Policies and Basic Approach

The Inabata Group recognizes the various global environment issues, including climate change, represent not only risks to the continuity of our business operations but also new opportunities for growth. In our materiality, we have identified "contributing to a decarbonized and circular society, sustainable use of natural capital," thereby expressing our commitment to contributing to the resolution of environmental challenges through our business activities.
In our previous medium-term management plan, New Challenge 2023, we positioned the expansion of sales of products that reduce environmental impact as one of the initiatives under the strategic priority of "multifaceted approach to markets with potential for future growth and steady monetization efforts."
In the medium-term management plan New Challenge 2026, announced in May 2024, we have positioned the expansion of environment-related business as a company-wide growth strategy. In addition, in the Sustainability Medium-Term Plan 2026 announced simultaneously, we have set numerical targets and are advancing initiatives across all segments.

• Sustainability at the Inabata Group：Materiality
• Mid-term Management Plan New Challenge 2026 (NC2026)

Targets

In the Sustainability Medium-term Plan 2026, we set strategies, KPIs, and targets.

The expected ratio of environment-related business by field in the final fiscal year of the Sustainability Medium-term Plan 2026 is outlined below.

• ■Energy & power (renewable energy, batteries, etc.) : Approx. 70％
• ■Resources & environment (sustainable materials, recycling, water, etc.) : Approx. 20％
• ■Materials & chemicals, agriculture & food, transportation & logistics, and environmental certification : Approx. 10%

The results for FY2024 are as follows.

Fields and Results of Environment-Related Business

Since the FY2021 report, we have reviewed the fields of products that reduce environmental impact, reorganizing these products mainly in the clean-tech field. In FY2024, sales in the Energy & Power sector led the growth, followed by steady increases in the Resources & Environment sector, including sustainable raw materials.

Sales of the main products in the clean technology area are as follows.

Example: Wood-burning Biomass Power Plant (Energy & Power)

Fukuyama Biomass Power Plant LLC (hereinafter, the "Project Company"), in which we have jointly invested together with Chubu Electric Power, Inc., Taihei Dengyo Kaisha, Ltd., Tokyo Sangyo Co., Ltd., Kanadevia Corporation, Aichi Kaiun Co., Ltd., Maruka Holdings Co., Ltd., MEC Corporation, Fujii Shoji Co., Ltd., and Solariant Capital Co., Ltd., commenced commercial operations of the Fukuyama Biomass Power Plant (hereinafter, the "Power Plant") in July 2025.
The Power Plant is a dedicated wood-fired biomass power plant with an output capacity of 52,700 kW and is expected to generate approximately 380 million kWh of electricity annually, equivalent to the electricity consumption of approximately 120,000 households.
We are responsible for the fuel management operations of wood chip fuel made from locally sourced woody biomass, such as unused forest thinning wood from Hiroshima Prefecture.

Panoramic View of Fukuyama Biomass Power Plant

Example: sustainable plastics business (Resources & Environment)

In 2022, Inabata launched the green business promotion project within the Plastics segment, dedicating efforts to providing a diverse range of decarbonization products and solutions, including recycled plastics and bioplastics.

Transition to a circular economy and demand for sustainable plastics

In recent years, growing concern over environmental pollution caused by plastic waste has led to stricter plastic regulations around the world, accelerating efforts to reduce plastic waste and transition to a circular economy. Against this backdrop, demand for sustainable plastics^*1 has been increasing year by year, and the market is projected to reach approximately 200 million tons by 2060.^*2 Also, the market for sustainable plastics in Japan is expected to grow to approximately 1.3 million tons around 2035 (see graph at right).

Inabata Group's sustainable plastics business

The global plastic recycling rate remains low at just 9%^*3, and in Japan, it is limited to 25%^*4. However, sales of sustainable plastics within the Inabata Group have been steadily increasing each year (see graph at right), with the proportion of sustainable plastics handled by the Plastics segment gradually rising relative to all plastics.

The Group leverages its extensive expertise in plastics gained through years in the plastics business, as well as the Group's integrated capabilities, to advance material recycling. In addition to handling post-industrial recycled (PIR) materials^*5, we have also begun dealing with post-consumer recycled (PCR)^*5 materials and have started recycling high-performance plastics, which are more challenging to process. We will continue to capitalize on the Group's strengths to contribute to the realization of a circular society.

