Climate Change Data

Environmental Metrics

ESG Focus Areas

• Financial Inclusion
• Sustainability
• Decarbonization
• Environmental Initiatives
• Social Contributions
• Human Resources
• Diversity
• Risk Management
• Compliance
• Corporate Governance

Environmental Achievements

• Switched AEON Card Select cards to recycled PVC plastic, reducing CO2 emissions by an estimated 58.1 tons over five years.
• Reduced CO2 emissions by 500 grams per envelope by promoting web-based statements.

Social Achievements

• Provided monetary support for COVID-19 vaccinations in ASEAN countries (¥60 million contribution).
• Supported Malaysia's medical care system with relief supplies.
• Supported Tohoku's recovery from the Great East Japan Earthquake through donations and volunteer activities.
• Conducted financial literacy lectures to university students (7,985 students in fiscal 2020).
• Participated in the Kimitsu AEON Forest Project, planting 6,000 trees.

Governance Achievements

• Established the Group Sustainability Division and renamed the CSR Committee to the Sustainability Committee.
• Included in the MSCI Japan ESG Select Leaders Index for the fifth consecutive year.
• AEON Credit Service (M) Berhad included in the FTSE4Good Bursa Malaysia Index.
• Received certification under the 2021 Certified Health & Productivity Management Outstanding Organizations Recognition Program.

Climate Goals & Targets

Environmental Challenges

• System risks related to major IT projects (delays, inadequate functions, budget overruns).
• Interruption or malfunction of system services due to human error, hardware failures, natural disasters, or external attacks.
• Risks related to external attacks (cyberattacks) leading to service suspension and data breaches.
• Fraud from external sources (phishing scams) leading to financial losses and loss of customer trust.
• Personal information leaks due to insufficient safety measures or mismanagement of outsourced companies.

Mitigation Strategies

• Utilizing an integrated development framework and multilevel monitoring for IT projects.
• Distributing office centers and core system servers across multiple locations.
• Implementing a remote working system.
• Establishing CSIRTs and conducting employee training to combat cyberattacks.
• Monitoring for phishing sites and unauthorized access.
• Implementing strict information safety management measures, including organizational, personnel, physical, and technical measures.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters affecting sales offices, communication systems, and customer daily lives.

Reporting Standards

Frameworks Used: MSCI ESG rating

Certifications: ISO 22301 (Business Continuity Management Systems)

Environmental Metrics

ESG Focus Areas

• Financial Inclusion
• Diversity & Inclusion
• Corporate Governance
• Climate Change
• Sustainable Finance
• Contribution to Local Communities

Environmental Achievements

• Reduced GHG emissions (Scope 1 & 2) by 2,586 tons YoY in 2022 (from 15,741 tons to 13,155 tons)
• Increased ratio of hybrid vehicles to 53.34% in 2022
• Increased domestic credit card web statement ratio to 85.12% in 2022
• Reduced CO2 emissions by 500 grams per unsent envelope through web-based statements
• Transitioned to a completely cardless business in Thailand via an app

Social Achievements

• Launched QRIS PayLater, a BNPL service in Indonesia, significantly improving customer convenience
• Provided financial services to small businesses in Malaysia through partnership with a business association
• Obtained a nano finance license in Thailand to provide microfinance loans
• Partnered with LAZADA in the Philippines to create employment opportunities for delivery drivers
• Provided inheritance-related consultation referral service in Japan
• Participated in Aeon Heartful Volunteers program, including marine litter cleanup and support for recovery after the Great East Japan Earthquake
• Provided financial literacy lectures to university students
• Established AFS Academy for employee training and development

Governance Achievements

• Established the AFS Academy
• Established the Sustainability Committee, Internal Control Committee, Nomination and Compensation Committee, Disclosure Committee, and Customer Satisfaction Improvement Committee
• Increased percentage of managerial positions filled by women to 34.2% in 2022 (target 50% in 2025)
• Established the Transaction-Judging Committee
• Commissioned an independent organization to evaluate Board of Directors effectiveness

Climate Goals & Targets

Environmental Challenges

• Competition from companies outside the financial sector
• Need to maximize customer base value
• Need to improve governance systems
• Need to address climate change risks and opportunities
• Need to improve profit ratios and PBR

Mitigation Strategies

• Implementing digital transformation (DX) initiatives
• Developing marketing ideas and responding to customer needs
• Improving governance through committees and evaluations
• Conducting scenario analysis of climate change risks and opportunities
• Setting targets and indicators to reduce environmental impact
• Procuring sustainability-linked loans
• Offering loan products for clean energy

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Use of Environmentally Responsible Materials in Credit Cards

Climate-Related Risks & Opportunities

Physical Risks

• Severe natural disasters (cyclones, floods)

Transition Risks

• Carbon tax, rising renewable energy prices

Opportunities

• Increased demand for products related to climate change
• GHG emission reduction through various initiatives

Reporting Standards

Frameworks Used: TCFD

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Loan products for decarbonized zero-energy homes (ZEH) and electric vehicles (EVs)
• AEON Cards made from recycled PVC materials

Awards & Recognition

• Eight domestic Group companies designated as Outstanding Health and Productivity Management Organizations for 2023
• ACS Credit Management Co., Ltd. recognized as a White 500 organization for 2023

Environmental Metrics

Social Achievements

• Absorbed and merged AEON Credit Service Co., Ltd. into a new management structure to strategically allocate management resources across the Group and further accelerate its decision-making. Consolidated FeliCa Pocket Marketing Inc. and KYOEI A&I Co., Ltd. to strengthen its payment and other financial infrastructures. Redesigned AEON Wallet and expanded AEON Pay functionality. Promoted employee education to develop digital transformation human resources, resulting in "DX Certified Business Operator" certification.

Climate Goals & Targets

Environmental Challenges

• Uncertain business environment due to political instability, decelerating Chinese economic growth, monetary tightening policies, and high interest rates. Rise in prices due to yen depreciation. Bipolarization of consumer spending.

Mitigation Strategies

• Optimized business portfolio focusing on "Our Purpose." Consolidated financial businesses within AEON Group. Transferred shares of AEON Product Finance Co., Ltd. to Orient Corporation. Made Post and Telecommunication Finance Company Limited a wholly owned subsidiary. Prepared for the opening of AEON BANK (M) BERHAD, a digital banking business in Malaysia. Promoted initiatives in Asian countries to respond to financing needs and improve accessibility to financial services. Strengthened credit management, debt collection, and expense controls.

Supply Chain Management

Climate-Related Risks & Opportunities