasures

We manage confidential information within the company under a stringent information security management system. Specifically, under the Toppan Group Basic Policy on Information Security, the Toppan Group has established rules based on the laws and regulations and information security-related standards of Japan and countries overseas, and such rules are revised as required in line with revisions of laws and regulations.

We strive to keep employees fully informed of relevant rules through regular training. We confirm observance of rules and provide instructions for improvements via internal audits and audits of subcontractors. To combat information leaks caused by cyberattacks by external parties, we take technological countermeasures such as monitoring networks and introducing systems for detecting virus-like behavior and other threats on devices. We also implement measures to prevent leaks by restricting physical access to areas in which important information is handled and monitoring operations conducted in such areas. These measures are reinforced and optimized as necessary.

16. Negative impact on business due to cyberattacks

Overview

In the DX business, the Toppan Group is driving a business model based on leveraging data by providing end-to-end platforms for collecting and analyzing data, adding value to it, and offering services to customers based on it.

As the Toppan Group advances the DX business, we recognize that cyberattacks are a particularly serious risk. The number of cyberattacks that look to exploit weaknesses arising due to remote working and online meetings, such as targeted email attacks and phishing, has risen rapidly, and such attacks are becoming increasingly sophisticated. In the event that a cyberattack occurs and damage is caused by information leakage, data corruption or falsification, system failure, or cessation of services, the Toppan Group’s social reputation could be negatively impacted and its operating results and financial position could be affected.

Main countermeasures

To reduce cybersecurity-related risks, we implement technological countermeasures on devices, networks, and clouds, conduct training to enhance employees’ ability to respond appropriately to targeted email attacks and other incidents, and implement measures to detect and pre-emptively or promptly respond to such attacks and incidents.

In addition to compiling information on cyberattacks, we have established a computer security incident response team (CSIRT) called TOPPAN-CERT.

17. Loss of trust from society due to suspension of production lines or digital service businesses caused by problems with ICT infrastructure

Overview

The Toppan Group has advanced digital publishing and other forms of the digitalization of printing since such efforts first began. By leveraging that know-how in the creation of content, we engage in various digital service businesses, including the provision of solutions fusing digital and real elements and the digitalization of social infrastructure. We believe the role of information and communications technology (ICT) is also very important in manufacturing processes. We operate smart factories by analyzing and using real-time information from various production equipment and IoT devices and implement high-level quality control.

The Toppan Group is strengthening initiatives to ensure the stable functioning of ICT infrastructure as an important part of environments for operating production lines and providing digital services. We are also taking measures such as establishing a backup structure and ensuring system redundancy to prepare for any failures or accidents. However, it is not possible to eliminate the possibility of a sudden stoppage of a production line or digital service business caused by, for example, a backup system not functioning properly when a device failure or human error occurs, even in a stably functioning system. If such a situation were to arise, it could negatively impact the level of trust that the Toppan Group enjoys from society or affect the Group’s performance.

Main countermeasures

The Toppan Group has formulated guidelines for the establishment of important infrastructure, implements countermeasures to prevent stoppages of ICT infrastructure, and regularly undertakes efforts to ensure that damage is minimized and recovery is enabled in the event of a an ICT infrastructure outage. These activities include confirmation of the scope of impact on operations, and confirmation and drills on priorities and procedures for recovery.

18. Quality-related incidents and self-imposed product recalls that could develop into issues in wider society (legal violations, fluid leaks, odors, foreign matter)

Overview

In production activities, we take measures to prevent product-related accidents or claims for all products by taking sufficient care with regard to quality control. However, a product-related accident arising in the future could affect the Group’s performance. In addition, if we are unable to appropriately handle changes or improvements to manufacturing lines associated with the launch of new plants or relocation of facilities, delays in delivering products to customers or decreases in plant productivity may lead to declines in sales.

The Toppan Group manufactures packaging for medical, pharmaceutical, and food products. In the manufacture of such items, we make every effort to comply with laws and regulations, manage manufacturing processes, and control quality. However, if a legal violation or quality defect were to occur, the Toppan Group could lose trust from society, significant costs could be incurred for self-imposed recalls or payment of compensation for damages, and the performance of the Group could be affected.

Main countermeasures

The Quality Assurance Center in the Head Office’s Manufacturing Management Division strives to reduce quality-related loss and further enhance quality by holding meetings attended by quality assurance departments throughout Japan, consolidating information on issues to be addressed with regard to product quality assurance and safety management, and following up on the progress of priority measures. We also drive continuous improvements based on quality management systems (ISO 9001) at every operational site.

Food-related businesses require particularly high-level quality assurance with respect to safety and hygiene. We have adopted a system by which sites are certified to handle such operations after passing audits based on quality guidelines for food-related businesses and quality audit check sheets.

19. Risks associated with raw material procurement

Overview

The Toppan Group procures the majority of certain raw materials, such as paper, ink, and glass, from outside manufacturers. Securing an adequate and stable supply of raw materials at a fair price is critical to maintain the Group's business. However, should the supply of raw materials be interrupted, the volume supplied be substantially inadequate, deliveries delayed, or a steep rise in raw material prices occur due to factors such as accidents, bankruptcy, or other incidents on the supplier side, the Toppan Group's performance could be affected.

