Climate Change Data

Environmental Metrics

ESG Focus Areas

• Ecology
• Global Operation
• Human Capital Development

Environmental Achievements

• Achieved targets for energy conservation (basic unit index) and greenhouse gas emissions (basic unit index) at production sites
• Achieved targets for VOC substances discharged
• Reduced total energy consumption by 17,000kl in crude oil equivalent
• Reduced transportation fuel consumption by 6%
• Launched Attack Neo, a water- and energy-conserving product
• Replaced chillers at Wakayama and Kashima plants with turbo refrigerators
• Improved modal shift rate to 64%
• Reduced CO2 emissions at all offices by 2,423kW (13.4%)
• Introduced a 97kW photovoltaic power generating system at Sumida Logistics Center

Social Achievements

• Implemented the Kao Group Eco Family Program to raise environmental awareness among employees and their families
• Increased percentage of female managers at Kao Corporation to 5.5%
• Increased percentage of fathers who took child-care leave to 36.5%
• Implemented Mammy's Lunch for working mothers
• Provided training programs dealing with human rights and harassment for employees
• Conducted an employee opinion survey known as “Find”
• Implemented the Employee Invention Compensation System
• Introduced the Kao Creativity Camp to produce creative human resources

Governance Achievements

• Introduced the Executive Officer system to separate the supervisory function from the execution function
• Established the Compensation Advisory Committee and the Committee for the Examination of the Nominees for the Chairman of the Board of Directors and the President
• Implemented a stock option plan for Board of Directors members and Executive Officers
• Established the Compliance Committee
• Established compliance hotlines
• Revised its guideline on avoiding conflicts of interest
• Established a company-wide risk management system

Climate Goals & Targets

Environmental Challenges

• Insufficient communication channels regarding the suspension of Econa products
• Negative consumer perception of product recalls and production suspensions
• Need to improve the rate of suppliers meeting Kao's standards
• Need to reduce the environmental impact of products throughout their life cycle
• Need to further enhance Kao's organizational culture and identify issues to be solved

Mitigation Strategies

• Established a Consumer Consultation Desk for Econa products
• Provided various data on Econa products via the corporate website
• Hosted briefing and dialogue sessions for stakeholders
• Visited suppliers that did not meet Kao's standards and requested improvements
• Developed environmentally conscious products and implemented LCA
• Conducted an employee opinion survey known as “Find” and implemented action plans based on the results

Supply Chain Management

Responsible Procurement

• CSR Procurement Standards
• Green Procurement Standards

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI 2006 Sustainability Reporting Guidelines, Environmental Reporting Guidelines (2007) and Environmental Accounting Guidelines (2005) by the Ministry of the Environment of Japan, Environmental Accounting Guidelines for Chemical Companies (November 2003) by the Japan Chemical Industry Association

Certifications: ISO 9001, ISO 14001, OHSAS 18001

Third-party Assurance: Responsible Care Verification Center of the Japan Responsible Care Council

Sustainable Products & Innovation

• Attack Neo
• Quickle Wiper (with recycled fibers)
• ECOLA (improved polylactide resin)
• Curel refill container

Awards & Recognition

• World's Most Ethical Companies (four consecutive years)
• Environmental Technology Prize at the 41st Annual JCIA Technology Award
• 33rd Kinoshita Award
• World Star 2009
• Minhang District Award for Energy-saving Technical Modifications
• Prime Minister's Hibiscus Award
• Award of the 9th Green Sustainable Chemistry Awards

Environmental Metrics

ESG Focus Areas

• Environment
• Health
• Aging society
• Hygiene

Environmental Achievements

• Reduced water consumption during product use (specific figures not provided, but a graph shows a reduction from 1912 million m3 in 2011 to 1828 million m3 in 2015)
• Launched ultra-concentrated laundry detergent Attack Neo in 2009, saving water, electricity, and time.
• Launched Ultra Attack Neo in 2013, enabling high-performance, speedy laundering.
• Introduced water-saving laundry detergents in multiple Asian countries.
• Launched improved CuCute dishwashing detergent in 2014 with higher cleaning power and faster rinsing.
• Launched improved Merit Shampoo and Bath Magiclean, reducing rinse water and improving cleaning efficiency.

Social Achievements

• Adopted the Kao Human Rights Policy in June 2015, based on the UN Guiding Principles on Business and Human Rights.
• Increased percentage of female managers to 27.5% worldwide and 10.4% in Japan as of December 31, 2015.
• Implemented various training programs for employee development, including the Global Leadership Development Program (GLDP).
• Achieved all targets of Kao Group Mid-term Plan 2015 (K15).

Governance Achievements

• Released a Report Concerning Corporate Governance in July 2015, explaining the implementation of the Tokyo Stock Exchange’s Corporate Governance Code.
• Improved governance by strengthening the supervisory function of the Board of Directors and the auditing function of the Audit & Supervisory Board.
• Increased Board diversity (specific figures not provided, but mentions six independent officers).

