TOCALO has identified major issues that it believes are essential to address for the continuity of the Company. These material issues have been categorized into the five areas presented below.

1. Develop advanced coatings and cultivate latent markets

In accordance with our vision of “contributing to a bright future for people and nature,” we are innovating and developing potential markets for high-performance coatings for the semiconductor, infrastructure, medical care, agriculture, and other fields that are important in people’s everyday lives, as well as for hydropower, wind power, geothermal power generation, storage batteries, and other fields that contribute to reducing greenhouse gas emissions.

2. Reduce environmental impact

Regarding decarbonization (carbon neutrality), we will advance initiatives toward a 46% reduction in greenhouse gas emissions by fiscal 2030 compared to fiscal 2013 levels, and further toward achieving "net zero" by fiscal 2040. Giving the highest priority to reducing greenhouse gas emissions associated with electricity consumption, we will dynamically expand solar power generation facilities and procure renewable energy. Furthermore, building on the calculation and visualization of Scope 3 emissions initiated in fiscal 2024, we will strengthen our efforts to reduce emissions across the entire supply chain, increase waste recycling rates, and establish a resource-recirculation business model.

3. Make manufacturing more sophisticated and enhance quality

Anticipating a doubling of our production capacity for semiconductor-related parts toward 2030, we will execute strategic investments ranging from 40.0 billion to 60.0 billion yen over the next five years. In addition to promoting the transition to smart factories through DX-driven automation and IoT integration, we will further sophisticated our quality control framework by establishing a world-class Product Quality Plan (PQP).

4. Cultivate and empower diverse human resources

Viewing human capital as the driving force behind our growth, we will continue our efforts to recruit approximately 40 individuals annually and improve employee compensation through wage increases through fiscal 2030. In addition to nurturing next-generation leaders through selective core talent development programs and various internal training sessions, we will strive to improve our internal environment so that employees can fully demonstrate their individuality and capabilities while working with vitality. Furthermore, by properly operating our occupational health and safety management system, we will ensure a workplace environment with zero occupational accidents.

5. Practice thorough compliance

To reinforce the management foundation that supports sustainable growth, we will swiftly address and improve various management issues while strengthening our corporate governance framework. In addition, centered on the Information Security Management Office established in April 2025, we will build an information management system on a global level. Furthermore, based on our Sustainable Procurement Guidelines, we will promote fair trade practices that respect human rights and the environment, striving to ensure corporate management that earns the trust of society.

(Excerpt from the Securities Report for the fiscal year ended March 2026)

Please see the Long-term vision and materiality section for details on material issues (materiality).