Thank you very much for waiting. Now we'd like to start Daiichi Sankyo's ESG briefing. Thank you for joining out of your very busy schedule today. I'm Harada from Sustainability Promotion Department, Sustainability Management Group. I'm delighted to serve as MC today. Thank you very much for your time. Presenters today are Representative Director, President and CEO, Sunao Manabe. Director, Senior Executive Officer, Head of Corporate Planning and Management Division and CFO, Hiroyuki Okuzawa. On behalf of outside directors, Chairman of the Board, Noritaka Uji and Sawako Nohara are joining. From management side, Executive Officer and Head of Corporate Affairs Division, Hironobu Furuta, and Vice President of Sustainability Promotion Department, Masahiro Kato , are also attending.
In this meeting, Manabe will first explain the progress of ESG management. Okuzawa will explain our initiatives to improve non-financial value, which maintains our competitiveness. After the presentation for about 40 minutes, we will have time for Q&A. We are planning to finish at 5:00 P.M. JST. Manabe-san, please. Manabe speaking. Thank you very much for joining Daiichi Sankyo's second ESG briefing out of your very busy schedule. Today, I would like to explain the progress of ESG management, which we have promoted and reinforced towards the realization of our group's purpose and vision. Our group's purpose is to contribute to the enrichment of quality of life around the world. This is a common belief among our group employees. This is the origin for us. We believe that each one of us thinking about patients suffering from diseases and addressing various social issues with sincerity in our day-to-day business activities will lead to stakeholders' trust and confidence in our group.
To realize our 2030 vision of becoming an innovative global healthcare company contributing to the sustainable development of society, we are aiming to address the social issues such as creating innovative pharmaceuticals, etc., that we are expected by society to solve. We challenge ourselves to continuously provide innovative solutions based on our strengths, science and technology. First, let me explain the creation of innovative pharmaceuticals by harnessing our strengths in terms of science and technology. Science and technology is the most important in responding to the society's expectations on us and continuing to create innovative pharmaceuticals. This is the source of our competitiveness and one of our strengths. This slide shows important elements of science and technology, namely our human resources, corporate culture, and core technologies. We strive to maintain and enhance these three elements of science and technology with a long-term perspective.
Next, I would like to explain our value creation model underpinned by our strengths in science and technology. In order to respond to diverse requirements from society, we invest various capital, such as human capital and intellectual capital, to take a challenge on value creation in the entire value chain by using our strengths in science and technology. We have identified materiality, which are material issues based on both the level of importance for our group and expectations from society, and we are working on them through our business. We contribute to treatments for patients by providing pharmaceuticals responding to diverse medical needs, such as Enhertu, and provide social and economic value by reducing environmental footprint and leveraging diverse range of our people. Through co-creation of value with various stakeholders, we strive to enhance our competitiveness and contribute to the sustainable development of society.
On page 9, I will explain high priority topics in leveraging our human capital and intellectual capital, which are particularly important among the capital we invest. We think our human capital includes corporate culture that enables a diverse range of people to be highly engaged, and a diverse range of people who create our competitive advantage. As high priority topics to strengthen our human capital, we are actively hiring and training human resources according to our business strategy. Specifically, we have initiatives to hire and develop people necessary for the global rollout of oncology products, such as Enhertu and the promotion of DX. We are also promoting opportunities for new challenges and growth in the entire group by realizing common global evaluation systems and trans-regional career paths, for example. Our intellectual capital includes oncology and other pipelines, technologies and know-how for discovering and delivering new drugs, and accumulated pharmaceutical information.
As high priority topics to strengthen our intellectual capital, we are working to establish our unique ADC technology platform and expand diverse assets and pipeline by applying new modalities. Next, I will explain DX promotion initiatives. In the near future, are we expecting a society where new value is created by digital transformation and the creativity of various people? To realize a society that provides the best possible services tailored to each person, we are working on healthcare as a service by leveraging various data and advanced technologies. In order to solve issues for each one of the patients and people in society and realize their well-being, we have started to lead these initiatives with Google, ExaWizards , and Deloitte Tohmatsu Financial Advisory, etc.
Collaborate with other companies and organizations in the health and medical sectors, and build a total care ecosystem across health promotion, illness prevention, treatment, and prognosis care. We also will try to link scattered health and medical data to individuals and promote building a total care platform, enabling data distribution and utilization in collaboration with other companies. By leveraging the platform and the advanced data analytics we have developed by now, we aim to look at issues faced by patients and people in society, link them to new healthcare services, and enhance research and development of our modalities. We are working on this as a to-be status we try to realize under our 2030 vision in the society where healthcare as a service is desired.
