Materiality
- Materiality
- Materiality Identification Process
- Value Creation Process
- Value Creation and Progress Management Based on Materialities
- Key Sustainability Topics, KPI, and FY2025 Results
Materiality
Epson analyzed the risks and opportunities brought about by changes in the social environment and identified areas where we can provide value to society through our own technologies and businesses. As a result, we
set seven materialities as key issues aimed at realizing the ENGINEERED FUTURE 2035 Long-Term Vision. These materialities are structured along the two layers of value creation and foundation for value creation.
The first layer of materialities related to value creation indicates the value that Epson provides to society
through its business activities. Through an analysis of changes in the social environment, we identified
four areas where Seiko Epson can leverage its technological and business strengths to balance solving
societal issues with enhancing corporate value: improving the efficiency of energy and resources,
technology evolution, addressing labor shortages, and enhancing learning, working, and living.
The second layer of materialities related to the foundation for value creation indicates the sources of
competitiveness and the management foundation required to sustainably realize value creation.
In formulating this long-term vision, we position human capital that generates innovation and intellectual
capital that implements innovation in society as essential to realizing sustainable value creation, and
position these as sources of value creation.
We focused on human capital based on the idea that, as societal issues become more complex and
uncertainty in the business environment increases, developing and utilizing talent with both vision and
execution capabilities as well as talent with diverse expertise will be a prerequisite for value creation.
We focused on intellectual capital based on the idea that, while deepening the technologies and
philosophy of efficient, compact, and precise at the source of Epson’s competitiveness, it is essential
for sustainable growth that we connect those technologies to real-world implementation and create
new value and markets.
Our management foundation, comprising responses to the global environment, supply chain
management, initiatives to respect human rights, and governance including appropriate capital
allocation that supports execution of these initiatives, is positioned as the foundation that enables
maximum demonstration of the sources of value creation and competitiveness and that supports
sustainable growth.
Epson aims to enhance its corporate value over the medium to long term by strengthening these
materialities in an integrated manner while linking them to one another, thereby achieving the
simultaneous creation of social value and economic value.
Materiality Identification Process
In formulating our ENGINEERED FUTURE 2035, Epson analyzed the impacts on Seiko Epson and
stakeholders from changes in the social environment and societal demands such as international
standards.
Specifically, taking into account social changes such as decarbonization, constraints on
energy and resources, the advance of an AI- and data-driven society, worsening labor shortages,
growth in emerging countries, geopolitical risks, and tightened regulations, we assessed key issues
from perspectives of business opportunities and risks. Doing so, we identified four value creation
areas—energy and resource efficiency, technology evolution, labor shortages, and improving learning,
working, and lifestyles—as areas in which we can create value through our technologies and business.
We also identified human capital and intellectual capital as sources of competitiveness in sustainably
realizing these value creation efforts, and added responsible management and execution as the
management foundation for overall efforts. We thereby identified seven materialities.
Value Creation Process
Under the ENGINEERED FUTURE 2035 Long-Term Vision, Epson is promoting value creation that leverages the technologies and philosophy of “efficient, compact, and precise” to address issues and needs arising from changes in the social environment. By linking our business strategies to our management foundation with a grounding in our seven materialities, we will realize the resolution of societal issues and the creation of new value, and will aim for sustainable growth and enhanced corporate value through the simultaneous creation of social value and economic value.
Value Creation and Progress Management Based on Materialities
To steadily realize value creation based on our materialities, we set the value to be created, initiative themes, and evaluation indicators for each materiality, and continuously manage progress. In line with this review of the value creation process, we reorganized the KPI framework. We also incorporated some indicators into executive management compensation evaluations to promote highly effective management aimed at the simultaneous creation of social value and economic value.
