Water is an important resource for maintaining people's lives and health. Good quality water is essential for us to create innovative pharmaceuticals and ensure stable supply of these pharmaceuticals to patients. We are committed to minimizing the negative impacts of our operations on the global environment and achieving a sustainable water recycling society through efficient use of water, appropriately wastewater management, and enhanced stakeholder engagement.

As for water risks, the Environmental Management Committee and the Nature Positive Subcommittee (previously: Water Subcommittee) established under it, lead and conduct surveys on the risks, and identify, analyze, and evaluates the risks that are considered to have negative impacts on our business.
In addition, in FY2023 we reviewed water-related risks and considered countermeasures for mitigation of risks, in line with the recommendations of the Task Force on Nature-related Financial Disclosures (TNFD). For more details, please see the page of our website titled “Information disclosure based on the TNFD recommendations.”

Major risks and measures

1. Water scarcity risk

Risk assessment

Using the World Resources Institute's Water Risk Assessment Tool (Aqueduct), we assessed water stress, an indicator of water scarcity (annual water use in an area divided by the annual amount of water available in that area) for our manufacturing plants and research institutes that are utilizing at least 95% of our total water withdrawals. As a result, none of the manufacturing plants or research institutes were determined to be at "High risk" or "Extremely high risk" for water stress. In addition, we conducted desk research and interviews with local municipalities concerning drought history, ratio of water resources to spare (an indicator showing the leeway of water sources), etc. in the areas where our manufacturing plants and research institutes are located. Since there have been no restrictions on water intake due to drought for the past 20 years or more and the local municipalities have sufficient water supplies, we assessed that there is no urgent water scarcity risk at our manufacturing plants or research institutes.

Results of the risk assessment for water stress in our manufacturing plants and research institutes（Aqueduct）

Water stress	Sites
Low to medium risk	Yamaguchi Plant, Joto Pharmaceutical Product Development Center, Minase Research Institute
Medium to high risk	Fujiyama Plant, Tsukuba Research Institute
High or extremely high risk	Not applicable

Measures

Although we assessed that there is no urgent water scarcity risk in the areas where our manufacturing plants and research institutes are located, we are committed to reducing water consumption through efficient use of water. For our manufacturing plants and research institutes, we develop an annual plan to reduce water consumption. In addition to efficient operation of pharmaceutical water and water for injection facilities and reduction of cooling water for boiler wastewater, we have installed ultrasonic flow meters in the water supply piping of facilities that were not targeted for reductions, and are narrowing down the next reduction target based on an understanding of the breakdown. We are also promoting initiatives for the efficient use of water, including the reuse of air conditioning condensate and cooling water. As a result of these efforts, our water consumption level has been below that of the previous year every consecutive year since FY2018. As another part of our effort to realize a water recycling society, we also educate our employees on water conservation. We will continue to work with our employees to improve the efficiency of water use and promote measures that will lead to the conservation of the region's abundant water resources.

2. Water pollution risk

Risk assessment

Raw materials and chemical substances such as intermediates and active ingredients of development compounds and of pharmaceuticals that are used in pharmaceutical research and manufacturing processes have the risk of causing adverse impacts on human health and ecosystems. If water pollution and resulting harm is caused by our business activities, there may be serious impacts on stakeholders in the region and great impacts on our business.
For substances for which the hazard profiles are known and controlled under laws and regulations, we assess their risk by monitoring concentrations in effluent from our manufacturing plants and research institutes. In addition, for chemical substances with unknown environmental hazards, such as synthetic intermediates and active ingredients of products under development and of pharmaceuticals, we assess their risks using their effects on aquatic organisms as indicators.

