ACT.1 Business portfolio transformation

Business domain to address social issues

With the aim of realizing the society that we envision for 2050, Mitsubishi Chemical Holdings has identified the social issues that we should contribute to resolving, reviewing SDGs and megatrends along with our mission and value standards. The resolution of these social issues has been defined as a business domain Mitsubishi Chemical Holdings should work on. When identifying social issues, the Company quantitatively assessed the risks associated with social issues and structural changes, and estimated that they were in the range of ¥1 trillion. Under KV30, we aim to minimize these risks, position the resolution of social issues as business opportunities, and continue to reform our business portfolio to achieve sustainable improvements in corporate value.

Process for specifying social issues and business domains

1. Identify social issues (MOS)
Identify social issues that the MCHC Group should help solve by reviewing megatrends and SDGs along with our mission and value standards.
2. Risk assessment
Hold discussions with internal and external stakeholders to quantitatively assess risks left unmanaged.
3. Specify social issues
Specify the social issues that the MCHC Group should address.
4. Specify business domains
Find the direction for resolving the identified social issues, and specify the business domains.

Risks of leaving social issues unmanaged

Risk 1
Loss of corporate and brand value
Risk 2
Loss or contraction of existing business
Risk 3
Loss of new growth opportunities
Social issues GHG reduction and effective use

Institutional investors emphasize ESG Sluggish stock prices and higher interest rates due to insufficient ESG response

Impairment of brand value if response to social issues is inadequate

Loss of outstanding young personnel who strongly demand corporate social responsibility

Risk actualization of existing businesses due to changes in customer demands, tighter regulations, and policy changes

Increase in business costs due to actualization of risks related to social issues

  • Carbon tax burden
  • Rising food prices
  • Operating loss due to extreme weather
  • Increase in medical insurance
  • Shut-down of operation due to spread of infections

Reduction in operating profit by cutting medical costs

Decline in competitiveness due to delays in digitalization

  • DX-based business optimization
  • Development competition based on MI*

Materials informatics (MI): AI-based method to design new materials and explore alternative materials rapidly and efficiently.

Loss of competitiveness due to delayed efforts for a change in HR structure to meet changes in social structure

Loss of growth opportunities due to delays in portfolio reforms that solve social issues

Loss of new growth opportunities due to delays in business model reforms and technological innovations to form platforms

Loss of growth opportunities due to delayed globalization

Sustainable resource management
Sustainable food supply
Sustainable water supply and use
Realization of healthy and vibrant lives
Realization of safe and comfortable lives
Improvement of communications and digital processing technologies
Human resources and work styles
Reformation responding to structural changes Business portfolio that contributes to solving social issues
Transformation of business models (from goods to solutions)
Strengthening response to environmental and social impacts
Reforming systems related to people and work styles
Impact of risk
(Billions of yen)
Deterioration of balance sheet 160
Decline in the value of stock 230
Operating income loss 20 410 220

Social issues and business domains for the MCHC Group

Social issues Directions for contributions to solving issues Business domains
GHG reduction Contribute to climate change mitigation through GHG reduction and effective utilization GHG reduction (Energy/Mobility)
Resource management Realize a recycling-based society for materials Carbon cycle
Food and water supply Contribute to ensuring the stability of food and water supply Food and water supply
Healthy and vibrant lives Realize a society where people can enjoy healthy and vibrant lives Medical advances
Digital Contribute to building the infrastructure for a data society that realizes optimization at the social system level Digital society infrastructure
Safety Contribute to the realization of safe and comfortable lives Human interface
Human resources and work styles Provide workplaces where people who are enthusiastic about solving social issues can work with motivation [Human resources system reforms]

Selection of growth businesses as the pillars of the portfolio

We are building a business portfolio from a medium- to long-term perspective in order to achieve sustainable growth. When selecting growth businesses, we considered GHG emissions regulations, plastic recycling, and other regulations that affect our business areas. We analyzed market and technological trends between now and 2030, with an eye to 2050, and chose prospective solutions. Among these solutions, we narrowed them down to identify the growth businesses based on the following three criteria: market growth potential, room for technological innovation, and market size.

”Growth” businesses as the pillars of the portfolio for 2030: The following six were set as social issues requiring resolution and priority business areas by the MCHC Group: GHG reduction; Carbon cycle; Food and water supply; Medical advances; Digital society infrastructure; and Human interface.

Business model reformation through the improvement of solution levels and the advancement of innovation

Mitsubishi Chemical Holdings believes that it is necessary to make fundamental changes to our business models in order to expand growth businesses that will form the pillars of our business portfolio. Under KV30, we will reform our business models that provide high value-added solutions to meet the demands of society in addition to supplying products to meet customer needs. In other words, we will improve our solution levels and expand the scope of problem solving and optimization to the entire social system. The MCHC Group will increase the added value of its growth businesses and strengthen its earning power by improving solution levels and advancing innovation.

Diagram of business model reformation: Businesses are mapped in a diagram in which advancement of innovation (materials technology innovations, data accumulation, algorithms/architecture, open innovation, human resources) are presented on the vertical axis, and solution levels and healthcare solution levels are presented on the horizontal axis

Developing a business Sales revenue target for 2030 portfolio focused on growth businesses

The MCHC Group aims to increase the share of sales revenue from growth businesses from the current level of approximately 25% to over 70% by 2030 by boldly transforming the business portfolio to businesses focused on solving social issues.

Sales revenue target for 2030

Graph: Turning the amount of growth businesses from 3.9 trillion yen in 2018 to 6.0 trillion yen in 2030