Value Creation and Progress Management Based on Materialities
| Materiality | Opportunities (○) / Risks (●) | Segment | Value Created | Main Initiative Themes | RS 1 |
Evaluation Indicators (KPI) | Phase 1 Target ※2 |
|---|---|---|---|---|---|---|---|
| Supporting advances with precision technology | ○As demand for energy saving and resource conservation expands, the market for high-efficiency products and solutions expands ○Business opportunities expand in areas related to closed resource loop initiatives and resource recycling ●Rising energy and resource prices and unstable supply raise procurement and manufacturing costs and disrupt supply ●Delays in responding to stricter environmental regulations and circularity requirements lead to reduced competitiveness and transaction constraints Precision |
Precision Innovation | Building on precision manufacturing and control technologies, we achieve lower energy use and higher efficiency in manufacturing processes together with more advanced device performance, and support the sustainable evolution of industry and of a data-driven society even under energy and resource constraints |
・Inkjet Solutions: Strengthen inkjet technology and engineering, expand applications and markets through co-creation and external partnerships, and drive manufacturing transformation ・Microdevices: Combine quartz and semiconductor technologies and support the evolution of the digital society through high-precision, low-power-consumption devices ・Epson Atmix: Further meet the need for closed resource loops and higher functionality by increasing the added value of high-performance materials and strengthening production capacity |
Revenue (billion yen) CAGR (%) |
Revenue ¥210.0 billion CAGR 8% |
|
| Supporting the Evolution of Technology with Precision Technology | ○Expanding demand for high-precision, low-power-consumption, high-reliability technologies
increases business opportunities in high value-added areas ○Growing use of AI and data increases demand for high-precision, low-power-consumption devices and related components ●Intensifying development competition in AI, semiconductors, and communications increases the investment burden ●Insufficient response to more advanced technical requirements and faster development speeds leads to delays in customer response and reduced market competitiveness |
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| Addressing labor shortages with productivity and reliability | ○As needs for automation, labor saving, and process optimization expand, the production-related solutions market expands ○Demand is growing for high-quality, highly efficient manufacturing and the optimization of end-to-end production processes ● Difficulty in securing talent and rising labor costs under a declining working-age population create difficulties in production system maintenance and stable supply ●Insufficient transfer of skilled expertise creates difficulties in productivity and quality maintenance |
Industrial & Robotics | Through automation and process optimization, we simultaneously solve the challenges of labor shortages and quality maintenance at production sites and contribute to building an industrial foundation that can grow sustainably even under labor constraints |
・Commercial and Industrial Printing: Strengthen the lineup of high-productivity models and digital printing solutions to advance higher productivity and process optimization ・Robotics: Expand the lineup of high-payload, collaborative robots and other products to advance production site reform through automation and labor saving |
Revenue (billion yen) CAGR (%) |
revenue ¥330 billion CAGR 4% |
|
| Supporting learning, working and lifestyles | ○Growing environmental awareness, soaring energy prices, and unstable electrical power in
emerging countries drive demand for products and services that help reduce environmental impact
and for operational efficiency improvements driven by rising labor costs ○Demand for more advanced education, experiential value, and communication is growing due to middle-class expansion in emerging economies, increasing digitalization, and the diversification of work and learning styles ●In education and business domains, progress in digitization and the emergence of alternative technologies reduce market competitiveness and result in lost sales opportunities ●Insufficient response to changes in work styles and to increasingly diverse customer needs reduces customer touchpoints and market opportunities |
Office & Home Printing | By improving access to information and operational efficiency, we enhance the quality of education and ways of working while contributing to growth opportunities in emerging countries and productivity improvements in advanced countries |
・Office & Home Printing: Expand sales and customer touchpoints in emerging markets while evolving the earnings base by strengthening our recurring model ・Visual & Lifestyle: Strengthen visual communication and the service model to advance enhanced experiential value and stable monetization |
Revenue (billion yen) ROIC (%) |
revenue ¥700.0 billion ROIC +1pt (compared to FY2025) |
|
| Visual & Lifestyle | revenue ¥260.0 billion ROIC +4pt (compared to FY2025) |
