Climate Change Data

Environmental Metrics

ESG Focus Areas

• Governance
• Compliance
• Risk Management
• Environment
• Customer Relations
• Employee Relations
• Social Contribution
• Shareholder Relations

Environmental Achievements

• Reduced waste by 15% in the head office building through improved waste sorting.
• Achieved 100% recycling of paper products in 2010.
• Reduced CO2 emissions by 13.5% in the toy business despite increased shipping volume.
• Reduced electricity consumption at the head office by approximately 4%.

Social Achievements

• Provided support to business partners affected by the Great East Japan Earthquake, including product replacement and compensation.
• Donated to the Japanese Red Cross and provided financial aid to affected businesses.
• Donated toys to children in disaster-stricken areas.
• Collected 18,162 bottle caps for polio vaccine donations.
• Implemented a total health consultation system to support employee health.

Governance Achievements

• Implemented an executive officer system to strengthen corporate governance.
• Established ethics committees to promote ethical conduct.
• No major legal violations reported in 2010 under the Happinet Group Compliance Program.
• Upward revision of dividend forecast for the fiscal year ending March 2012.

Climate Goals & Targets

Environmental Challenges

• Disposal of excess inventory due to difficulties in accurate demand forecasting.
• The Great East Japan Earthquake and its impact on business operations and supply chains.

Mitigation Strategies

• Improved demand forecasting methods using POS data and analysis of sales trends.
• Implemented various countermeasures against earthquakes, including measures to prevent product damage.
• Developed a business continuity plan (BCP) and action plans for each department.
• Established a system for quickly collecting and sharing safety information in case of large-scale disasters.

Supply Chain Management

Responsible Procurement

• Implementation of CoC audits for major overseas production contractors.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Guidelines (G3.1), Ministry of the Environment's Environmental Reporting Guidelines (2007)

Environmental Metrics

ESG Focus Areas

• Environmental Management
• Customer Satisfaction
• Employee Relations
• Social Contribution
• Shareholder Relations
• Compliance
• Risk Management

Environmental Achievements

• Reduced promotional waste by 64%
• Reduced general waste by 20% in logistics centers
• Reduced CO2 emissions by approximately 29 tons through optimized shipping
• Achieved a 1.5 times increase in sales at stores with the new capsule toy POS system

Social Achievements

• Launched the "Showa Cinema Yokocho" campaign, collaborating with 5 major film companies to provide rental DVDs of classic Japanese films for senior citizens.
• Implemented a new stress check system for all employees.
• Increased the number of "eco-people" (eco-certification holders) by 23 to 236.
• Conducted community cleanup activities at 3 logistics locations.

Governance Achievements

• Developed a new disaster preparedness manual.
• No major legal violations reported in 2013.
• Strengthened internal control systems.
• Established a system to prevent the distribution of toys that haven't been confirmed to meet safety standards.

Climate Goals & Targets

Environmental Challenges

• Increase in group waste volume by 10% (despite efforts to reduce it)
• No significant reduction in group electricity consumption despite energy-saving efforts.
• Challenges in accurately predicting demand for video games, resulting in lower inventory turnover rate.

Mitigation Strategies

• Strengthened efforts to accurately predict demand and manage inventory.
• Continued efforts in 3R (Reduce, Reuse, Recycle) initiatives.
• Implemented a single-item data acquisition system for capsule toy vending machines to improve demand forecasting and optimize inventory.

Supply Chain Management

Supplier Audits: CoC audits conducted on approximately 60% of regular factories.

Responsible Procurement

• Compliance with laws and regulations
• Implementation of Happinet quality standards
• Use of ST standards for toys

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G3.1, Environmental Agency's Environmental Report Guidelines (2007)

Sustainable Products & Innovation

• Development of "co-play toys" for children with disabilities

Awards & Recognition

• 楽天市場ショップ・オブ・ザ・イヤー2013 おもちゃ・ホビー・ゲームジャンル大賞 (Happinet Online Rakuten Branch)
• Yahoo!ショッピング Best Store Awards 2013 ソフト部門賞 (Happinet Online Yahoo! Branch)
• 日本おもちゃ大賞2013 共遊玩具部門優秀賞 (的中ニャンコ生き物バージョン)

