Materiality and KPIs - ESG Investors

In conjunction with the launch of the new Mid-Term Management Plan, and as detailed below, the Group has revised Materiality, which are important management issues, for the realization of our Long-Term Vision of “Grow the new Story. New logistics, nurturing a new society together.” aimed at 2030, as well as the enhancement of our corporate value over the medium- to long-term.

Since it was founded in 1957, the Group has constantly considered what it can do for customers, and has had the corporate philosophy of “Trust, Create, Challenge” with the “Hikyaku no Kokoro” (the spirit of Edo-era express messengers) to do its best in its heart. In addition, using the Material CSR Issues, etc. established in FY2017 as a guideline and to meet the expectations of stakeholders, we have worked to resolve a variety of social issues through business activities with the aim of creating new value.
Meanwhile, the speed of changes in the environment surrounding companies has been accelerating, causing the issues that they must address to become more diverse and complex. In international society, for example, action on social issues, including measures to address climate change, are being increasingly demanded. Against this backdrop, and with the aim of fostering both a sustainable society and sustainable growth for the Group, we declared a Long-Term Vision of “Grow the new Story. New logistics, nurturing a new society together.” aimed at 2030, and to realize this vision and enable the Group to increase its corporate value over the medium- to long-term, we established Materiality, which are important management issues, in FY2023. For FY2025, the first year of the Mid-Term Management Plan “SGH Story 2027,” we have revised Materiality to reflect recent developments in the business environment and changes in our management resources and stakeholders due to the integration of the Meito Transportation, Hutech norin, and Morrison into the Group. With these revisions, we will be pursuing an even more sustainable approach to management.

In the previous Mid-Term Management Plan “SGH Story 2024,” we specified 10 key strategies as Materiality, but with the formulation of “SGH Story 2027,” we conducted a review and established a new version of Materiality. We determined it by backcasting from our vision, positioning Materiality as issues to be solved toward the realization of our Long-Term Vision. Meanwhile, we have positioned the Mid-Term Management Plan as an activity plan for resolving the issues.

In recent years, the external environment surrounding the Group has become increasingly complex, with rapid changes occurring in our business environment. Domestically, labor shortages have become severe, and accelerating operational efficiency improvements on the assumption of wage increases and inflation going forward has become an urgent task for all companies.
Meanwhile, the global economy is expected to see medium- to long-term growth, necessitating proactive approaches toward overseas business expansion.

• Enhancement of logistics solutions

  Social issues

  Transformation of consumption activities(diversification, increased fluidity, globalization)
  Shrinking labor force in Japan, increased risk of inability to deliver due to shortages of drivers

  Background to selection

  • Opportunity

  The transformation of consumption activities is a trend that the Group must closely monitor and respond to promptly in order to continue to be an indispensable presence (= infrastructure) for our customers and society. We recognize that providing diverse solutions to resolve social and customer issues from a global perspective represents an opportunity that the Company should seize for sustainable growth.
  While driver shortages pose a risk, the fact that the Group has secured sufficient resources provides us with a competitive advantage. We believe that this also gives as an opportunity to provide efficient and stable transportation solutions by utilizing resources both within and outside the Group.

  Related SDGs

  

  

  

  

  

  Major initiatives	FY2028/3 Targets / KPIs	Related MTMP key strategies
  Provision of logistics solutions that meet diverse needs	Expansion in growth areas* for express package delivery services Number of packages handled: +44 million (compared to FY2024) * Real commerce, cross-border e-commerce, low-temperature logistics	Expansion of domestic service areas and our global logistics infrastructure (1) Strengthening our revenue base through expanding the service competitiveness and improving the efficiency of express package delivery services (2) Building one of the best cold chains in Japan through expansion of low-temperature logistics solutions (3) Enhancing added-value in domestic logistics and expanding the TMS business domain (4) Expanding the customer base and improving profitability of global logistics
  	Sales of low-temperature logistics solutions: +50.0 billion yen (compared to FY2023)
  Expansion of areas in which we offer proposals in global logistics	Freight forwarding Air cargo volume: 370 thousand tons Ocean cargo volume: 330 thousand TEU
  Enhancement of quality so that customers choose our services	Customer service quality in express package delivery services: year-on-year improvement every fiscal year

• Strengthening of growth platform with personnel and partners

  Social issues

  Balancing job satisfaction and economic growth
  Shrinking workforce

  Background to selection

  • Opportunity
  • Risk

  Securing human resources in both quantitative and qualitative terms to maintain and expand our business is vital for the Group as we operate in a labor-intensive industry. Failure to secure adequate resources would make it difficult for us to maintain our logistics infrastructure, threatening business continuity and posing the risk of significant financial losses for the Group.
  On the other hand, we also recognize this as an opportunity. By securing resources for the Company and for partner companies, and securing and developing sufficient personnel with the knowledge necessary for growth, we can expect to see our business grow further.
  To continuously secure resources, it will be important to make the Company, and by extension the logistics industry, a place that offers appealing work. Aiming to create workplaces that provide job satisfaction by improving environments so that anyone can work comfortably, by evaluated fairly, and receive appropriate compensation will lead to the development of both the Company and the industry.