| Materiality | Opportunities (○) / Risks (●) | Value Created | Main Initiative Themes | RS 1 |
Evaluation Indicators (KPI) | FY2026 Targets |
|---|---|---|---|---|---|---|
| Evolution of human capital | ○Through development and hiring of specialized talent, leveraging of AI/data, reskilling, and optimal global talent allocation, productivity improvement and innovation creation will accelerate, contributing to business growth and achievement of ROIC ○Promoting active roles for diverse talent and enhancing employee engagement through appropriate evaluation and treatment lead to maximization of organizational capabilities ●Productivity and competitiveness decline due to delayed reskilling and talent development ●Strategy delays and higher costs due to shortages of executive management/managerial talent and specialized talent result in missed growth opportunities ●Difficulty in securing talent and rising labor costs under a declining working-age population create difficulties in securing expert talent and in strengthening organizational capabilities |
Realize a global human resource base that can create innovation by committing to results and demonstrating their abilities with diverse and advanced human resources. | ・Advanced utilization of our global organizational and human resources base |
・Expansion of talent utilization that goes beyond existing organizational frameworks |
Expansion of roles through the creation of themes | |
| ・Cultivation of leadership that drives business | ● |
・Rate of succession readiness for key Group positions (including overseas key positions)※3 |
100% | |||
| ・Strengthening of engineering talent and expansion of areas of contribution | ・Promote the development of engineers who directly contribute to solving customer challenges ・Embed and strengthen the engineering approach (engineering-based problem solving) throughout the organization |
・Reinforce training on problem-solving methodologies ・Prepare for revisions to the performance evaluation system
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| ・Maximization of organizational teamwork | ● |
・Ratio of women in management positions |
6.7% | |||
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・Employment rate of people with disabilities |
2.6% ※4 | |||||
| Creation of intellectual capital | ○New markets are created through real-world implementation driven by technological advancement and co-creation ● Delayed technology development, insufficient differentiation, and outflow/obsolescence of intellectual property undermine our competitive advantage and earnings base |
Build an intellectual foundation that creates new value and markets through technological advancement and real-world implementation to achieve both competitive advantage and solutions to social issues | ・Advancement of “efficient, compact, and precise” technologies and of R&D | ・Execution of R&D aligned with business growth vectors | Setting of priority themes | |
| ・Utilization of intellectual capital linked to business strategy | ・Utilization of IP landscapes in business and development | Expanded utilization in priority themes | ||||
| Responsible management and execution | ● Reputational damage, business constraints, and higher costs result from delays or violations in regulatory compliance related to ESG areas such as the environment, human rights, and supply chains ●Resource procurement constraints and price fluctuations stemming from geopolitical risks and impacts on economic security result in supply instability and profit deterioration ●Cyberattacks and information leaks affect business continuity and customer trust ○ Enhancement of ROIC-centered capital allocation and ESG initiatives achieves both earnings reform and growth investment, thereby increasing corporate value ○ Strengthening of supply chain management and risk management enhances business stability and resilience |
From a foundation of responsible management that achieves capital efficiency and sustainability, link social trust to the strengthening of business foundations and generate corporate value |
・Decarbonization initiatives Previous fiscal | ● |
・Scope 1 and 2 GHG emissions reduction rate (total; compared to FY2017) |
Previous fiscal year rate or higher (82% in FY2025) |
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・Scope 1, 2, and 3 GHG emissions reduction rate |
Previous fiscal year rate or higher (35% in FY2025) |
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| ・Utilization of renewable energy |
・Renewable energy adoption rate |
Maintenance of 100% global adoption rate | ||||
| ・Strengthening of supply chain BCM | ● |
・Enhance BCM planning accuracy and strengthen recovery response capabilities to minimize sales impact from supply chain disruptions and interruptions |
Year-over-year improvement of BCM plans/ achievement rate of recovery plans during emergencies |
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| ・Realization of responsible supply chains |
CSR risk levels of suppliers |
High risk 0% | ||||
| ・Respect for human rights |
・Expansion of scope of human rights due diligence |
Expansion of scope of human rights risk identification and assessment | ||||
| ・Strengthening the foundation of compliance management | ● |
・Number of major compliance violations |