To realize our 2030 vision, we have set 2030 DX Vision that is to contribute to the transformation of healthcare as an innovative global healthcare company by utilizing data and digital technologies. Okuzawa will explain DX promotion initiatives later. Here, I'm going to talk about the creation of a corporate culture and the development of human resources for DX promotion. We are working to improve data and digital literacy throughout the company and develop and acquire advanced data and digital human resources. We are also addressing cross-organizational, external collaboration, and the transformation of systems and processes for agile decision-making. Through these initiatives, we will promote the creation of a corporate culture capable of transformative thinking. I'd like to explain creating One DS Culture towards realizing our 2030 vision.
As I explained at the beginning, our 2030 vision is to become an innovative global healthcare company contributing to the sustainable development of society. Globalization for us is to deliver innovative pharmaceuticals and medical treatment solutions, such as Enhertu, to people around the world. In order to realize this, we must put into place an environment where all employees around the world with a diverse sense of value can play an active role and create One DS Culture, which is a unique corporate culture by putting to practice the globally shared core behaviors to realize our purpose and vision. As our core behaviors, we have selected be inclusive and embrace diversity, collaborate and trust, and develop and grow. Let me explain how these were selected. In December 2020, we implemented the culture diagnosis by our employees around the world. Respect for others and sincerity were raised as our strengths.
On the other hand, topics came to light, such as cultural inconsistencies between different regions and departments, inefficient handling of decision-making and actions, and insufficient focus on the development of human resources overseas, etc. We had rounds of discussions attended by executive management committee members and global leaders to discuss how we can leverage our strengths and create a culture to overcome the challenges. We concluded that penetrating the three core behaviors among all group employees will serve as the foundation to create One DS Culture. We have been promoting these initiatives as a global culture initiative since 2020. In FY 2021, as an initiative to introduce the transformation, we organized eight online workshops for about 200 global leaders so that they can serve as a role model to put core behaviors to practice.
We also held 13 town hall meetings with the CEO to raise awareness and enhance penetration of One DS Culture among group employees. From FY 2022, we have been working on this as a stage to make transformation possible for further penetration among all employees. I'd like to continue to the explanation of co-creating value with stakeholders. Our group hopes to be a company that earns the trust of society through proactive dialogue with our stakeholders, including patients, and through engagement that recognizes the demands and expectations of society and responds to them through our business activities.
This slide shows how we reflected the matters derived from the dialogue with our stakeholders in our materiality in FY 2021. We will continue our efforts to co-create value with our stakeholders toward the realization of 2030 vision. In this slide, I'd like to explain our efforts to contribute to patients through our patient-centric mindset as a value co-creation with our stakeholders. As stated in our purpose, we are committed to corporate activities with patients in mind. For example, we have developed and improved drug formulations based on patient feedback and promoted information provision activities from the patient's perspective.
In the future, we believe it is important to further foster a patient-centric mindset that places the patient at the center in order to deliver therapeutic drugs to patients in an appropriate manner. We will strengthen these activities through the value chain and globally. This slide shows our initiatives in drug discovery and clinical development, as well as in sales, information generation, and information provision with regard to value co-creation with patients. We aim to enhance the value of medicines through COMPASS, an initiative for patient-oriented drug discovery, patient advocacy activities to solve problems from the standpoint of patients in terms of policies and systems and patient engagement lectures for employees.
Next, I'd like to explain about medical access. In order to bring the group's mainstay product, Enhertu, to patients as quickly as possible, we have been working to expand the indications. Since its launch in the US, we have accelerated market penetration in Japan, the U.S., and Europe, as well as work toward early launch outside of Japan, the U.S., and Europe. As of the end of September 2022, the total number of countries and regions has expanded to 30. As a result, access to patients has improved, and the number of patients served has increased to approximately 13,000 as of the end of September 2022. We're also working with AstraZeneca, with whom we have a strategic alliance, to further expand access. In the field of oncology, where many people still suffer, we will continue our activities to deliver new therapeutic agents to patients and medical facilities as soon as possible.
