Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced carbon emissions through the use of surplus electricity from residential photovoltaic systems (Yumeca (e-money) Plan)
• Recycled 40.8% (2,902t) of food waste
• Reduced plastic bag and wrapping paper usage (over 70% customer cooperation on eco-friendly wrapping)

Social Achievements

• Opened Youme Town Nursery to support childcare for employees and tenants
• Launched "Wellness Points" program to incentivize healthy purchases
• Established comprehensive regional revitalization cooperative arrangements for disaster response

Governance Achievements

• Established Izumi Privacy Policy to protect customer data
• Regular compliance training for all employees
• Effective corporate governance with a Board of Directors, Audit & Supervisory Board, and Compliance and Risk Management Committee

Climate Goals & Targets

Environmental Challenges

• Declining birthrate and aging population
• Weakening consumer confidence after consumption tax hike
• COVID-19 pandemic impacting production and consumption
• Difficulties in hiring due to labor shortages
• High construction costs
• Poor sales of seasonal products
• Weak sales at new Youme Mart stores

Mitigation Strategies

• Shifting growth strategy from expansion to profitability
• Revitalizing existing stores
• Closing unprofitable stores
• Forming partnerships (e.g., Seven & i Holdings Co., Ltd., Maruyosi Center Inc.)
• Investing in digital transformation (e-commerce, predictive supply ordering systems, RPA)
• Implementing structural reforms (drastic reductions in advertising and promotional expenses)
• Promoting productivity reforms (SM reform, human resource development, sales promotion reform, rebuilding the earnings base, enhancing product competitiveness)

Supply Chain Management

Responsible Procurement

• Emphasis on "good products at low prices"
• Building routes for local products, including perishable items

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Seven Premium products

Awards & Recognition

• Okayama Governor’s Food Safety and Sanitation Award (Youme Mart Mimasaka)

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance
• Customers
• Tenants
• Employees
• Local Communities

Environmental Achievements

• Reduced CO2 emissions by 24.6% relative to FY2013.
• Reduced food waste by 57% relative to FY2018.
• Increased food recycling rate to 70%.

Social Achievements

• Increased ratio of women in managerial positions to 41.6%.
• Opened a childcare support hub and city library in-store.
• Launched community-oriented delivery service Youme Delivery.
• Concluded over 60 agreements with local governments.

Governance Achievements

• Increased the proportion of independent outside directors to at least one-third.
• Established a voluntary Appointment & Remuneration Committee.
• Endorsed the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).

Climate Goals & Targets

Environmental Challenges

• Reduced customer traffic to large-scale commercial facilities due to COVID-19.
• Supply chain disruptions due to semiconductor shortages.
• Increasing overhead costs due to soaring energy prices.

Mitigation Strategies

• Structural reforms toward a robust management structure.
• Reviewing purchasing plans, shrinking inventories, and optimizing advertising.
• Revitalizing existing stores and expanding food supermarket operations.
• Strengthening Group management and peripheral businesses.

Supply Chain Management

Responsible Procurement

• Sustainable procurement of marine and agricultural products.

Climate-Related Risks & Opportunities

Physical Risks

• Heavy rainfall and flooding

Opportunities

• Development of energy-efficient products and renewable energy sources.

Reporting Standards

Frameworks Used: IIRC International Integrated Reporting Framework, GRI Sustainability Reporting Standards

Sustainable Products & Innovation

• zehi in-house production brand

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance
• Local communities
• Customers
• Tenants
• Employees

Environmental Achievements

• CO2 emission reduction rate of 16.1% relative to FY2013
• Food waste recycling rate of 41.6%
• 71% reduction rate of plastic bag usage (relative to FY2018)
• Introduced a power purchase agreement (PPA) model to expand the use of renewable energy in 19 stores
• Food waste reduced by 57% in fiscal 2021 relative to fiscal 2018

Social Achievements

• Launched Youme Can Project in 2014 to promote women's advancement
• Ratio of women in managerial positions increased to 15.6%
• Opened company-run childcare facilities at Youme Town Hikarinomori and Youme Town Hatsukaichi
• Opened Fun Fan Hidamari Community Cafe in Youme Town Higashihiroshima
• Concluded agreements with local governments for community-based disaster response and industry promotion
• Supported local employment through Hamada office of the Shimane Employment Support Center

Governance Achievements

• Established a Sustainability Committee
• Endorsed the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD)
• Increased the proportion of independent outside directors to at least one-third
• Reviewed executive remuneration system
• Established a voluntary Appointment & Remuneration Committee

Climate Goals & Targets

Environmental Challenges

• Reduced customer traffic to large-scale commercial facilities due to COVID-19
• Shift in food supermarket revenues due to the winding down of the stay-at-home economy
• Supply chain disruptions affecting new store openings
• Increasing productivity of individual stores
• Adapting to demographic and lifestyle changes in shopping center operations
• Reaching younger consumers in shopping centers

Mitigation Strategies

• Structural reforms to improve profit structure
• Standardized size-based classification of stores to improve efficiency
• Reforms to business platforms in shopping centers
• Comprehensive agreements with local governments for community collaboration
• Initiatives to attract younger consumers to shopping centers (e.g., Arao City Library in Youme Town Arao)
• Expansion of peripheral businesses of subsidiaries
• Investment in digital transformation (DX)

Supply Chain Management

Responsible Procurement

• Sustainable procurement of marine and agricultural products

Climate-Related Risks & Opportunities

Physical Risks

• Heavy rainfall and flooding

Opportunities

• Development of energy-efficient products and renewable energy sources

Reporting Standards

Frameworks Used: IIRC International Integrated Reporting Framework, GRI Sustainability Reporting Standards

Sustainable Products & Innovation

• zehi in-house production brand

Awards & Recognition

• DX-Certified Operator (Ministry of Economy, Trade and Industry)

Environmental Metrics

ESG Focus Areas

• Local communities and customers
• Environment
• Safety and security
• Diversity

Environmental Achievements

• Reduced energy use by almost 10% compared to the previous year.
• Reduced CO2 emissions associated with store operations by 21.2% (relative to FY2013).
• Reduced plastic bag usage by 70.1% (relative to FY2018).
• Recycled 70% of food waste.
• Youme Mart Saijo, opened in 2023, is Izumi’s first store to run on 100% renewable energy.

