Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions by 24% per unit of sales vs. fiscal 2005/3
• Achieved medium-term targets for recycling at all factories in 2020
• 99.8% recycling rate

Social Achievements

• Launched and established portfolio of products with eco labeling
• Implemented work-style reforms
• Continued to use Diversity Index

Governance Achievements

• Established a dedicated ESG department
• Enhanced discussions on medium-term management plan, sustainability, risks, and capital productivity
• Board of Directors reforms

Climate Goals & Targets

Environmental Challenges

• Lower utilization rates caused by the COVID-19 pandemic worsened emissions per unit of sales.
• Weaker inbound tourism demand and economic stagnation caused by COVID-19.
• Risks of greenhouse gas-related regulations, reduced demand for some product sectors, and dramatic increases in the price of raw materials.

Mitigation Strategies

• Energy-saving measures in our offices and manufacturing upgrades.
• Developed products after confirming whether raw materials can be used in China, and whether these products can be used in China’s living environment.
• Took appropriate measures to address each risk and opportunity identified through climate change scenario analysis.

Supply Chain Management

Supplier Audits: Survey of 40 major suppliers of raw materials to assess the risk of human rights violations in 2020

Responsible Procurement

• Kobayashi Pharmaceutical Basic Procurement Policy
• Policies on strengthening respect for human rights and fulfilling our corporate social responsibilities

Climate-Related Risks & Opportunities

Physical Risks

• Reduced sales of strongly seasonal products due to unseasonable weather

Transition Risks

• Burden imposed by carbon tax due to the trend towards reducing greenhouse gases

Opportunities

• Increased yields of natural raw materials and greater demand for products to help deal with heat

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, Guidance for Collaborative Value Creation

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Products with eco labeling
• Products using recycled and biomass plastics

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Transitioned Sendai Kobayashi Pharmaceutical to zero CO2 emission electricity in 2020
• Switched to environmentally friendly resins with a low impact on the environment, such as recycled and biomass plastic, starting with top-selling brands Shoshugen and Liquid Bluelet products

Social Achievements

• Introduced a system allowing side jobs along with liberalization of the dress code in February 2022
• Held a panel discussion featuring three general managers, entitled “What is diversity promotion?” and converted the content of the discussion into a video
• Held training for female leaders

Governance Achievements

• Increased the number of outside directors and created new committees with the aim of improving our governance
• Established a Nomination Committee and Compensation Advisory Committee
• Established an Advisory Board

Climate Goals & Targets

Environmental Challenges

• Loss of inbound demand due to the spread of the novel coronavirus
• Reduced production in 2020
• Increased use of water to prevent snow melting and freezing at some plants
• Increased production of products that require a lot of water
• Decreased needs for annual paid holidays owing to the COVID-19 pandemic
• Limited in-store floor space presents a challenge for OTC sales channels
• High percentage of products susceptible to seasonality

Mitigation Strategies

• Used water flow meters to control water consumption and reused water from water purification systems
• Maintained a high recycling rate of 99.9%
• Improving flexible work programs
• Boosting investment in advertising, focusing on strong international businesses
• Increased investment in research and development
• Deploying unmanned and automated equipment
• Strengthening profits at each business, and improving capital efficiency through dividend increases and share buybacks
• Leveraging e-commerce for niche products
• Integrating the Direct Marketing Division and Healthcare Division to strengthen domestic e-commerce and online business strategy
• Adopting in-house eco standards to further advance efforts to lower the environmental impact of products and operations

Supply Chain Management

Supplier Audits: Survey of 40 major suppliers of raw materials in 2020 and 62 primary (Tier 1) suppliers of raw materials, and 367 secondary (Tier 2) suppliers in 2021

Responsible Procurement

• Kobayashi Pharmaceutical Basic Procurement Policy

Climate-Related Risks & Opportunities

Physical Risks

• Increased frequency of flood damage
• Increased water use
• Changes in areas where body warmers are sold/market shrinking
• Cost of relocating factories from low-lying areas
• Halting of procurement due to extinction

Transition Risks

• Introduction of carbon tax
• Carbon credit purchase cost
• Changes in demand

Opportunities

• Cost reduction through energy conservation
• Stable supply due to increased yields
• Price reductions due to increased yields
• Creation of new markets due to ethical orientation
• Increased sales of products to counter heatstroke
• Sale of emission credits

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, Guidance for Collaborative Value Creation

UN Sustainable Development Goals

• Leave no one behind

Meeting needs that are too small for mass market business

Sustainable Products & Innovation

• Products with packaging that meets our eco standards are presented with “ECO” labels

Awards & Recognition

• Intellectual Property Achievement Award from the Commission of the Japan Patent Office

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Achieved Scope 3 target for CO2 emissions reduction
• Acquired SBTi validation for GHG emissions reduction targets
• Introduced ecological standards into new product development in 2021
• Switched to highly sustainable materials for plastic packaging
• Used 100% sustainable paper packaging

Social Achievements

• Launched a special pantyliner for discharge, becoming the first company in Japan to do so
• Implemented job rotation and training to promote the advancement of women
• Improved employee job satisfaction and percentage of employees feeling able to work in mentally and physically good condition (based on employee attitude surveys)

Governance Achievements

• Clarified its attitude and commitment to actively investing in human resources in the form of a promise to its employees
• Established a five-in-one development system combining R&D, technology development, development planning, brand management, and Central R&D Laboratory support to strengthen competitiveness of existing products
• Reorganized three departments (Finance and Accounting, Public Relations and IR, and Business Support) under the direct control of the president to increase the speed of decision-making

Climate Goals & Targets

Environmental Challenges

• Sluggish sales growth of existing products in the domestic market
• Decreasing number of new product launches
• High raw material and utility costs
• Product supply issues due to supply chain disruptions
• Discrepancy between the Company’s purpose and promises to its employees and its current work methods and corporate culture

Mitigation Strategies

• Accelerating product development by establishing concurrent, unique themes
• Strengthening marketing promotions focused on e-commerce
• Working to build a stable supply system for pharmaceutical products
• Implementing a Company-wide plan to put the theme of the medium-term management plan, “I make a wish and I make it happen,” into practice
• Implementing dialogue training for managers and obtaining psychological safety facilitator qualifications for executives

Supply Chain Management

Responsible Procurement

• CSR procurement
• Procuring low-carbon raw materials and switching to low-carbon specifications
• Making procurement locations and raw materials more diverse

Climate-Related Risks & Opportunities

Physical Risks

• Uncertainty around raw material supply due to natural disasters
• Decrease in sales of body warmers due to global warming
• Increase in price of naturally derived materials

Transition Risks

• Increased cost of container and packaging recycling
• Avoidance of high-carbon products
• Taxation on Scope 1 and 2 emissions due to carbon tax introduction
• Taxation on Scope 3 emissions due to carbon tax introduction
• Increase in price of environmentally friendly resins
• Increase in price of renewable energy
• Transition to environmentally friendly products made by other companies

Opportunities

• Development of new products to meet the needs from fewer people going out and of the e-commerce market
• Provide and strengthen exclusive e-commerce products
• Develop antiperspirants, heatstroke prevention products, and infectious disease prevention products

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, Guidance for Collaborative Value Creation

Certifications: SBTi certification for 1.5°C level GHG emissions reduction targets

Sustainable Products & Innovation

• Shoshugen SAVON (refillable air freshener)
• Eyebon eye wash (bottle made with biomass raw materials)