We're also promoting initiatives for patients who have limited access to medicines due to various other factors. In November last year, the efficacy and safety of DS-5670, which is based on our proprietary messenger RNA technology, were confirmed in clinical trials for a booster shot, and an application for approval was submitted in Japan in January this year. We are also planning to conduct clinical trials of DS-5670 vaccine for Omicron strain and will strive to strengthen our domestic vaccine development and production system. As for our contribution to global health, we are working to resolve issues such as under-development of medical infrastructure, development of healthcare human resources, and awareness-raising among patients. In recent years, non-communicable diseases have been increasing in low and middle-income countries. In Nepal and other countries, we are working with NGOs to improve access to healthcare in projects related to the oncology area.
In addition, to promote drug discovery to conquer infectious diseases in developing countries, we have contributed funds to the GHIT Fund, which was established in 2013 as a Japan-originated public-private partnership, and have participated in the Access Accelerated initiative, which was established in 2017 to improve prevention, diagnosis, and treatment of non-communicable diseases in low and middle-income countries. I will now continue with an explanation of our initiatives to reduce environmental impact. In order to proactively respond to the growing social demand for carbon neutrality, we have changed our CO2 emissions target to a more aggressive 42% reduction in FY 2025 and 63% reduction in FY 2030 compared to FY 2015, consistent with the 1.5 degree Celsius target.
Therefore, we have also raised our renewable electricity utilization rate target for FY 2025 to 60% or more, and we aim to achieve the 100% target set in RE100 as early as possible in FY 2030. For Scope 3, we plan to request our business partners to set SBT level targets as engagement targets. Starting with the operation of solar power generation at the Pfaffenhofen plant in Germany, we have converted electricity at 13 sites in Japan, including the head office building, to renewable energy from April 2022. In addition, Daiichi Sankyo Brazil has started a reforestation project by planting 4,000 trees in cooperation with an NGO.
The Shanghai plant in China is also planning to start solar power generation by the end of FY 2022. In order to further reduce our environmental impact, it is important for us to work in partnership with the local community and the pharmaceutical industry rather than to carry it out on our own. In cooperation with TerraCycle Japan and the city of Yokohama, Daiichi Sankyo Healthcare has launched the first demonstration experiment of the drug sheet recycle program in Japan. This program aims to contribute to the circular economy by collecting not only our products, but also other prescription and OTC drugs medicine sheets, and raising awareness of them as a recyclable resource. I will continue with an explanation of the promotion of ESG management through materiality management.
The left side of this slide shows the eight materialities that we have identified as mid and long-term issues to be addressed in FY 2021. The right side of this slide shows the management cycle throughout the year. Through the disclosure of information on efforts to meet KPI targets, new issues are identified based on constructive dialogue with stakeholders and ESG assessment results, and materiality is identified, evolved, and KPIs are set after discussion and approval by the board of directors and management committee. The following are the major FY 2021 results and FY 2022 additions and changes to the materiality. In FY 2021, our efforts to achieve KPI targets up to FY 2025 were generally in line with plans.
For FY 2022, as additions and changes to KPIs, we revised KPI target values based on domestic and international situations and trends related to climate change measures. In addition, in response to the trend toward legalization of human rights in various countries, increasing social demands, and the results of ESG assessments, we have newly set improvement of human rights initiatives through promotion of human rights due diligence as an issue, added KPI items and KPI target values by FY 2025, and strengthened our initiatives. Last but not least, ESG management promoted by our group is management from a long-term perspective that enhances both financial and non-financial value by reflecting ESG factors in management strategies.
We will realize our purpose and 2030 vision through our materiality efforts by challenging the demands and expectations of society in pursuit of the group's business growth throughout the value chain using science and technology, which is our strength. We consider the exchange of opinions with all of you attending today to be a very valuable opportunity, and we would like to deepen the discussion by receiving your frank opinions and suggestions later on.
I'll hand it over to Mr. Okuzawa. Mr. Okuzawa, you have the floor.
I'd like to explain our initiatives to improve non-financial value, which maintains our competitiveness. I hope this meeting will serve as an opportunity to receive insights and opinions from you investors and deepen our understanding. As CEO Manabe also explained, ESG management in our group is management from a long-term perspective to enhance both financial and non-financial value by incorporating ESG factors into its management strategy. Our current market capitalization based on the closing price yesterday is about JPY 8 trillion. As of the end of September, the market capitalization was JPY 7.8 trillion, and the capital on our balance sheet was JPY 1.4 trillion. PBR was 5.4x . We believe value which does not appear on a balance sheet is getting higher, and pipeline value, ESG value, et cetera, is being evaluated highly as a non-financial value.
