Climate Change Data

Environmental Metrics

ESG Focus Areas

• Child Abuse Prevention (Orange Ribbon Movement)

Social Achievements

• Supported the Orange Ribbon Movement through various initiatives including donations, awareness campaigns, and employee volunteer activities.

Governance Achievements

• Implemented a revised shareholder reward program that includes the option to donate to the Orange Ribbon Movement.

Climate Goals & Targets

Environmental Challenges

• Decreased customer purchasing power for high-value items due to stock market fluctuations.
• Reduced store operating hours due to severe weather conditions (snow and cold waves).

Mitigation Strategies

• Continued store renovations and layout changes to improve sales.
• Strengthened marketing and promotion of original brands and e-commerce.

Supply Chain Management

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• SDG 16: Peace, Justice and Strong Institutions

Support for the Orange Ribbon Movement contributes to SDG 16 by promoting peace and justice through the prevention of child abuse.

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Introduced ethical jewelry and plans to introduce fair-trade leather products.

Social Achievements

• Employee satisfaction survey showed 70% of respondents were satisfied or somewhat satisfied with their work.

Governance Achievements

• Strengthening risk response capabilities and developing a business continuity plan (BCP) to adapt to the COVID-19 pandemic and other environmental changes.

Climate Goals & Targets

Environmental Challenges

• Significant decrease in sales and customer traffic due to the COVID-19 pandemic and temporary closures.
• Decreased sales of high-priced brand products.

Mitigation Strategies

• Implemented proactive sales promotions to recover sales after the state of emergency was lifted.
• Decided to close unprofitable stores and new business formats.
• Accelerated efforts in non-contact sales such as EC and digital investment.
• Strengthened sales promotions in June and July, leveraging the special fixed-amount grant (¥100,000).

Supply Chain Management

Responsible Procurement

• Introduction of ethical and fair-trade products (jewelry and planned leather goods).

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Ethical jewelry
• Fair-trade leather products (under development)

Environmental Metrics

ESG Focus Areas

• Gender diversity
• Employee well-being
• Community engagement
• Sustainable business practices
• DX (Digital Transformation)

Environmental Achievements

• Not disclosed

Social Achievements

• Launched Kawaguchi store as a training facility to improve employee skills and engagement.
• Increased female representation in management positions.
• Partnered with Watabe Wedding to integrate employees into Happiness stores.
• Support for the Orange Ribbon Movement to prevent child abuse.

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on store operating hours and customer traffic.
• Decreased sales in certain product categories (watches).

Mitigation Strategies

• Implemented customer acquisition strategies (coupons, promotions).
• Focused on strengthening the jewelry department.
• Pushed forward with new store openings, contactless sales, in-house EC, and digital-related investments.
• Developed a new business model focusing on a more accessible brand shop with a curated selection.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• SDG 5: Gender equality
• SDG 8: Decent work and economic growth
• SDG 11: Sustainable cities and communities

Happiness' initiatives contribute to these goals through promoting gender equality in the workplace, supporting employee well-being, and engaging with the community.

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Community Investment
• Employee Well-being
• Digital Transformation (DX)

Social Achievements

• Supported the Orange Ribbon Movement to prevent child abuse.
• Implemented employee training programs (implied by the mention of human resource investment).

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact, including reduced operating hours and decreased customer traffic.
• High-value item sales decline in some product categories.

Mitigation Strategies

• Strengthened customer acquisition strategies, focusing on the jewelry department.
• Implemented promotional campaigns (coupons).
• Investment in digital transformation (DX) including an app, beacons, and CRM.
• Investment in human capital, including sales force restructuring and training.

Supply Chain Management

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• SDG 10 (Reduced Inequalities)
• SDG 8 (Decent Work and Economic Growth)
• SDG 11 (Sustainable Cities and Communities)

Supporting the Orange Ribbon Movement aligns with SDG 10 by addressing child abuse, a form of inequality. Investments in human capital and digital transformation contribute to SDG 8 by creating jobs and improving economic opportunities. The OMO strategy and store development contribute to SDG 11 by supporting sustainable urban development.

Environmental Metrics

ESG Focus Areas

• Poverty
• Health and Welfare
• Gender Equality
• Resource Conservation
• Ocean Protection
• Human Resources Strategy

Environmental Achievements

• Reduced shopping bag usage by 69% per sales transaction through bag fee implementation.
• Developed and sold a private brand down coat using recycled materials.

