Materiality

Environmental, societal, and business structural changes—resulting from such factors as the need for action on climate change and the SDGs, as well as the declining birth rate, the aging population, and changes in the way people work—have led to the emergence of new challenges that need to be addressed. Automation—which can serve in a variety of ways, such as mechanization, labor saving, energy saving, and resource conservation—is playing an increasingly essential role in solving these issues, further enhancing its value and raising expectations. Amid these changes, in August 2022, to achieve sustainable growth for the azbil Group, we incorporated double materiality (a concept that evaluates materiality from two aspects: financial evaluation of the impact of the environment and society on the company, and the impact of corporate activities on the environment and society) from the perspective of both opportunity and risk, based on the Group philosophy. We have identified 10 material issues across five areas to be tackled over the long term. In FY2023, with advice from external experts, the process for identifying materiality was reassessed, and its validity was reaffirmed.

In FY2026, the azbil Group reviewed and revised its materiality in light of changes in the business environment and the formulation of its Purpose, following deliberations by the Board of Directors. In this changing landscape, both supply chains and human capital continue to increase in importance globally. At the same time, the semiconductor and data center markets—which demand technological advances and solutions for societal issues—are treated as rapidly evolving growth areas in the azbil Group’s unique business model. Based on these considerations, we reassessed the importance and financial impact of each material issue. As a result, we are placing greater emphasis on issues related to supply chains and human capital, and we have newly identified “water resources” as a material issue. Of particular note is the huge increase in water consumption resulting from the construction of data centers required to meet AI growth. Data centers rely on energy supplies and cooling, hence the importance of water resources. As part of the global strategy of the Building Automation (BA) business in regions facing potential water scarcity, the azbil Group recognizes significant growth potential in solutions that support business continuity and enable the efficient use of cooling water for air-conditioning systems at data centers and other facilities. In addition to assessing the impact of water-related issues on the BA business, the azbil Group has evaluated their financial impact across its business domains. This includes equipment and services that enhance water efficiency and environmental accident prevention solutions in the Advanced Automation business, as well as leak detection solutions in the Life Automation business.

Materiality identification process

STEP1

Based on various guidelines (e.g., SDGs, GRI Standards, SASB Standards), social issues were comprehensively identified as materiality candidates.

STEP2

For the materiality candidates, we identified opportunities and risks from the perspective of double materiality and evaluated their level of importance, taking into account several key issues that emerged through stakeholder engagement and advice from external experts.

STEP3

Following conferral with external experts, in FY2023 the Management Meeting and the Board of Directors confirmed the validity of the 10 material issues and reaffirmed the azbil Group’s materiality.
In FY2026, the azbil Group reviewed and revised its materiality in light of changes in the business environment and the formulation of its Purpose, following deliberations by the Board of Directors.

Materiality and Essential Goals of azbil Group for SDGs

Based on the materiality we have identified, for eight material issues related to our business and corporate activities, we have formulated specific targets to achieve by FY2030 within the scope of the essential goals of the azbil Group for the SDGs. For the other three material issues, which are fundamental obligations that a company must fulfill to be a member of society, we have established specific goals as part of our CSR activities. We are promoting sustainability management through various initiatives to achieve these goals.