This non-financial value is as a result of the market evaluation of our non-financial capital investments in order to achieve future vision and meet to long-term plans. We think this will be reflected onto financial capital, such as an increase in our revenue and profit and a reduction of capital costs into the future. We will continue and strengthen our investments into non-financial capital, manage these results through materiality management and business performance management, and enhance our corporate value. Next, let me explain our investment into non-financial capital. To enhance our pipelines, maintain and strengthen our science and technology and global business foundation, we are increasing our investment in R&D, manufactured capital, human capital, and DX, while improving investment capital efficiency, such as shifting to a profit structure based on new drugs, optimizing the cost of sales and expenses, and reducing non-core assets.
During the fifth five-year business plan period, out of the JPY 2.8 trillion expected as a source of investment, we are allocating JPY 1.5 trillion as investments for growth, particularly to R&D expenditure, especially for the three ADCs, and about JPY 500 billion to capital expenditure. The ratio of R&D cost to sales was 24.9% in FY 2021. The level of investments has been higher than the industry average since the establishment of Daiichi Sankyo in 2005. As it takes more than 10 years to create new drugs, it is important to make continuous investments to develop specialized human resources, secure core technologies and advance R&D from a long-term perspective.
We can say, as a result, we have been able to develop our strength in science and technology as a source of innovation and generate the current pipeline value. In order to enhance the pipelines, which can continuously generate a cash flow, we'd like to see the balance between revenue and profit and secure investments in R&D. As for investment in manufactured capital, as is set as a materiality KPI, we are addressing increased demand for the three ADCs, including Enhertu, and the development progress of DXd ADCs. We are reinforcing our investments in our own production facilities in Japan and abroad, as well as external CMOs, to establish a strong global supply chain for FY 2026 and beyond. Human capital and DX investments will be explained later in my presentation. We think original capital can be formed and built through these investments.
This page shows how our investments into non-financial capital and ESG initiatives, et cetera, which we explained earlier, will lead to corporate value improvement. We aim to achieve stable profit through a value creation model that utilizes our original capital formed and built through investments into non-financial capital. On the other hand, we will also strive to improve invested capital efficiency and improve ROE by shifting to a profit structure based on new drugs. From the capital cost perspective, we will pursue ESG initiatives, including the environment and human rights, strengthening risk management, gaining trust, and improving our external ESG evaluation, which will contribute to reducing the capital cost. On the other hand, ESG initiatives and business strategy, in line with patient centricity, will also lead to improving our profit.
We will aim for sustainable corporate value improvement by working on the three elements: improving our ROE, reducing the capital cost, and achieving DOE, which exceeds the cost of equity. Next, I will use two pages to explain how capital is enhanced through capital circulation in a value creation process based on the relationship with materiality. Capital invested in our value creation process creates outputs, such as the creation and provision of pharmaceuticals through our business model. The outputs through these corporate activities will cyclically impact the capital, et cetera, as outcome according to the basic concept of the IIRC's framework. We have followed the concept to classify the created outcomes into internal and external outcomes, as is shown on this page. This page explains what kind of non-financial capital enhancement materiality initiatives in our value creation process are linked to. We recognize capital to be enhanced by materiality.
At the same time, try to understand the causality, ensure investment into non-financial capital, and promote on initiatives. Single circle in the table means capital directly related to materiality initiatives. Double circle indicates capital that has a high degree of impact on our corporate value because it helps to shape our strength in terms of a value creation model or is in line with a strategy for achieving our vision and five-year business plan. As you can see, creating innovative pharmaceuticals, providing a stable supply of top quality pharmaceutical products, and providing the highest quality medical information are deeply related to enhancing both intellectual capital and human capital. As for governance, we believe it's linked to enhancing all capital from the perspective of supervising materiality on business and materiality on business foundations as a whole.
From here on, I'd like to explain our human capital. We consider our people to be our most important asset, and we respect the diversity of each employee as we promote the development and active participation of human resources with the aim of achieving the sustainable growth of both employees and our company. For a group's value creation model to function, we believe that human capital is the most important indispensable capital. This page shows two major challenges for realizing materiality, key themes, and specific measures to enhance our human capital. Today, I will focus on the blue portions, explaining major measures to enhance our human capital for globalization. To create a work environment where a diverse range of talents are highly engaged and can maximize their potential, we regard as key themes opportunities for new challenges and growth, and increasing engagement.
