Responding to Water Risks and Opportunities

The CITIZEN Group promotes the sustainable use of water resources at all of its production bases in Japan and overseas by reducing water consumption through the introduction of high-efficiency equipment and the promotion of water recycling, as well as by making factory wastewater cleaner through strict wastewater management. We are also working to reduce water risk by setting detailed goals for each site.

Water-Related Risks and Opportunities

1. * From the WRI Aqueduct assessment as of June 2022
2. * Data for each region (%): Percentage of water intake in each region of The CITIZEN Group
3. * The levels of overall water risk display the degree of the highest risk areas within the sites in the country.

Operating in Areas of High Water Risk

Alongside climate change-related risks and opportunities, water-related risks and opportunities have been identified and integrated into the Company-wide risk management system. The risks are also included in the Sustainability Committee’s agenda, which identifies risks as per the ISO 14001 framework. Across the subsequent three to five years, we use the WRI Aqueduct to regularly review our annual water-related risks and opportunities. The results of the WRI Aqueduct Assessments and local site information have revealed that four CITIZEN Group have production site factories in Thailand and one in China are in high-water-risk areas. To establish this, we focused not only on water stress, an indicator of the risk of freshwater shortage in the watershed but also on indicators related to wastewater quality, which can affect local ecosystems. We then introduced a wastewater quality improvement target to our Environmental Target 2030. Going forward, we will enhance our assessment of water-related risks at production sites and consider setting targets tailored to the risks identified. Additionally, water-related risks, such as flooding and water shortages caused by extreme weather, can significantly affect the value chain, including direct operations and parts procurement. This can, in turn, reduce the Company’s profitability. No water-related opportunities that could have a direct and substantial impact on the business were identified for The CITIZEN Group, and no flood risks were identified. In addition to an assessment of drought risk, in FY2023, we will conduct regional surveys on water pollution, including water contamination, and take detailed action to identify and reduce risks. We will also enhance our supplier surveys and ask our suppliers to carry out water-risk-reduction activities.

We engage in close communication with local industrial park management and government agencies to ensure our water-related risk information remains up-to-date. Moreover, when developing projects or building factories, we identify and evaluate any water-related risks and opportunities. However, in FY2022, no projects underwent this process.

Efforts to Respond to Water Risks

To promote sustainable use of water resources in response to water supply risks, The CITIZEN Group is making improvements by setting a reduction target for water intake. In addition, to respond to regulatory risks such as water-related laws and regulations and to ensure clean factory wastewater, we monitor the quality of wastewater discharged from wastewater treatment facilities and have set our own standards for wastewater management that are stricter than the legal limits. At factories in industrial parks that have standards that are stricter than the legal limits, we have set our own effluent standard values after consultation with the industrial park administrator.

In FY2022, there were no significant violations of water-related laws and regulations, no penalties or fines, and no water-related adverse impacts.

The manufacture of semiconductors requires significant volumes of water during the dicing process (i.e. when chips are cut from silicon wafers). CITIZEN ELECTRONICS has adopted a system whereby wastewater is collected from the dicing equipment, filtered, and resupplied to support the dicing process. This system optimizes the use of limited water resources by reducing water consumption by as much as 1,104,902 liters per unit annually.

Trends in The CITIZEN Group's Water Withdrawal

Under The CITIZEN Group Environmental Target 2030, we have set a target of a significant reduction of 35% in water intake compared to FY2018, and are promoting activities to conserve water resources.

In FY2021, domestic water intake was 1,219,000㎥ and overseas water intake was 563,000㎥, for a total intake of 1,782,000㎥. As the result, we achieved a 12% reduction compared to the FY2018 level, which was the target for water intake in FY2022. The water intake was 33% groundwater, 38% tap water, and 20% industrial water. To realize the "sustainable factory" concept, which takes water risks in all manufacturing processes into account, we will introduce water-saving and high-efficiency equipment, recycle water, and further reduce water intake and wastewater discharge in FY2023 and beyond.