  Related SDGs

  

  

  

  

  

  

  

  Major initiatives	FY2028/3 Targets / KPIs	Related MTMP key strategies
  Development of human resources who can drive sustainable growth globally	Number of DX/global personnel developed: 70 persons/year	Expansion of management resources to support growth (5) Maintaining and strengthening our service infrastructure, including strengthening of coordination with partner companies (6) Maximizing corporate value through investment in human capital (7) Enhancing business competitiveness through investment in DX, R&D, and the latest technologies
  Securing of human resources and improvement of efficiency to support infrastructure	Improvement of employee retention rate
  Establishment of a basis to leverage performance that respects human rights and diversity	Percentage of female managers: 12%
  	Employee engagement Positive response rate: +1 pt. every fiscal year(compared to previous fiscal year)
  	Performance of human rights due diligence, provision/expansion of human rights education
  Construction of sustainable infrastructure through co-creation with partner companies	Building of partnerships through proper consultation with and support for partner companies

• Strengthening Measures to Address Environmental Issuess

  Social issues

  Impact of climate change (Emissions reduction, etc.)

  Background to selection

  • Opportunity
  • Risk

  Initiatives to address environmental issues have an important social role, but as we are a company that uses vehicles in its operations, they also have a significant impact on our business. If no measures are taken and global warming progresses, there is a possibility that our profits could be squeezed by increased costs associated with adapting to the changed environment. On the other hand, given the growing importance of environmental action in recent years, working on solutions to resolve environmental issues can help consignors reduce their Scope 3 emissions, so it offers the prospect of new business opportunities. In addition, as climate change progresses, we can contribute, as social infrastructure, to emissions reductions across the entire supply chain.

  Related SDGs

  

  

  

  

  

  

  

  Major initiatives	FY2028/3 Targets / KPIs	Related MTMP key strategies
  Contribution to the establishment of a decarbonized society	GHG emissions reduction rate (compared to FY2013) * To be disclosed in May 2026	Initiatives for sustainable management (8) Responses aimed at solving social and environmental issues such as decarbonization (9) Enhancing governance to increase corporate value
  Promotion of initiatives for circulation of resources	Development and strengthening of recycling-oriented logistics solutions
  Construction of a resilient logistics network adapted to climate change	Strengthening of domestic BCM framework, and risk assessments and more powerful risk mitigation measures overseas
  	Strengthening of disaster prevention and disaster support activities

• Enhancement of safety and compliance

  Social issues

  Growing awareness of compliance
  Increased cyber security risks

  Background to selection

  • Risk

  Legal compliance is a fundamental prerequisite for business operations. The Group, in particular, conducts numerous transactions with subcontractors and frequently handles important information such as the addresses of consumers as it conducts business. As a company with a declared goal of continuing to serve as infrastructure, the monitoring of compliance with laws and regulations, as well as a compliance structure for ensuring the safety of customers and consumers by mitigating risks such as information leakage, are critical tasks for us. Noncompliance could result in significant impacts such as business suspension risk and reputational risk.

  Related SDGs

  

  

  

  Major initiatives	FY2028/3 Targets / KPIs	Related MTMP key strategies
  Fair business operations	Implementation and expansion of compliance training for all employees	Initiatives for sustainable management (8) Responses aimed at solving social and environmental issues such as decarbonization (9) Enhancing governance to increase corporate value
  Traffic safety and occupational safety	Suppression of long working hours
  	Number of serious personal injury accidents: Zero
  Protection of the privacy of customers and business partners	Provision of security education and updating of security measures

• Advancement of governance

  Social issues

  Focus on corporate transparency and accountability

  Background to selection

  • Opportunity
  • Risk

  Advancing governance and administering the Company in a highly transparent manner is essential for executing the strategies to which we have committed. As a listed company, we are also subject to increasing demands to enhance our governance, and we recognize that failure to respond to these demands would be viewed as risks for the Company’s growth and damage our corporate value. However, by advancing our governance, transparency and confidence in our growth prospects will increase, resulting in us being perceived as a low-risk enterprise. This will lead to a reduction in our cost of shareholders’ equity capital, so we also view it as an opportunity to increase our corporate value.

  Related SDGs

  

  

  

  Major initiatives	FY2028/3 Targets / KPIs	Related MTMP key strategies
  Establishment of transparent governance structure and enhancement of its effectiveness	Implementation of measures based on Board of Directors effectiveness evaluations and results of interviews with Officers	Initiatives for sustainable management (8) Responses aimed at solving social and environmental issues such as decarbonization (9) Enhancing governance to increase corporate value
  	Initiatives aimed at advancing corporate governance
  Enhancement of trust with stakeholders	Expansion of dialogue with stakeholders in Japan and overseas Small meetings with President and Outside Directors: One of each per year Meetings with institutional investors and analysts: Approximately 300 times per year Theme-based small meetings: Held on an ad hoc basis (at least three in FY2025) Expansion of overseas IR

For the KPIs set for each Materiality item, we will monitor progress alongside the key strategies of the Mid-Term Management Plan “SGH Story 2027,” and when deviations have occurred in achievement levels, we will analyze the reasons and consider countermeasures. KPI monitoring is conducted by the Sustainability Committee, which will disclose its findings annually. If changes have occurred or are expected to occur in Group policies and measures due to changes in the internal or external environment, we will consider resetting Materiality initiatives, targets, and KPIs as appropriate.

• <For printing> FY2024 Targets and Results for Materiality (Key Strategies of the Medium-term Management Plan) KPIs (196KB)
• <For printing> FY2023 Targets and Results for Materiality (Key Strategies of the Medium-term Management Plan) KPIs (2.4MB)
• <For printing> FY2022 Targets and Results for Materiality (Key Strategies of the Medium-term Management Plan) KPIs (550KB)

• Corporate Governance
• Sustainability Promotion Structure