We are working to establish systems and infrastructure at the global level, foster culture through core behaviors, conduct engagement, et cetera. In doing global business focusing on oncology, it's urgently necessary to shift from a regionally optimized organization to a globally optimized structure. It's essential to put into place common global HR platform and systems for global alignment of business targets and required behaviors, as well as human resource evaluation framework as a basis. As our group is aiming to be true One DS, in order to establish the operating foundation to support our business globally with regards to various HR systems in operation by each region, we plan to introduce the common global evaluation and grading system in phases starting in FY 2023 to unify the system to a certain degree.
By having a common global infrastructure, we aim to realize trans-regional career paths, create opportunities for employees to take challenges and grow, and realize human resource portfolio in line with our business strategy. By introducing global work style rules, we can enhance the sustainability of our global collaboration and create an environment where employees can continue to work vigorously and productively. As for the second challenge of acquisition and training of talents to enhance our business competitiveness, we are actively hiring and training human resources according to our business strategy and working on the penetration of global R&D. Specifically, in less than three years from April 2020, as highly specialized professionals to support our science and technology, we hired about 730 science talent and about 230 DX talents globally as a whole.
We are strongly promoting the acquisition of highly specialized professionals on a global basis. We plan to gradually introduce global leader development measures from next fiscal year in order to strengthen the development of talent who can be leaders playing an active role globally. In this way, we try to leverage diverse talent and environments to create our competitive advantages as a strength. We will aim for further value creation through the measures to further enhance our human capital. Next, let me explain our DX promotion initiatives.
As one of the foundations supporting the four strategic pillars of the five-year business plan, our group is promoting DX initiatives, has established a DX vision for 2030, and is making company-wide efforts for digital transformation. The slide you are looking at summarizes our typical DX promotion initiatives. Today, I will explain in detail about realizing data-driven management, transforming our company with advanced digital technology, and transforming our company by developing an IT platform. First, let me explain the foundation of realizing data-driven management. Data is an important asset that generates competitiveness. We view data as a valuable strategic asset for our group and actively utilize various types of data. Until now, in the reutilization of data has been fragmented by system, which has led to challenges in processing and analysis.
To solve this problem, we built the Integrated Data Analytics Platform, IDAP, which centralizes data collected for different purposes and in different areas, both inside and outside the company, and processes and analyzes the data according to its intended use to create outputs. As an initiative using IDAP, we have realized a proper use monitoring system that proactively realizes risk minimization, the cornerstone of safety measures by integrating the vast amount of safety information collected from various sources after a drug is marketed. In addition, we aim to generate new evidence through the utilization of real-world data, which is medical big data, to provide new medical treatments to patients as early as possible and to expand the value of our products.
N ext, I will discuss Project D, Daiichi Sankyo Data-Driven Decision Making, which is designed to build optimal business processes and systems. One of the missions of Project 4D is to realize rapid and accurate decision-making based on integrated data and analysis. We will revamp the management dashboard that supports this, as well as the core business system ERP, which focuses on financial planning and supply chain. By standardizing business process globally and building an organizational structure according through ERP renewal, we will be able to monitor activities and resource reallocation through more sophisticated and flexible budget and performance management, and achieve more sophisticated management of supply and demand of cancer products. We aim to realize business transformation triggered by ERP and build a solid management foundation to support our strategy to become an advanced global healthcare company.
In order to respond flexibly to a business environment that will continue to change significantly in the future, we will proactively utilize advanced digital technologies to strengthen innovation while accelerating decision-making and enhancing business sophistication through the development of a global IT infrastructure. In drug discovery activities, we will evolve the activities, including discovery of new technologies by making full use of data, AI, robotics, et cetera, and pursue the possibilities of new drugs that will reform the existing standard of care. As a company-wide initiative, we will improve the efficiency of existing operations through image AI analysis. We're also promoting operational reform and improvement by visualizing business processes to uncover the seeds of operational reform throughout the company and promoting the automation of operations through the use of RPA and other tools.