Main countermeasures

To prepare for such circumstances, the Toppan Group conducts surveys to monitor the status of business continuity activities, particularly at suppliers that are critical to the Group’s operations, and holds workshops as part of efforts to enhance the level of business continuity planning by all parties.

20. Impact of environment-related legislation (pollution of soil, groundwater, or water for public use due to leaks of toxic substances)

Overview

National and local laws and regulations in Japan and overseas impose substantial potential liability on the Toppan Group for improper use or disposal of toxic substances and any resulting environmental pollution such as soil contamination and atmospheric pollution. The Toppan Group uses certain toxic substances in its manufacturing processes and research and development, and has to manage waste disposal. We are extremely careful to comply with applicable regulations. However, we cannot eliminate all risk of accidental pollution or discharge, or the damage resulting from such occurrences. In the unlikely event of an accident occurring, it could have an adverse effect on the Toppan Group's business operations.

Main countermeasures

We manage and maintain toxic substance storage tanks that could potentially be the source of accidental pollution and discharge. As well as comprehensive day-to-day management and equipment inspections, we perform diagnosis of degradation in accordance with years of use and replace equipment systematically based on our own management guidelines. We have installed fluid barriers where storage tanks are located to prevent outflow of any leaks. In recognition of the possibility of accidental pollution or discharge when pumping, storing, transporting, or disposing of chemical substances, we have established emergency procedures and conduct regular drills based on the procedures to enable us to minimize any impact. The management of these measures is checked during environmental audits by the Ecology Center of the Head Office’s Manufacturing Management Division, and instructions for improvement are given as required.

21. Risks associated with waste

Overview

A large volume of paper waste is produced by Toppan Group operating sites, predominantly those in the Information & Communication and Living & Industry segments. Paper accounts for approximately 60% of total waste output. Waste plastic from the Living & Industry business and waste liquid from the Electronics business also account for relatively large proportions of waste. Treatment of these waste materials is outsourced to waste treatment contractors, but if a contractor were to dispose of waste illegally or fail to treat waste appropriately, the name and other information of the Toppan Group could be published as the business producing the waste, the names of customer products printed or produced by Toppan could be disseminated over social media or other channels, and the social trust enjoyed by customers could be damaged, potentially causing a loss of social credibility and affecting the business activities of the Toppan Group.

Main countermeasures

As countermeasures to the risk of illegal disposal or improper treatment of waste by a contractor, the Toppan Group manages manifests stringently, assesses appropriate treatment by industrial waste disposal contractors via our own assessment sheet, and conducts environmental audits handled by the Ecology Center of the Head Office’s Manufacturing Management Division.

In addition to the appropriate disposal of waste, targets for final landfill waste volume and waste plastic material recycling rate are included in our medium-and-long-term targets, and progress towards their achievement is managed. Accordingly, we are striving to reduce waste emissions from business activities and drive reuse and recycling of discharged waste as we strengthen efforts to address marine plastic pollution and the creation of a circular economy, issues which are currently the focus of considerable attention.

22. Fires and industrial accidents

Overview

The Toppan Group has established a Basic Policy on Health, Safety & Fire Safety, which stipulates that safety comes first in all aspects of business activities. Management and the labor union cooperate to advance activities for health, safety, and fire safety. If a fire or industrial accident occurs due to unforeseen circumstances, there is a possibility that employees could be seriously injured or operational site equipment could be severely damaged, interrupting part or all of the operation of equipment and causing delays in production and delivery. Significant costs could also be incurred for the repair of damaged equipment, resulting in an impact on the Toppan Group’s business activities, performance, and financial condition. If management of health, safety, and fire safety is inadequate, it could negatively affect the public esteem of the Toppan Group.

Main countermeasures

Safety masters, safety personnel, employees in charge of engineering and safety, and other safety experts are deployed to Toppan Group sites across Japan. We organize safety education of various types for everyone in the workplace. This includes thorough training for forepersons and risk assessments to upgrade the intrinsic safety of equipment. We have established safety training facilities called Anzen Dojo at core manufacturing sites in Japan and overseas. These training facilities provide simulated experiences of workplace hazards such as fires, explosions, and the dangers of presses and rollers in order to enhance safety awareness and the ability to perceive danger.

We have also launched training that makes use of virtual reality technology and head-mounted displays to enable simulated audiovisual experiences of accidents via digital content. This enables safety training to be provided to large numbers of employees, including those who are unable to attend courses at Anzen Dojo safety training facilities.

23. Risks associated with labor issues (violations of labor-related laws, labor disputes, etc.)

Overview

The Toppan Group values its employees as precious “human assets.” Based on a philosophy that “a company is its people,” we believe that it is essential that every employee fulfills their potential by approaching work with motivation, vitality, and commitment. We implement a range of labor-related measures to ensure that this is the case, based on trends in government policy and legal systems and on consultation with the labor union. However, if we were to be subject to administrative penalties from authorities due to violations of labor-related laws, such as employees working long overtime hours exceeding standards or being unable to take prescribed paid leave, or if a labor dispute were to arise, in addition to negatively impacting the performance of Toppan Group employees, it could also cause a loss of brand value and affect the performance of the Group.