Measures

We continuously to strive to reduce the use of harmful substances at our manufacturing plants and research institutes. For substances controlled by laws and regulations, we not only comply with the permissible limits on effluent as set in the laws and regulations, but also set standard values based on agreements with local governments or voluntary standard values for some chemical substances, thereby controlling discharged water with stricter control values than those set in the laws and regulations. In July 2024, to further strengthen these operations, we established voluntary control targets for hazardous chemical substances that are 10 times stricter than the legal limit (1/10 concentration of the legal permissible limit), and commenced control. In addition, for substances with unknown hazard profiles such as active ingredients of development compounds and of pharmaceuticals, we predict environmental hazard using in silico quantitative structure-activity relationship (QSAR) analysis. We are continuing to establish a risk assessment system for active ingredients of development compounds and of pharmaceuticals.

3. Water-related risks at our business partners

Risk assessment

We assessed water dependencies and impacts of our business partners in line with TNFD recommendations. For all suppliers related to our manufacture of pharmaceuticals, we assessed the water stress and flood risk using Aqueduct. For the suppliers that are critical to our business continuity, we also assessed pollution risks derived from discharged water, etc. by searching the status of their environmental management system certification and the presence or absence of past serious environmental accidents or violations.

Measures

To reduce water-related risks, we aim to establish a water-related risk management system for business partners that are critical to our business continuity by FY2026. For those business partners that are critical to our business continuity for which concerns about water-related risks were raised in the above risk assessment, we will ascertain the details of the water-related risks associated with their business activities using the EcoVadis sustainability assessment system and/or other tools. In any case in which serious water-related risks are identified in the activities of the business partners, we will conduct an on-site audit and request corrective actions.

The total water intake amount in FY2023 was 189.9 thousand m³, a 6.5 thousand m³ reduction (reduction rate: 3.3%) compared to FY2022. This amount represents a reduction of 135.2 thousand m³ (reduction rate: 41.6%) compared to the base year, FY2017. Since FY2018, our water intake has fallen each year on a year-on-year basis.

Specific initiatives to reduce water consumption have included the following: visualization of water consumption amount through the installation of ultrasonic flowmeters, adaptation of highly airtight doors and by stopping the use of running water traps as insect repellent, reduction of cooling water through thermal recovery and adjustment of the preset temperature of the heat drain tank, optimization of the sterilization of the pharmaceutical water tank in the manufacturing plant, updating of boilers to high-efficiency models, stopping the spraying of water on air-cooling chillers and total heat exchangers or changing the preset temperature spraying water, reduction of coolant water by collecting heat from hot drainage, and conduction of regular water leakage checks in the research institutes. We also installed water-saving sanitary equipment when a site was expanded, reconstructed, or renewed.

Water intake (water resource consumption)

Water discharge

• Sites where data on water consumption and wastewater volume were collected: Fujiyama Plant, Joto Pharmaceutical Product Development Center, Yamaguchi Plant (added from FY2018), Minase Research Institute, Fukui Research Institute (closed at the end of March 2022 due to the reorganization of research bases), Tsukuba Research Institute, and Headquarters and other Japan offices/sites (added ONO Pharma UD from FY2023).

Activities for water quality pollution risk management

There is growing public concern about the ecosystem impacts of active pharmaceutical ingredients released into the environment. We are taking measures to prevent the release of active pharmaceutical ingredients, etc. into the environment during the manufacturing process of pharmaceuticals. For more details, please see the page of our website titled “Biodiversity.” Since FY2022, we have been conducting Whole Effluent Toxicity (WET) tests annually at our Fujiyama Plant, which is our major production center. In FY2024, the scope of WET tests will be expanded to include the Yamaguchi Plant and Tsukuba Research Institute, and by FY2025, a system will be in place to annually conduct WET tests at all of our manufacturing plants and research institutes. For active ingredients of development compounds and of pharmaceuticals, we will not only predict environmental hazards using in silico quantitative structure-activity relationship (QSAR) analysis but will also evaluate the effects on aquatic organisms, and these results will be disclosed through safety data sheets (SDS).

In the Water Security survey conducted by CDP, a global environmental non-profit organization, we have been selected “A List” company, the highest rating, for three consecutive years (FY2021 to FY2023).