I'll explain how to achieve sustainable growth in corporate value. The movement toward institutionalization of non-financial information disclosure is gaining momentum at the global level. In preparation for disclosure in line with guidelines such as TCFD and ISSB, which we consider important, and furthermore, for disclosure based on CSRD in Europe, we will strengthen the information collection structure within the group to ensure reliability in information. Global sustainability issues such as human rights and climate change are becoming increasingly important in corporate management. We will enhance non-financial information disclosure to ensure transparency in our corporate activities and will make the most of this information in our dialogues with stakeholders.
We have been disclosing information in line with TCFD disclosure framework in 2020. We have reviewed our disclosures in line with the 2021 revision, as well as conducted a scenario analysis to identify risks and opportunities that may affect our business in the future and examined our resilience. With regard to transition risk, we believe that the financial impact of the carbon tax, et cetera, will be limited considering the scale of our CO2 emissions. In addition to our ongoing shift to renewable energy, we will seek to achieve KPIs related to CO2 emission reductions by asking our business partners to take decarbonization measures by setting CO2 emission reduction targets at the level of the 1.5 degree Celsius target, thereby making the financial impact more negligible.
Regarding physical risks, the manifestation of weather-related disasters, such as river flooding caused by heavy rains, raises concerns about the stable supply of pharmaceutical products. To enhance our resilience against flooding, we are developing a water disaster manual at our production sites and promoting disaster mitigation measures. Specifically, we are planning to invest approximately JPY 200 million at the Tatebayashi plant to prepare for a possible flooding of the Tone River. In addition to raising the level of sustainable facilities, we have already taken steps to prevent flooding of buildings and plan to move other important facilities to higher locations in sequence.
As the risk management officer, I will also promote ESG management from a long-term perspective, keeping abreast of the risks and financial impact on our business activities, such as weather disasters associated with climate change and the impact of cost burdens due to tighter regulations. This will be the last slide. Today, I have explained our efforts to enhance non-financial value, which sustains our competitiveness, focusing on our investments and initiatives in non-financial capital. In addition to financial capital, non-financial capital, including human resources, is an important source of corporate value for our company, and the value of this capital is truly non-financial value, an invisible asset that is not shown in financial statements.
While taking a long-term perspective and strengthening investments and initiatives in non-financial capital, I, as the CFO, would like to contribute to corporate management that leads to sustainable enhancement of corporate value from the perspective of improving capital efficiency and optimal allocation of management resources. We will continue to promote ESG management from a long-term perspective and work to improve ROE, reduce the cost of capital, and achieve DOE that exceeds shareholder cost with the aim of achieving sustainable corporate value enhancement. That concludes my presentation.
Now we are moving on to Q&A session. First, Mr. Muraoka from Morgan Stanley Securities, please.
Hello, Muraoka from Morgan Stanley speaking. Can you hear me?
Yes, we can hear you. Thank you.
I have a question. On page 15, about One DS Culture. During the presentation, you mentioned there were cultural inconsistencies between different regions and departments. What kind of inconsistencies were seen between different regions and departments? How much have you been able to improve or change by now? Could you share episodes or topics if possible?
Thank you for your question. First, I'd like to respond. Head of Corporate Affairs Division, Furuta, may make additional comments later, if any. I'm sure you can understand that there are cultural differences among different regions. Among Japan, U.S., and our ASCA region, Asia and Europe, there are differences, which I think is understandable. Among different departments, for example, decision-making and ways of thinking by salespeople are greatly different from those by R&D people. When we had internal discussions, we discussed how to think about globalization. For globalization, we may decide to use English as our official language. For example, for salespeople in Japan, they think their communication skills have already been established. There is a question whether they need English as a first language in such an environment. There are different ways of thinking about globalization. On the other hand, for R&D people, they think it's essential in rolling out products globally.
It was quite difficult initially to align on this point, according to my understanding. As I explained today, globalization for Daiichi Sankyo is to deliver innovations created by Daiichi Sankyo to people around the world globally. We'd like to strive for such a situation. In that process, there are various measures, strategies, and methodologies. One of them may be where to locate the head office function, for example. We may decide to use English as the first official language at certain group companies. These are the means and not what we are aiming to achieve in the first place, as I emphasized a lot. We have tried to align on what we aim for and have had these discussions, so I think that's the most significant point in my view.
Mr. Furuta, do you have any specific additional comments?