0 cases | |||
| ・Reinforcing information security |
・Number of major information security incidents |
0 cases |
※1 Evaluation indicators for executive management compensation ※2 Medium-term targets through FY2028 ※3 Calculated as: number of successor candidates / number of Group key positions ※4 As of June 2026
Key Sustainability Topics, KPI, and FY2025 Results
Key Sustainability Topics in Epson's long-term vision, Epson 25 Renewed, and 2025 targets
| Materiality | Key Sustainability Topics | RS 1 indicator | Initiative Topics | Key Performance Indicators (KPI) | FY2025 (Target) | FY2025 (Result) |
|---|---|---|---|---|---|---|
| Achieve sustainability in a circular economy | Decarbonization initiatives | ● | Using energy-saving equipment and facilities, removing greenhouse gases, engaging suppliers, and pursuing carbon-free logistics to become carbon negative by 2050 | Scope 1, 2 and 3 GHG emissions reduction ratio |
Reduce by 34% compared to FY2017 | Reduced by 35% compared to FY2017 |
| Scope 1 and 2 GHG emissions reduction ratio |
Reduce by 80% compared to FY2017 | Reduced by 82% compared to FY2017 | ||||
| Using renewable electricity to achieve RE100 | Renewable electricity adoption ratio | Maintain 100% globally | 100% | |||
| Closed-resource loop initiatives | Becoming underground resource2 free by 2050:
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Ratio of sustainable resources3 | 38% | 39% | ||
| Final landfilled rate4 | ≤1% | 0.7% | ||||
| Customer environmental impact mitigation | Maximizing avoided emissions with products and services that have a lower environmental impacts5 | Emissions avoided through products & services | More than last year (last year: 9.8 kt-CO 2 e 6) |
167.8kt-CO2e *7 *The calculation range differs from last year. |
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| Environmental technology development | The following initiatives aimed at “carbon negative” and “zero consumption of underground resources” by 2050
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Progress of development process/Status of development of technologies for high-performance materials | Externally disclose development results | 2 external reports *
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| Progress of development process/Status of operation of metal resource recycling equipment | Commence operation of refining plant and conduct Group resource circulation trial | Metal recycling plant equipment operating status
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| Status of development of CO2 separation membranes/DAC systems | Develop systems for PoC8 | Verified CO2 separation and concentration functionality using systems for PoC |
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| Advance the frontiers of industry | Increasing productivity through digitization and automation | Leading the digitization and automation of commercial and industrial printing with inkjet technology, diverse solutions and expanded services, to reduce environmental impact and improve productivity | Average sales growth rate of commercial and industrial IJP compared to the previous year | ≥ 10% | 13.9% | |
| Improving working environment and improving educational environment | Reducing environmental impact and improving productivity with inkjet technology and open solutions to provide a printing environment that meets the needs of society | Sales volume growth rate of high-capacity inkjet printers for SOHO and home users compared to the previous year (Including consumables; excluding foreign exchange effects) |
≥ 4% | 5% | ||
| Eliminating labor shortages through automation using robots | Number of labor shortages eliminated9 | 27,000 persons | 26,000 persons | |||
| Providing a fair, natural, and comfortable communication environment without boundaries, combining the real and remote, with both a sense of presence and information conten | Number of co creation and collaboration projects, or number of partners | Co-creation: Continuing + case deployment 5 cases Implementing companies/partners: Continuing + new development at least 1 company |
Co-creation/ collaboration: Continuing + case deployment 5 cases Implementing companies/partners: Continuing + new development at least 1 company |
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| Creating homogeneous learning opportunities through smart, portable displays that enable large screen communication in a compact form, to mitigate learning disparities stemming from differences in regional and social conditions | Number of local demonstration programs through co-creation and collaboration | A cumulative total of 60 programs
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A cumulative total of 60 programs (New: 5) |
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| Number of countries where demonstrations have been conducted in general education and efforts to raise awareness of social issues | A cumulative total of 5 countries |
A cumulative total of 5 countries (New: 2 countries) |
