Climate Change Data

Environmental Metrics

ESG Focus Areas

• Social
• Governance

Social Achievements

• Women employee ratio reached approximately 70% as of March 2021.
• Implemented telework and childcare leave regulations.

Governance Achievements

• First disclosure of performance outlook in August 2021, demonstrating a proactive approach to investor relations.

Climate Goals & Targets

Environmental Challenges

• Uncertainty due to the COVID-19 pandemic.
• Competition in the internet and pharmaceutical industries.
• Securing and developing human resources in a tight labor market.

Mitigation Strategies

• Cost reduction through operational efficiency improvements in the pharmaceutical business.
• Expansion of OTC medicine sales and procurement enhancement in the pharmaceutical business.
• Establishment of a dedicated recruitment department to strengthen recruitment activities.
• Development of new services and new customer acquisition in the internet business.
• Cost reduction and reduction of agency fees to mitigate the risk of declining profits due to lower mobile phone communication fees.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Governance
• Human Capital
• Climate Change

Social Achievements

• Implemented a 3-year training program for new graduate pharmacists.
• Provided financial assistance for certified pharmacist acquisition.
• Implemented engineer technical training programs.
• Reflected acquisition of new IT technologies in personnel evaluations.
• Implemented compliance and security education.
• Promoted women's active participation (increased number of female managers, promoted childcare leave and return to work, promoted part-time work system).

Governance Achievements

• Established an independent investigation committee following a 2022 incident involving a subsidiary executive.
• Implemented corrective actions based on the committee's recommendations (correction of individual business execution systems, strengthening of risk assessment and supervisory functions regarding subsidiary management in the board of directors, improvement of compliance awareness, complete withdrawal from the inbound billing service of Sophia Digital Co., Ltd.).

Climate Goals & Targets

Environmental Challenges

• Pursuing group synergy.
• Expanding business areas through M&A and alliances.
• Increasing profitability in internet-related and communication businesses.
• Strengthening the functions of pharmaceutical and related businesses.
• Promoting human capital management.
• Strengthening the financial foundation and stable fund procurement.
• Strengthening internal control and risk management systems.
• Risks related to internal control and compliance.
• Risks related to compliance.
• Risks related to affiliated companies, outsourcing companies, and sales agents.
• Risks related to changes in the business environment.
• Risks related to investment and M&A.
• Risks related to securing and educating human resources.
• Risks related to quality and operations.
• Risks related to changes in laws and regulations.
• Risks related to the novel coronavirus infection.
• Risks related to business continuity.
• Risks related to information security.
• Relationship with the parent company.

Mitigation Strategies

• Organically combining ICT and medical peripheral businesses to provide high-quality solutions.
• Utilizing M&A and alliances for new business development and expansion, considering financial base strengthening.
• Improving growth by providing new businesses and services that meet market needs.
• Expanding profitability through new solutions using communication technology.
• Continuing to aim for operation as a primary care pharmacy, utilizing DX and metaverse for online dispensing guidance.
• Securing and developing human resources, creating a workplace where employees can work with peace of mind.
• Securing stable profits and steadily reducing interest-bearing debt to improve the financial base.
• Utilizing various fund procurement methods for new businesses and M&A.
• Implementing corrective actions based on the independent investigation committee's recommendations.
• Strengthening monitoring of business activities to detect and respond to inappropriate activities.
• Conducting audits and investigations of affiliated companies before and after the start of transactions.
• Strengthening monitoring of the performance of affiliated companies.
• Improving functions as a primary care pharmacy and building regional collaborative pharmacies.
• Strengthening online dispensing guidance.
• Active technology development and research on advanced information service technologies.
• Careful consideration of business prospects and synergy effects before starting new businesses.
• Regular monitoring of business development and performance of new businesses.
• Careful consideration of investment prospects and synergy effects before M&A.
• Conducting due diligence by external experts.
• Monthly monitoring of the performance of investment destinations.
• Implementing measures to improve profitability or considering early sales for underperforming investments.
• Securing stable profits and steadily reducing interest-bearing debt to strengthen the financial base.
• Maintaining good relationships with financial institutions.
• Continuously working to acquire excellent human resources, develop existing human resources, and improve employee satisfaction.
• Creating a work environment with flexible work styles and various systems.
• Implementing cost prevention measures such as experienced managers for project management and progress review meetings.
• Regular maintenance and inspection of equipment, thorough operational manuals, and preparation for failure response.
• Improving the management system to prevent dispensing errors and installing an audit check system.
• Joining a pharmacist's compensation liability insurance.
• Monitoring compliance with laws and guidelines, improving management and operation methods, and consulting external experts.
• Monitoring changes in laws and regulations and taking countermeasures.
• Consulting external experts as needed.
• Prioritizing customer and employee safety with infection prevention measures.
• Considering the development of telework environments and business continuity plans (BCP).
• Positioning information management as an important management item, strengthening information management systems, and conducting internal education and awareness-raising activities.
• Implementing various measures against cyberattacks, network management, and security systems for entry and exit.
• Respecting mutual independence and autonomy with the parent company, carefully conducting transactions by comparing transaction conditions with those of third parties.
• Requiring approval from the board of directors for transactions and contracts that may cause conflicts of interest with minority shareholders.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons and floods
• Climate change-related infectious diseases