Thank you for the question. Furuta speaking. I am the Head of Corporate Affairs Division. Manabe has already made comments, but I will also comment without going into too much detail. First, as is generally said, there are differences in wording to be used, and meeting methodologies, and decision-making methods such as ringi and kessai approval processes are very cumbersome. Such inefficient work and procedures were one of the topics mentioned. On the other hand, relations of trust among employees, finding the job worth doing, expectations for the future, were identified commonly as our advantages according to the survey results.
That's all from me. Understood. Thank you. I misunderstood that there might have been grave inconsistencies specific to your company. What you mentioned is something often seen with Japanese companies, although it may be at different levels at different companies, as I heard. Is my understanding correct? Am I not missing the point?
Right. We didn't identify any major issues.
Understood. Thank you. One more question. Regarding your investment of JPY 500 billion as part of the midterm business plan, I think you also mentioned in your presentation investment in external CMOs. I might have heard this before, but what are you doing specifically? Not just outsourcing, but are you doing something as the word investment suggests?
Thank you for your question. Regarding the production of our products, including the three ADCs, of course, we are using our own in-house facilities and plants. As you know, we are also using external CMOs. In our contracts with them, so that they can do the work for the future production of Daiichi Sankyo's ADCs, we are making investments to a certain degree so that they can move forward as part of the contract. That's why I use such an expression.
Understood. JPY 500 billion includes such investment and CapEx on P&L, correct?
Yes, you are right.
Understood. That's all from me. Thank you very much.
Now I'd like to proceed to the next one. Mr. Hyogo, please go ahead.
This is Hyogo from Mitsubishi UFJ Trust & Banking. Thank you very much for your presentation today. I feel that the content has become very rich and very easy to understand as the presentations have been made each time. The question I would like to ask is, I think you have added a little more to the materiality part this time. If I may ask, what role did people outside the company actually play in this process? In other words, did the executive side list the items, and did people outside the company authorize them? Did they look at them and advise them that they should be more watchful on certain issues? My main point is that I'd like to know how the outside directors were involved from a sustainability governance perspective.
That is my first question.
Yes, thank you very much. At the start of the five-year business plan, as I explained today, you have listed a variety of items on the two axes of ESG management. What is important for the company itself and what is expected of Daiichi Sankyo from an external perspective? In the first draft stage, after defining what items will be included in the list, we asked the outside directors what they thought might be missing here or what they thought might be more important from an outside perspective, for example. From the beginning, we have received a variety of opinions when we were drafting the materiality.
May I add something here as an outside director?
Yes, please.
Okay. The major flow has been-- Well, I'm Uji, an outside director. I'm also chairman. As CEO Manabe just mentioned, along with the fact that materiality in the five-year business plan is extremely important for an external perspective, it is also extremely important to know what KPIs to use for materiality and how to show them to the outside world. We have had those discussions as well. In that sense, we have also discussed what we think about the KPI of female executives, for example, in the current materiality list, and whether it should be higher. Various KPIs have been considered, one of the comments from an outside board member, for example, was the company should give a more patient-oriented view of what kind of contribution they are making to patients.
Having said that, KPIs are also important in terms of scenarios for how well they can be achieved and whether or not data can be properly collected. These issues have been discussed with great enthusiasm by the executive team. In any case, in general, the management and board members have interacted considerably. We have also had special meetings outside the board meetings to discuss issues other than those on the board agenda. We hope you will understand that we do these things as well. That's all.
Thank you. Another question I have, concerns non-financial value, including human investment. In fact, can you tell us how you plan to quantitatively measure the effectiveness of, say, human investment in the future? Recently, there have been many examples of other companies using Impact-Weighted Accounting and analyzing the relationship with PBR over a long period of time. I'd like to know how you would like to measure the effectiveness. That's all.
Sure. Thank you for your very valuable question. Our CFO, Okuzawa, will answer this question.
Yes, thank you very much. I believe that your point is precisely one of the most important points for our future initiatives. That is, what value and relevance do business strategies and financial statements have to the expansion of HR capital and HR strategies? There is a term called an impact path. We have the idea of organizing such specific values and relevance in the future and actually verifying the effects of the current HR policy, HR functions, and system enhancements. Based on the results of such verification, we would like to develop a roadmap for future HR reforms. We also have a plan to further brush up measures to expand human capital as needed. I also believe that this is a difficult initiative. In addition to the availability of data, even if data is available, there is the issue of its reliability.
We would like to include these and other issues as one of the priority issues to be addressed in the next fiscal year and beyond.
Thank you so much for your very detailed explanation. I am looking forward to it, and thank you in advance. That is all for my questions. Thank you.