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| Improve the quality of life | Proposing diverse lifestyles | Enriching the diverse lifestyles of people by converting data obtained from customers through wearable products with our sensing devices as their core into value to provide health advice and monitoring of day-to-day life | Percentage of revenue that the data business in support services accounts for 10 | ≥ 20% | 15% | |
| Realizing an abundant and colorful life | Providing attractive and high-quality products with our efficient, compact, and precise technologies and our artisanal skills, to enrich the diverse lifestyles of our customers | Sales growth rate of attractive, high quality products compared to the previous year | ≥ 20% | ≥ 20% | ||
| Fulfill our social responsibility | Increasing stakeholder engagement |
Responding to needs and social demands by strengthening dialogue with stakeholders |
Monetary value of support in social support activities | ≥ 0.1% of sales as a guideline | 0.1% of sales | |
| Number of dialogs with shareholders and investors and reflecting opinions on management |
≥ 200 meetings with shareholders & investors | 210 meetings with shareholders & investors | ||||
| Evaluation indices of external evaluation agencies | Acquire high recognition 11 | Acquired high recognition | ||||
| Realizing responsible supply chains | Reinforcing supply chain BCM | Impact on customers due to disruption and stagnation in supply chain (Aiming to have no impact on sales in FY2024) | No impact on sales | No impact on sales | ||
| ● | Realizing responsible supply chains |
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| Realization of responsible sourcing of minerals |
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| Respecting human rights and promoting diversity | Creating a free and open organizational culture | Organizational climate assessment score for “strength to work in teams” | Motivation cloud
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| Number of high risk workplaces with “general health risk” in the mental health check 14 | Number of high risk workplaces with “general health risk”: 0 |
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| Implementation of harassment prevention measures (education and training, case sharing, appointment process, etc.), ensuring to report cases to the head office | Continue FY2024 measures |
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| Respect for human rights through dissemination of the new “Human Rights Policy” within the Group | Embedding and improving the commitment for respecting human rights, human rights due diligence (DD) & remediation mechanisms | Continue FY2024 measures |
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| ● | Utilizing human resources in a way that respects diversity |
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| Strengthening governance | ● | Reinforcement of compliance management platform | Number of serious compliance violations15 | 0 cases | 0 cases | |
| Enhancement of Group compliance level | Implementation ratio of compliance training (e learning) to all Group companies | Completion rate in Epson Group: 100% | Completion rate in Epson Group: 100% | |||
| Maintenance and strengthening of governance structure to realize transparent, fair, prompt and decisive decision-making | Ratio of Outside Directors in the Board of Directors Ratio of Outside Directors in Nomination & Compensation Committees |
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| Strengthening information security | Number of serious information security incidents | 0 cases | 0 cases |
1 RS indicator: Restricted Stock (RS) evaluation indicator
2 Non-renewable resources such as oil and metals
3 The total ratio of the amount of sustainable resources input and the amount of depletable resources used that have been recycled, relative to raw materials. Sustainable resources refer to renewable resources, closed-loop materials, and less depletable resources.
4 Ratio of landfilled amount of production resources against the volume of resources input
5 Quantified the contribution of products and services toward greenhouse gas (GHG) emissions reductions
6 Avoided emissions by Epson A3 color inkjet printers
7 The total avoided emissions by Epson high-capacity ink tank printers and A3 color inkjet printers.
Breakdown: A3 color inkjet printers 9.0kt-CO 2 e, high-capacity ink tank printers 158.8ｋt-CO 2 e
For details of calculation conditions, please see this page.
8 PoC (Proof of Concept): A process to verify the feasibility and actual effect, etc. of a new technology, etc.
9 Calculated based on the effectiveness of Epson’s internal projects
10 Business model that provides value by converting data based on algorithms
11 Sustainalytics: Low; FTSE: 4 or higher; Top 50 or higher in “Toyo Keizai CSR ranking”
12 Changed the operation to focus on risk control to ensure that high-risk suppliers are zero by ensuring that all suppliers subject to evaluation have completed corrective actions after ensuring that all suppliers subject to evaluation have completed corrective actions.
13 Rate of suppliers submitting responses to suppliers we have sent survey requests
14 Target-value control is performed for workplaces with 10 or more respondents.
15 Serious compliance violations: Violation that correspond to timely disclosure matters
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