Main countermeasures

To advance work-life balance, the various committees and councils involving employees, management, and the labor union discuss measures to further reduce overtime hours and respond to revisions of relevant laws. These bodies also analyze actual overtime hours worked and examine the introduction and use of new working systems. We target improved productivity and lower working hours through the introduction of various measures. These include a “smart work” system, under which overall working hours are managed on a monthly basis while day-to-day working times are at the discretion of employees. We have also introduced a “notification option,” which enables the annual working hours and days of leave taken by employees to be routinely monitored. In light of the COVID-19 pandemic, we have introduced a “remote work system.” Employees use IT devices stipulated by the Company and are able to work from their homes or other approved locations such as satellite offices. Staff who can be consulted on labor-related matters are deployed at Toppan Group sites as we strive to prevent labor-related disputes and other problems.

24. Harassment

Overview

The Toppan Group values its employees as precious “human assets.” Based on a philosophy that “a company is its people,” we implement various measures to ensure that every employee can approach work with motivation, vitality, and commitment. However, if sexual harassment, power harassment, or any other form of harassment occurs, in addition to negatively affecting the workplace environment, it could lead to workers’ compensation or loss of brand value and also affect the performance of the Toppan Group.

Main countermeasures

The prohibition of harassment is stipulated in the Toppan Group Conduct Guidelines, and training and other measures are implemented to ensure compliance. We also conduct educational activities for general affairs departments, training for managerial staff in each workplace, and questionnaires to monitor the situation. We have established structures at individual sites for consultation regarding all forms of harassment and operate the Toppan Group Helpline as an internal reporting system that can be used by employees to ensure that any cases of harassment are identified promptly and dealt with appropriately.

Labor and management recognize the problem of harassment and cooperate to prevent such conduct. An agreement on the handling of harassment prevention has been concluded between the two parties to ensure comfortable, harassment-free workplaces.

25. Infringement of patents, copyrights, and other intellectual property rights

Overview

The Toppan Group owns a large number of patents, trademarks, and other intellectual property rights, which are combined to secure an advantage in business. However, there is a possibility that, due to a difference of opinion, technologies or other intellectual property of the Toppan Group could be deemed to have infringed the intellectual property rights of other parties, or that the Toppan Group could become involved in lawsuits. It is also possible that the Toppan Group could be unable to prevent unauthorized use of its intellectual property by a third party or that measures taken to prevent infringement are not successful.

In addition, the Toppan Group routinely handles copyrighted materials in the course of making proposals for printed matter and product package designs. Therefore, based on the rights attached to the copyrighted materials handled, the Toppan Group could be deemed to have infringed the copyright of another party or could be involved in a lawsuit due to such reasons as not being able to sufficiently confirm processing circumstances in advance.

Main countermeasures

The Toppan Group will work to prevent the risk of infringing the intellectual property rights of other companies by continuing to research and monitor such intellectual property rights. The Toppan Group avoids the risk of other companies infringing its own intellectual property rights by acquiring rights in accordance with the countries and regions in which it does business and establishing a robust intellectual property portfolio.

The Toppan Group also conducts regular training on copyrights for internal staff and external designers to whom work is outsourced and ensures that copyrights are processed properly in advance to prevent the risk of infringing the copyrights of other parties.

26. Misconduct (serious improper conduct or inappropriate actions, etc.) and compliance violations (bid-rigging, bribery, other legal or regulatory violations)

Overview

The Toppan Group is subject to a wide range of legislation and regulations on account of the fact that it has multiple bases in Japan and overseas and deals with a large number of customers in diverse industries. In conducting business activities, the Toppan Group must comply with laws including company laws, financial instrument laws, tax laws, anti-monopoly laws, sub-contracting laws, and bribery-related laws and must also obtain permission or licenses or make filings related to certain aspects of operations. If there is a case of misconduct involving serious improper or inappropriate conduct on the part of an employee, or if there is a compliance violation, the Toppan Group could not only be subject to legal penalties or claims for compensation for damages, but could lose social credibility and customers or suppliers, affecting the Group’s financial condition and performance.

Main countermeasures

The Toppan Group has established the Toppan Group Conduct Guidelines, which set out behavioral norms to be observed by every employee based on legal compliance and corporate ethics. We believe that the thorough implementation of the Conduct Guidelines ensures that compliance is put into practice. We have introduced a Conduct Guidelines Promotion Leader system, under which Leaders in each workplace lead activities to ensure that the Conduct Guidelines are understood and observed in day-to-day operations.

To prevent bid-rigging, cartels, violations of subcontracting laws, bribery and other misconduct, we implement measures such as training and audits to raise the compliance awareness of employees.

The Toppan Group has established the Toppan Group Helpline, an internal reporting system for the entire Group to enable the prompt detection and appropriate handling of legal violations.