Yes, thank you. Thank you.
Next, Mr. Hashiguchi from Daiwa Securities, please.
Hashiguchi from Daiwa Securities. Thank you for your time. Thank you. Thank you. You took time to explain a lot, but I apologize for my poor understanding. I listened to your presentation today by checking the notes I took during the previous ESG briefing held in November 2021. I think the wording and expressions have changed, and the presentations in graphs and figures have changed in many cases. In terms of the contents, I didn't have a clear understanding of the changes to your way of thinking or changes to the details of your initiatives and new additions you are making. Of course, just 14 months have passed since the previous briefing, so I understand that it would be strange to see a drastic change in corporate strategies and corporate behaviors.
I wonder where I can find your recent new initiatives and new ideas. If none, that's fine. Could you explain this point, please?
In the five-year business plan, materiality itself, which I explained earlier, has not changed in essence. We set KPIs for the materiality and we are working on them. I think we reported that progress today. With regards to how to consider and enhance non-financial value, we had deeper discussions than before, and we are feeling more convinced. At the time of the previous briefing, we did use the terms financial and non-financial value, but there were slightly different views among us. This time, we have been able to reach alignment. In the presentation, we had a separate section on initiatives to improve non-financial value, which maintains our competitiveness.
In other words, at the time of the previous briefing, it was somewhat ambiguous, and all people may not have felt fully convinced. By having rounds of discussions, you have made progress in turning this into words. The overall direction has not changed, but internal initiatives are becoming more concrete. Is my understanding correct? Yes. Anything to add from CFO Okuzawa?
If I may add, as a way to present, I think I emphasized governance in particular out of ESG during the previous briefing, but this time we try to explain not only governance, but also elaborate on social and IIRC's integrated model in particular. Non-financial capital, which we think is important for us, particularly intellectual capital and human capital, are strongly linked to our strength, science and technology. Over time, non-financial capital value will also be reflected onto financial capital value in the long term.
We wanted to emphasize these points in our explanation. We organized this briefing session with such an intention.
Thank you. I'd also like to ask a question about your thinking behind setting materiality KPI target values. This time, you revised KPI targets for environment-related CO2 emission reduction and renewable electricity utilization rate. Could you please elaborate on this background?
I assume other KPI targets will also be revised in the future. I'd like to know the background for the revisions this time as a case study. According to the explanation earlier, I understood that you placed importance on requirements from outside. In terms of the level of the hurdle to clear, if you can achieve the target without making so much effort, the target is too low. If it's not feasible, the target is too high.
If you make efforts and then manage to achieve the target, that would be the right level in my view. Upward revisions became possible, how to address what kind of issues to achieve the new targets. I'd like to hear your comments on the appropriateness of the target values.
Kato, Vice President of Sustainability Promotion Department, is going to respond.
Katou from Sustainability Promotion Department speaking. About the changes to the target values. As for the upward revision of the target value for CO2 emission reduction, along with the carbon neutrality declaration by the Japanese government two years ago, we wanted to raise our target above that level, and we started to work on this. Initially, our target was to achieve 25% reduction by FY 2025 compared to FY 2015.
This time, we raised our target to 42% reduction by FY 2025 and 63% reduction by FY 2030. In terms of the prospect for achieving these targets, we'd like to actively utilize renewable energy, and we have increased the feasibility by shifting to renewable energy at 13 locations in Japan this year. In FY 2030, we will introduce renewable energy close to 100% also at overseas subsidiaries, in addition to Japan. We can raise the level to something close to 63%. As for the shortage, we will shift to electric vehicles and the electrification of boilers, which have quite a big proportion and fuel energy. We will watch technology innovations and adopt what we can implement. With regards to Scope 3, how we address Scope 3, which accounts for a big proportion among the questions from ESG rating agencies, et cetera.
At our company, Scope 3 emissions are bigger than Scope 1 and 2. We will address this area, which will contribute to the reduction of CO2 emissions in society at large. Our target is to address the 1.5 degree goal in Scope 1 and 2. We have decided to ask operations with bigger procurement volumes to work on targets at a similar level. That's all from me.
Thank you very much. There seems to be no more question. We are closing this ESG briefing a little earlier than originally scheduled. We have a request to you. Please respond to our questionnaire survey. We appreciate your candid opinion and feedback. Thank you once again for joining today. Thank you very much.