Social Achievements

• Relocated Arao City Library within Arao City Mall (Youme Town City Mall).
• Partnered with Ube City to relocate the childcare support center to Youme Town Ube.
• Received the 2022 Furusato Enterprise Award.
• Increased the number of male employees taking childcare leave from 31.3% to 101.6%.

Governance Achievements

• Strengthened the organization in charge of quality control and product labeling.
• Established a Sustainability Committee.
• Established a voluntary Appointment & Remuneration Committee.
• Increased the proportion of independent outside directors to at least one third.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on GMS business.
• Surge in raw material costs.
• Leap in electricity rates.
• Rapidly rising commodity prices.
• Declining profitability of store investment plans due to rising construction costs.
• Population decline and aging population.
• Increased competition.
• Expansion of e-commerce market.
• Diversification of consumption behavior.
• Food loss.
• Insufficient collaboration with local communities.

Mitigation Strategies

• Lowered the numerical target for operating profit by ¥4.0 billion.
• Shifted investment focus from new store openings to existing stores.
• Implemented a “scrap and build” approach for renovations.
• Proactively implemented investments in GMS, medium-sized stores, and supermarkets.
• Advanced M&A strategy, focusing on supermarkets.
• Increased investment in DX.
• Introduced multi-functional devices in all stores.
• Expanded the use of Pipit (Beep) Self mobile checkout system.
• Used cash flow from operations and capital borrowed from financial institutions.
• Implemented energy-saving efforts.
• Reduced labor costs through optimal employee allocation.
• Developed our private brand 'zehi' and budget products.
• Strengthened cooperation with local governments.

Supply Chain Management

Responsible Procurement

• Procurement policy with nine requirements (safe products, compliance, human rights, working conditions, fair trading, data protection, environmental protection, community contribution, practical systems).

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (typhoons, torrential rain, mudslides, storm surges, etc.)
• Rise in average temperatures
• Changing rainfall and weather patterns
• Changing marine environments

Transition Risks

• GHG emissions regulations
• Plastics regulations
• Renewable energy policies
• Changing raw material costs
• Changing customer behavior

Opportunities

• Development of energy-efficient products
• Expansion of online shopping and delivery businesses
• Procuring certified sustainable marine products

Reporting Standards

Frameworks Used: IFRS Foundation, International Integrated Reporting Framework, GRI Sustainability Reporting Standards, Ministry of Economy, Trade and Industry, Guidance for Collaborative Value Creation

Certifications: Kurumin certification, Eruboshi certification, DX-Certified Operator by the Ministry of Economy, Trade and Industry

Sustainable Products & Innovation

• Underwear made from recycled PET
• Zehi private brand prepared foods
• Eco-friendly products

Awards & Recognition

• 2022 Furusato Enterprise Award

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by 21.9% (relative to FY2013)
• Reduced plastic bag usage by 69.2% (relative to FY2018)
• Recycled 43.1% of food waste
• Installed solar panels at 23 stores, reducing CO2 emissions by 2,889.87 tons

Social Achievements

• Launched Ube City Childcare Support Center within Youme Town Ube
• Sold meat raised by local high school students in Izumi-operated stores
• Developed Akitakata-yaki, a new culinary specialty, in collaboration with Akitakata city
• Increased ratio of women in managerial positions to 11.0%

Governance Achievements

• Established a Sustainability Committee chaired by the Representative Director
• Established a Compliance and Risk Management Committee
• Implemented a comprehensive review of business processes following a ransomware attack

Climate Goals & Targets

Environmental Challenges

• Risk-averse management style hindering future growth
• Rising barriers to opening stores due to soaring construction costs
• Need to increase average purchase value per existing customer and attract new customers
• Connecting management and human resources strategies
• Need to advance concrete initiatives with local governments
• Need to reduce Scope 3 emissions

Mitigation Strategies

• Promoting investment for growth and optimizing capital use
• Shifting focus from new store openings to revitalizing existing stores and M&As
• Effective use of card holder purchasing data and enhancing sales promotions
• Implementing concrete policies to address six key challenges in human capital
• Furthering initiatives contributing to local communities and delivering business results
• Exploring initiatives to reduce emissions throughout supply chains

Supply Chain Management

Responsible Procurement

• Sustainable product procurement roadmap and KPIs
• Survey of business partners using Global Compact Network Japan’s CSR/Sustainable Procurement Self-Assessment Questionnaire

Climate-Related Risks & Opportunities

Physical Risks

• Flood or storm surge damages
• Interruption of business

Transition Risks

• Carbon taxation
• Emissions trading

Reporting Standards

Frameworks Used: IFRS Foundation, International Integrated Reporting Framework, GRI Sustainability Reporting Standards, Ministry of Economy, Trade and Industry, Guidance for Collaborative Value Creation 2.0

Certifications: Kurumin certification, Eruboshi certification, DX-Certified Operator by the Ministry of Economy, Trade and Industry

Sustainable Products & Innovation

• zehi private brand
• Sustainable procurement of marine and agricultural products