Climate Goals & Targets

Environmental Challenges

• Improving profitability of the cosmetics business in Japan due to intensifying market competition.
• Rebuilding functional drinks (Healthya) due to intensifying market competition.
• Weak demand in some customer industries in Japan for the Chemical Business.
• Fluctuations in raw material prices (natural fats and oils, petrochemicals).

Mitigation Strategies

• Major reforms for Kao Sofina and Kanebo Cosmetics.
• Strengthened promotion of Healthya functional drinks.
• Creation of high-value-added products that match customer needs in the Chemical Business.
• Cost reduction activities and development of substitute raw materials for natural fats and oils.

Supply Chain Management

Responsible Procurement

• Sustainable raw material procurement (palm oil, paper, pulp)
• Supplier self-assessments
• Requesting suppliers to register with Sedex.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UN Global Compact

Sustainable Products & Innovation

• Ultra Attack Neo
• Attack Antibacterial EX Super Clear Gel
• Renewed Humming fabric softener
• Flair Fragrance fabric softener
• Attack Jaz1
• Renewed Magiclean household cleaners
• Quickle household cleaning sheets
• Renewed Resesh fabric refresher
• Deodorizing Strong range

Awards & Recognition

• Asia IP Elite (three consecutive years)
• PEZA Environmental Performance Award (Pilipinas Kao, Inc.)
• Award from the Minister of the Environment of Japan (Kashima Plant)
• World’s Most Ethical Companies (ten consecutive years)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Decarbonization
• Water Conservation
• Responsible Sourcing
• Stakeholder Engagement

Environmental Achievements

• Reduced CO2 emissions across the entire product lifecycle by 15% compared to 2017.
• Achieved 100% renewable energy for purchased electricity in Japan by the end of 2023.
• Reduced energy consumption per unit of sales by 6% compared to the previous year.
• Reduced greenhouse gas emissions (Scope 1+2) by 35% compared to 2017.

Social Achievements

• Launched e-learning program on Kirei Lifestyle Plan and decarbonization.
• Awarded CDP Supplier Engagement Leader for the seventh consecutive year.
• Obtained a Triple A score from CDP for Climate Change, Water Security, and Forests for the fourth consecutive year.

Governance Achievements

• Introduced an internal carbon price system (currently $168/ton-CO2).
• Established various committees (Responsible Care Promotion Committee, Risk & Crisis Management Committee, ESG Managing Committee) for ESG oversight.
• Supports the Task Force on Climate-related Financial Disclosures (TCFD).

Climate Goals & Targets

Environmental Challenges

• Increased costs for product development in response to climate change.
• Drop in sales of seasonal products due to global warming.
• Reputation risk due to insufficient response to climate change.
• Flood damage to Kao plants due to increased frequency of heavy rainfall.
• Supply chain disruption impacting product supply.
• Increased costs of raw materials due to restrictions on the use of fossil fuels.
• Increased costs for responding to regulations resulting from the introduction of carbon taxes.

Mitigation Strategies

• Formulating resilient corporate strategies to respond to identified risks and opportunities.
• Improving energy efficiency of worksites and shifting to green energy use.
• Reducing emissions at every stage of the product lifecycle.
• Providing products and services that contribute toward reducing CO2 emissions for society as a whole.
• Investing in the development of technologies for using atmospheric CO2 as raw material.
• Implementing carbon fixation through tree-planting.
• Developing and launching low-carbon products.
• Formulating a business continuity plan (BCP) that assumes long-term shutdowns.
• Implementing supplier water risk surveys.
• Production planning adjustment.
• Development and launch of products against infectious diseases.

Supply Chain Management

Supplier Audits: CDP Supply Chain Program participation (Climate Change, Water, Forests)

Responsible Procurement

• ESG-driven procurement (including Sedex and CDP participation).
• Sustainable and responsible procurement of palm oil, paper, and pulp.
• Collaboration with suppliers to adopt lower-CO2 raw materials.

Climate-Related Risks & Opportunities

Physical Risks

• Flood damage to Kao plants.
• Supply chain disruptions.
• Increased risk of flooding

Transition Risks

• Increased costs relating to regulatory compliance due to carbon taxes.
• Increased expenses relating to product development.
• Rising raw material costs due to restrictions on fossil fuels.

Opportunities

• Reduced operating expenses due to effective resource utilization.
• Increased sales from developing products that mitigate climate change impacts.
• Increased sales of products adapted to changing climate (e.g., sunscreen, antiperspirants).

Reporting Standards

Frameworks Used: GRI

Sustainable Products & Innovation

• Attack ZERO laundry detergent (using Bio IOS surfactant)
• Attack ZERO Perfect Stick (reduced plastic packaging)
• Bioré UV Aqua Rich Aqua Protect Mist (non-gas mist-type sunblock)
• Bioré GUARD Mos Block Serum (repellent lotion)
• Water-saving products (shampoo, body wash, dishwashing detergent)
• Low-temperature fixing toner
• Additive for coating material improving fuel economy
• Additive for fuel-efficient tires

Awards & Recognition

• CDP Supplier Engagement Leader (7 consecutive years)
• CDP Triple A rating (4 consecutive years)
• 2023 Nikkei Excellent Products and Services Award (Bioré UV Aqua Rich Aqua Protect Mist)