Social Achievements

• Participated in and supported the Orange Ribbon Campaign to raise awareness of child abuse prevention.
• Donated to the Barrier-Free Fund.
• Donated to the "Sea and Japan Project" Promotion Fund.
• Revised employment systems and training for women in model stores to promote gender equality.
• Implemented an internal job posting system (2 successful cases in 3 years).
• Successfully promoted 23 employees to full-time positions in 3 years.

Governance Achievements

• Established a compliance system, including internal audit and whistleblowing procedures.
• Implemented an anti-social force countermeasure regulation.
• Adopted a corporate governance structure with an audit committee (including external directors).

Climate Goals & Targets

Environmental Challenges

• Declining consumer purchasing power due to rising import brand prices and increased consumer frugality.
• Increased operating costs due to rising labor and energy costs.
• Increased competition from online retail (EC), reuse, and peer-to-peer sales.
• Fluctuations in exchange rates and precious metal prices.
• Risks associated with M&A investments (contingent liabilities, goodwill impairment).
• Potential for losses from new business ventures.
• Risk of intellectual property infringement.
• Concentration of stores in suburban shopping centers (SC) and potential changes in commercial center locations.
• Shortage of human resources due to intense competition in the labor market.
• Potential for fraudulent activities.
• Impact of natural disasters on store facilities and operations.
• Information security risks (cyberattacks, data breaches).
• High dependence on interest-bearing debt.
• Potential for impairment losses.
• Potential write-down of deferred tax assets.

Mitigation Strategies

• Diversification of business models through M&A and new business ventures (establishment of AbHeri and No.).
• Structural reforms at Happiness and D, including product reform (reducing import brand goods and expanding jewelry and private brands), improving customer service skills through AI role-playing training, and store restructuring (closing unprofitable stores and remodeling existing ones).
• Expansion of AbHeri into the Kansai region.
• Launch of a new jewelry business through No. (starting with online sales and pop-up stores).
• Active pursuit of M&A opportunities.
• Reconstruction of store development policy, considering consumer trends, catchment area characteristics, and profitability.
• Strengthening merchandising (MD) through live sales and new initiatives.
• Promotion of store DX (digital transformation) and ABC system implementation.
• Securing and developing human resources through improved compensation, employee benefits, and training.
• Improved inventory management through electronic tagging.
• Outsourcing of logistics operations.
• Obtaining agreement from financial institutions for changes to loan repayment terms and securing new loans.
• Issuance of new stock options to strengthen equity capital.

Supply Chain Management

Responsible Procurement

• Sourcing from AACD-affiliated companies for new import brand products.

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• Goal 1: No Poverty
• Goal 3: Good Health and Well-being
• Goal 5: Gender Equality
• Goal 12: Responsible Consumption and Production
• Goal 13: Climate Action
• Goal 14: Life Below Water

The company's initiatives contribute to these goals through various programs and donations.

Sustainable Products & Innovation

• Private brand down coat using recycled materials.

Environmental Metrics

ESG Focus Areas

• CSR (Corporate Social Responsibility)
• Child Abuse Prevention
• Sustainable Product Development
• Supply Chain Ethics (Bangladeshi factory production)

Environmental Achievements

• Developed products using recycled ocean plastic

Social Achievements

• Supported the "Orange Ribbon Movement" for child abuse prevention
• Reduced number of stores to improve profitability (17 stores closed)

Governance Achievements

• Established a risk management committee
• Revised internal control system
• Implemented a compliance program
• Strengthened audit and supervisory functions by appointing a full-time audit committee member

Climate Goals & Targets

Environmental Challenges

• Significant decline in sales of import brand products due to rapid yen depreciation and rising prices
• Operating losses and net losses in the previous and current fiscal years
• Uncertainty about the future due to the challenging retail environment

Mitigation Strategies

• Structural reform of Happiness & D, including reducing import brand goods and expanding high-profit jewelry and private brands
• Establishment of a new subsidiary (No.) for a new jewelry business
• Active pursuit of M&A to diversify business models
• Expansion of AbHeri's business
• Cost reduction measures, including downsizing of office space
• Store renovations and closures
• Strengthening sales of high-margin PB leather goods and bags
• Introduction of new PB jewelry products
• Optimization of inventory management
• Business tie-up with RAIN for 24K gold products

Supply Chain Management

Responsible Procurement

• Production entrusted to factories in Bangladesh
• Development of products using recycled ocean plastic

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Products using recycled ocean plastic