Transition Risks

• Introduction of carbon tax or emission trading
• Increased demand for system development for GHG emission management
• Increased cost of renewable energy procurement
• Increased cost of energy saving and plastic reduction measures
• Increased development cost to meet customer needs for environmentally friendly products
• Increased cost of introducing decarbonization equipment
• Deterioration of reputation due to insufficient measures against climate change
• Deterioration of financing conditions from financial institutions and investors

Opportunities

• Increased demand for system development for energy saving and plastic reduction measures
• Possibility of new businesses related to renewable energy
• Increased sales of environmentally friendly products
• Improved evaluation and trust through measures against climate change
• Increased sales due to customer BCP review
• Increased demand for system infrastructure related to climate change

Sustainable Products & Innovation

• Development of a metaverse with pharmacy functions for online dispensing guidance.

Environmental Metrics

ESG Focus Areas

• Governance
• Climate Change
• Human Capital

Social Achievements

• Implemented a 3-year training program for new graduate pharmacists.
• Provided financial assistance for certified pharmacist acquisition.
• Implemented engineer technical training programs.
• Reflected acquisition of new IT technologies in personnel evaluations.
• Implemented compliance and security education.
• Promoted women's active participation, including increasing the number of female managers, promoting childcare leave and return to work, and promoting the use of part-time work systems.
• Promoted remote work (excluding pharmacy stores).
• Promoted work-life balance, including promoting paternity leave and increasing paid leave.

Governance Achievements

• Established a Sustainability Promotion Council (chaired by the President) to discuss sustainability policies and important matters.
• Established working groups (WGs) to address specific sustainability challenges, including an Environmental WG and a Human Resources WG.
• Implemented a permanent conflict of interest transaction monitoring committee.

Climate Goals & Targets

Environmental Challenges

• Pursuing group synergy to organically combine ICT and medical peripheral businesses.
• Expanding business areas through M&A and alliances.
• Increasing profitability in internet-related and telecommunications businesses.
• Strengthening the functions of pharmaceutical and related businesses.
• Promoting human capital management.
• Strengthening the financial foundation and securing stable funding.
• Securing engineers and pharmacists.
• System development project failures.
• Equipment malfunctions and operational errors.
• Occurrence of dispensing errors.
• Occurrence of legal violations.
• Changes in regulations related to pharmacies and medical separation.
• Technological innovation and price competition in the information service industry.
• Risks related to new businesses and services.
• Poor performance of investment destinations.
• Impairment of tangible fixed assets and goodwill.
• Repayment of borrowings and rising interest rates.
• Business continuity risks.
• Information security risks.
• Relationship with parent company.

Mitigation Strategies

• Organically combining ICT and medical peripheral businesses to provide high-quality solutions.
• Utilizing M&A and alliances for new business development and expansion, considering financial base strengthening.
• Providing new businesses and services to meet market needs.
• Providing new solutions using communication technology.
• Operating pharmacies in line with patient needs as a primary care pharmacy.
• Increasing the number of pharmacies and improving profitability through rationalization.
• Securing and developing human resources, improving employee education and training systems, and creating a comfortable work environment.
• Securing stable earnings and steadily reducing interest-bearing debt to improve the financial base.
• Utilizing various funding methods for new businesses and M&A.
• Continuously acquiring excellent human resources, developing existing human resources, and improving employee satisfaction.
• Implementing thorough project management and holding progress review meetings for large-scale projects.
• Regularly maintaining and inspecting equipment, creating operation manuals, and improving service quality.
• Improving dispensing error prevention management systems and joining pharmacist liability insurance.
• Monitoring compliance with laws and guidelines, improving management and operation methods, and consulting external experts.
• Monitoring changes in laws and regulations and taking necessary measures.
• Improving the telework environment and formulating a business continuity plan (BCP).
• Strengthening information management systems, implementing cybersecurity measures, and enhancing network management.
• Establishing procedures for transactions with controlling shareholders and establishing a permanent conflict of interest transaction monitoring committee.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons and floods
• Climate change-related infectious diseases

Transition Risks

• Carbon tax or emissions trading
• Increased demand for renewable energy
• Customer demand for environmentally friendly products
• Decarbonization requirements from trading partners

Opportunities

• Development of energy-efficient products
• Increased demand for energy-saving systems
• Increased sales of environmentally friendly products