2026.6.23
Turning Environmental Value into Growth- Daiseki’s Circular Business Model and the Source of Its Competitive Advantage
We spotlight Daiseki Co., Ltd. — providing an overview of the company and an account of Cadira's engagement activities.
History of Daiseki
Daiseki traces its roots to a small metal parts processing business founded in Nagoya in 1938 by the late Haruo Ito. The company pivoted to oil and fat refining in 1945, and in 1958 was formally incorporated as Daido Sekiyu Kagaku Kogyo Co., Ltd., a name inspired by "Daido-cho," the district in Nagoya where it was based. The company initially manufactured lubricating oils, but as industrial pollution intensified during the rapid industrialisation of the 1960s, it began recycling used lubricants. In 1972, it obtained a licence as an industrial waste processor in Nagoya, positioning recycling as its core business. It subsequently expanded its scope to cover liquid waste more broadly, serving a diverse customer base and extending its operational footprint nationwide. The company was renamed Daiseki in 1984 and has since grown to encompass soil remediation, lead battery recycling, and other adjacent areas.
Daiseki's Business Model
Daiseki collects liquid waste and sludge from client facilities and processes it for resource recovery at its own plants. Prior to accepting any waste, the company collects samples and conducts in-house analysis to confirm recyclability before committing to treatment. As a result, virtually all incoming material — aside from residual waste — is repurposed, giving the company a recycling rate(*1) of approximately 90%, an exceptionally high figure for a waste processing operator.
Daiseki's revenue is primarily derived from processing fees charged when collecting waste, supplemented by sales of recycled products. Revenue from recycled fuel accounted for 11.7% of total sales in the fiscal year ending February 2026. Materials that cannot be used as recycled fuel are transferred to cement manufacturers as raw material inputs, with Daiseki paying for their disposal. For substances that are otherwise difficult to handle — such as heavy metals — this approach makes practical sense: the high temperatures involved in the cement manufacturing process render such materials harmless, making paid disposal a rational solution from both an environmental and business continuity standpoint.
Daiseki's Environmental Contribution
Daiseki's environmental contribution can be understood from two perspectives. The first is the advancement of recycling. As noted above, the company recycles approximately 90% of the waste it accepts, and through ongoing research and development it continues to expand the range of materials it can process — enabling growth while maintaining a high recycling rate. What began as a focus solely on waste oil has broadened through technological advancement to include alkaline and acidic liquid waste, soil, lead batteries, and plasterboard. More recently, the company has been extending its recycling capabilities to cover plastics and gaseous substances such as ammonia.
The second contribution lies in CO2 emissions reduction. According to the company's own disclosures, Daiseki contributed to a reduction of 643,000 tonnes of CO2 emissions(*2) in the fiscal year ending February 2025. For client companies, engaging Daiseki offers the benefit of reducing Scope 3 Category 5 emissions — those associated with the transport and treatment of waste generated through business operations. Notably, the 643,000-tonne figure is substantially larger than Daiseki's own emissions footprint (Scope 1 and 2: 36,000 tonnes; Scope 3: 173,000 tonnes, for the fiscal year ending February 2025), underscoring the scale of the company's positive environmental impact through its core business activities.
Cadira's Engagement
With the aim of deepening its understanding of Daiseki's business, Cadira visited the company's Nagoya headquarters in April 2026 and conducted a tour of the adjacent processing facility. The visit was hosted by President Yamamoto, who provided a comprehensive walkthrough of the entire workflow — from waste intake through to resource recovery — set against the backdrop of the company's history and organisational culture. The visit offered valuable insight into the strategic foundations of Daiseki's stable growth, including the competitive strength derived from its accumulated processing expertise and purpose-built facilities, as well as its risk management approach through diversification across customer industries. President Yamamoto also provided detailed commentary on the company's approach to investor dialogue, leaving a strong impression of a management team that places genuine value on engagement.
Daiseki expressed keen interest in Cadira's identity as a sustainability-oriented investor, and during the meeting President Yamamoto invited Cadira's views on best practices in IR. Cadira noted that the historically grounded explanation of management philosophy — rooted in the company's founding story — had been particularly valuable in conveying the essence of the business, and suggested that this narrative be incorporated into future disclosure materials. Cadira also conveyed its expectation that the company enhance the clarity of its reporting on business outcomes, including non-financial information.
Daiseki's commitment to stable growth alongside environmental contribution aligns closely with the management qualities Cadira seeks in its investee companies. We intend to continue monitoring the company's business progress and supporting it through ongoing dialogue.
A photo taken with the founder's statue and the management philosophy in the background.
From the right: Daiseki President Yamamoto, Matsushita (Cadira), Shimizu (Cadira), and Mr. Hayakawa (Daiseki).
(*1)Recycling rate = (Waste received − Intermediate processing residue) ÷ Waste received
(*2)CO2 reduction contribution from Daiseki Group's recycling operations (CO2 reduction contribution outside Scope 1, 2, and 3)
https://www.daiseki.co.jp/sustainability/environment/carbon.html#haisyutu
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