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• Compliance
• Risk Management
• Environment
• Customer Relations
• Employee Relations
• Social Contribution
• Shareholder Relations

Environmental Achievements

• Reduced waste through improved demand forecasting and inventory management
• Reduced CO2 emissions through optimized logistics and relocation of logistics facilities
• Improved energy efficiency through asset reduction

Social Achievements

• Implemented health promotion programs for employees
• Consolidated and renovated offices to improve work environment
• Improved logistics efficiency and safety
• Supported disaster-stricken customers in their recovery

Governance Achievements

• Strengthened internal control systems
• Established a compliance promotion system and internal audit
• Implemented a whistleblower system
• Developed a business continuity plan (BCP)

Climate Goals & Targets

Environmental Challenges

• Variations in participation rates in health promotion programs across different age and gender groups
• Difficulties in securing event venues for music CD promotions
• Dependence on individual skills and know-how in some business processes
• Securing timely product delivery in snowy conditions in Hokkaido

Mitigation Strategies

• Developing age and gender-specific programs for health promotion
• Exploring alternative event strategies, such as co-hosting events with multiple artists
• Creating templates for standardized business processes
• Shifting to a Sapporo-based logistics system to reduce delivery times in Hokkaido

Supply Chain Management

Responsible Procurement

• Compliance with laws and regulations; adherence to the Japan Toy Association's safety standards; CoC audits of overseas factories

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4, Environmental Agency of Japan's Environmental Reporting Guidelines (2012)

Sustainable Products & Innovation

• Original toys with a focus on safety and sustainability

Environmental Metrics

ESG Focus Areas

• Compliance Management
• Risk Management
• Environmental Management
• Product Responsibility
• Customer Communication
• Diversity and Work-Life Balance
• Human Resources Development
• Occupational Safety and Health
• Social Contribution
• IR Activities

Environmental Achievements

• Reduced waste through improved demand forecasting and inventory management
• Promoted energy saving through asset reduction and server virtualization

Social Achievements

• Continued promotion of employment of people with disabilities
• Strengthened disaster response system through training and drills
• Expanded nationwide business meetings to provide useful information to retailers
• Increased touchpoints through sales location development and event expansion

Governance Achievements

• Strengthened internal control system
• Enhanced IR activities, including increased investor meetings and a first overseas roadshow

Climate Goals & Targets

Environmental Challenges

• Increased inventory due to declining trends in character merchandise
• System troubles on the EC site hindering customer satisfaction improvement
• Lack of widespread brand recognition despite significant market share

Mitigation Strategies

• Review of inventory management rules and implementation of new inventory management system
• Efforts to improve brand awareness through various PR activities
• System improvements planned for EC site

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Guidelines (G4), Environment Agency of Japan's Environmental Reporting Guidelines (2012)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions through optimized logistics and inventory management
• Reduced waste through improved packaging and recycling initiatives
• Promoted energy conservation by reducing server assets

Social Achievements

• Launched a company-wide organizational diagnosis to improve employee satisfaction and implemented improvements based on feedback (e.g., creating a new break room)
• Implemented initiatives to improve employee wellbeing and work-life balance
• Increased employee communication through various initiatives
• Supported disaster relief efforts and community engagement activities

Governance Achievements

• Strengthened internal control systems
• Enhanced compliance programs and internal reporting systems
• Improved risk management practices
• Implemented measures to ensure fair and ethical business practices

Climate Goals & Targets

Environmental Challenges

• Waste and discarded promotional materials increased due to difficult market conditions
• Inventory evaluation losses due to difficult market conditions
• Labor shortages in warehousing and trucking
• Need for improved risk management in light of business succession

Mitigation Strategies

• Continued efforts to optimize logistics and inventory management to reduce waste
• Exploring the use of advanced technologies to address labor shortages
• Risk assessment and appropriate insurance coverage for new business risks

Supply Chain Management

Responsible Procurement

• Compliance with laws and regulations
• Use of ST standards for toys
• Third-party audits of overseas manufacturing facilities

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards, Environmental Agency's Environmental Report Guidelines (2012 edition)

Sustainable Products & Innovation

• Green Toy (cultivation kit using recycled plastic bottles)