As for water risks, the Environmental Management Committee and the Water Recycling subcommittee established under it, lead and conduct surveys on the risks, and identify, analyze, and evaluates the risks that are considered to have an impact on our business.
In addition, in FY2022, we considered how issues of water-related risks vary by the catchment area of each business site, re-considered our risks, and changed to a risk-based approach. Assessments have been updated in reference to the guidelines issued by the CEO Water Mandate, "Setting Site Water Targets Informed by Catchment Context: A Guide For Companies", and new medium- to long-term targets responding to risks are set.

Major risks and measures

1. Water scarcity risk

Risk assessment

Water scarcity risk evaluation is conducted for our research institutes and manufacturing plants that are utilizing at least 95% of our total water withdrawals by the WRI AQUEDUCT, a water-related risk assessment tool of the World Resource Institute. As of the end of FY2022, none of our research institutes and manufacturing plants are operating in areas categorized as being at "high risk" or “extremely high risk” for water stress. In addition, we conducted desk research and interviews with local municipalities concerning drought history in the areas where our business sites are located. As a result, we determined that the water scarcity risk at our research institutes and manufacturing plants is small.

Results of the risk assessment for water stress in our research institutes and manufacturing plants （WRI 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 determined that the water scarcity risk is small in areas where our sites are located, in order to appropriately manage water resources into the future, we will continue to promote the efficient use of water at our business sites and to manage appropriate water use. In addition, we will also promote measures that lead to the conservation of the local’s rich water resources.

2. Water pollution risk

Risk assessment

Raw materials, active pharmaceutical ingredients (APIs), and other chemical substances that are used in pharmaceutical research and manufacturing processes have the risk of causing an adverse impact on human health and ecosystems. If water pollution and resulting harm caused by our business activities, there may be a serious impact on stakeholders in the region and a great impact on our business (e.g., possibility of exclusion of our products from insurance coverage, bearing costs that exceed compensation amounts, assuming legal liabilities, etc.).
The substances used in our research institutes and manufacturing plants include substances for which the hazardousness is known and controlled under laws and regulations, as well as substances for which the hazardousness (in particular, hazardousness to the environment) is unknown, such as API, and therefore voluntary control is required. The risks must be managed based on the characteristics. For the substances controlled under laws and regulations, we monitor the concentration of them in drainage and then assess the presence or absence of pollution risks to the ecosystem based on the publicly available harmful information of these substances. On the other hand, for API, such as a development compounds, for which the hazardousness to the environment is unknown, we are currently developing the risk assessment system.

Measures

We continue to strive reducing the use of harmful substances and to maintain and strengthen drainage management at our research institutes and manufacturing plants with stricter control values than applicable laws and regulations for substances that are controlled by laws and regulations. In addition, for substances with the unknown environmental hazardousness such as development compounds, we plan to assess the impact to environment using the aquatic life as well as the computer simulation based on the quantitative structure-activity relationship (QSAR). 

3. Water-related risks at our business partners

Risk assessment

Sustainability risks in association with the business activities of our business partners are assessed and handled through supply chain management. For water-related risks assessment, we will also establish a comprehensive risk management system by FY2026.

Measures

Following the identification of water-related risks such as water stress, drought, flood, and water quality etc. by WRI AQUEDUCT, we will assess the water-related risks associated with business activities of important business partners using EcoVadis' sustainability assessment system. In the case that water-related risks are suspected in the activities of important business partners, we will collect the information through an on-site audit and propose corrective actions. 

4. Other risks

For the assessment and action status of flood risks due to typhoon, etc., see our website on Information Disclosure Based on the TCFD Recommendation. In addition, for the business continuity plan (BCP) when a natural disaster occurs, see here.
We have posted details such as the water-related risks and opportunities, water intake and wastewater volumes at CDP Water Security (Japanese only). They can be confirmed at the CDP website (A CDP ID is required).

Towards “Realization of a water recycling society,” medium- to long-term targets that we have promoted since FY2019 were updated to new medium- to long-term targets in FY2022 in consideration of risk assessment results.

The water intake amount in FY2022 was 196.4 thousand m³, a 23.0 thousand m³ reduction (reduction rate: 10.5%) compared to FY2021. In addition, water intake amount was reduced by 128.7 thousand m³ (reduction rate: 39.6%) compared to the standard year, FY2017.

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

Water intake (water resource consumption) 

Wastewater

• 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, Tsukuba Research Institute, Head Office, sales offices and other offices, etc.
  

• Draining destination: The draining destination is to a river (surface water of fresh water) or sewer (effluent by a third party) only and not the surface water of brackish water/seawater and underground water.
• Water source: Water intake amount at Fujiyama Plant includes underground water (FY2017: 34.6 km³, FY2018: 26.2 km³, FY2019: 21.0 km³, FY2020: 22.0 km³, FY2021: 19.6 km³, and FY2022: 15.3 km³).
  Intake water from a third party's water source are used in other facilities.
  Please note that no facilities intake water from the surface water of fresh water, surface water of brackish water/seawater, underground water (non-renewable), or produced water/mixed water.
• The Fukui Research Institute was closed at the end of March 2022 due to the reorganization of research bases.
• Toyohira River, Okura River, Arakawa River, Sakawa River, Kiso River, Lake Biwa, Yodo River, Ota River, Yoshino River, Naka River

Activities for water quality pollution risk management

At the 4th meeting of the International Conference for Chemicals Management (ICCM), pharmaceuticals in the environment are listed as an "Emerging Issue," and EFPIA, which is a pharmaceutical industry group in Europe, published the Eco-Pharmaco Stewardship program, and other actions were implemented.
We introduced whole effluent toxicity testing (WET testing) at Fujiyama Plant, which is our major production center, as part of activities for water pollution risks.
In addition, we assessed the impact of active pharmaceutical ingredients (APIs) under development on aquatic life using Quantitative Structure-Activity Relationship (QSAR) and promoted listing information in the safety data sheet (SDS).

External evaluation

In the Water Security survey conducted by CDP, a U.K.-based nonprofit organization, we received “B” in FY2018, “A-” in FY2019 and FY2020, and “A”, the highest rating, in FY2021 and FY2022.