• ^*1 Sustainable plastics refer to recycled plastics, biomass plastics, and biodegradable plastics.
• ^*2 Based on the OECD report "Global plastic waste set to almost triple by 2060, says OECD," plastic consumption is projected to reach 1,230 million tons by 2060, with a recycling rate estimated at 17%.
• ^*3 OECD, Global Plastics Outlook (2022), figures as of 2019.
• ^*4 Source: Plastic Waste Management Institute (Japan), Status of production, disposal, recycling and treatment of plastic products in 2023 (Material Flow Diagram) (2024).
• ^*5 PIR (Post-Industrial Recycled) refers to recycling materials generated during manufacturing processes before they reach the market, while PCR (Post-Consumer Recycled) refers to recycling products that have been used by consumers.

Example: Inabata Group Integrated Plastic Recycling System (PCR Commodity Plastics)

In 2023, we integrated the functions of plastic waste collection, pelletizing, product manufacturing, quality control, and planning and sales—previously handled individually by different companies—and established a unified recycling system across the entire Group. This has enabled us to efficiently recycle post-consumer plastics from the market and sell them as plastic products, including items such as plastic bags.
This achievement is rooted in our extensive plastic expertise cultivated through years in the plastics business, enabling us to propose comprehensive recycling solutions, as well as the Group's integrated functions in logistics, resin processing, product processing, and product sales. In addressing the common challenge of quality degradation in plastic recycling, we manage the entire recycling process consistently to ensure a stable supply of high-quality recycled plastics.
Our sales have grown more than threefold compared to four years ago, when we began collecting and recycling plastic waste. Going forward, we will also explore various applications and further strengthen our presence in the expanding plastic recycling market.

Example: Sludge Reduction Business (Resources & Environment)

The Life Industry Division has launched a business to reduce the volume of sludge, which is one of the most discharged industrial waste in Japan.

State of industrial waste in Japan

Sludge is a muddy waste mainly generated in the process of treating wastewater produced by business activities. According to the State of the Discharge and Treatment of Industrial Waste, published by the Ministry of the Environment, sludge is the most discharged industrial waste in Japan. Sludge is divided into organic and inorganic sludge, the former containing organically contaminated wastewater discharged from food factories and other facilities, and the latter containing mainly sand and metal components discharged from civil engineering sites, metal factories, and other facilities.

Overview of sludge reduction business

Wastewater (sewage) from homes and factories must be treated such that sludge falls below standard levels before discharge.
Sewage treatment plants and other facilities therefore treat this wastewater. In the activated sludge process, a common purification method, oxygen is supplied to activated sludge (organic sludge), stimulating microorganisms in the sludge to feed on and decompose contaminants (organic matter), thereby cleaning the water. However, the microorganism husks (dead bacteria) remain as excess sludge, which becomes industrial waste.
The microorganism formulation we provide produces enzymes that break down the dead bacteria in excess sludge. These enzymes are capable of breaking down the cell walls of the dead bacteria, thus reducing the amount of sludge (industrial waste) discharged. Sludge reduction also has the side effect of contributing to the reduction of CO2 emissions.

Case study: Yahaba Town, Iwate Prefecture

In Yahaba Town, Iwate Prefecture, sludge treatment costs across three treatment plants were approximately 23 million yen during FY2021. We provided an original microorganism formulation blend tailored to the purpose and target materials, generating the following benefits.

Example: ISCC PLUS certification

The Inabata Group has obtained International Sustainability and Carbon Certification (ISCC) PLUS certification, one of the internationally recognized certification schemes for sustainable products. The scope of the certification is "Trader with Storage."

ISCC is a globally recognized certification scheme for sustainability and carbon management. It certifies that materials such as biomass and recycled resources are sustainably sourced, and are managed and verified throughout the supply chain using the mass balance approach^*.
The Group has obtained ISCC PLUS certification at three domestic sites of Inabata & Co., Ltd., as well as at three overseas sites. In recent years, demand for biomass plastics and recycled plastics has been increasing. By obtaining this certification, we demonstrate that we handle reliable products made from sustainable materials, and aim to further expand our business.

The Inabata Group promises and declares that in accordance with the latest ISCC standards, it will comply with ISCC PLUS certification requirements.

• ^*Mass balance approach: A method used throughout the processing and distribution stages from raw materials to finished products, in which sustainability sourced raw materials, such as biomass or recycled plastic materials, are mixed with non-sustainable raw materials, like those derived from fossil fuels. Based on the amount of sustainably sourced raw materials input, the associated sustainable characteristics are proportionally allocated to a share of the finished products.

How the ISCC certification system works

The ISCC certification ensures traceability through a Chain of Custody (CoC) system, under which materials are properly managed and handled throughout the processing and distribution stages. As a result, all organizations involved in the value chain are required to obtain ISCC certification. In addition, each site issues a document known as a Sustainability Declaration, which is passed on to the subsequent site to ensure the continuity of information.

Inabata Group's certified entities and scope

• Sustainability Data：Certification：Sustainability Certification Status