Climate Change Data

Environmental Metrics

ESG Focus Areas

• Human Resources
• Environmental Protection
• Corporate Governance

Environmental Achievements

• CO2 reduced (tons), compared to conventional thermal labels: 4,040 (Japan only)
• Launched ECONANO®, a technology which absorbs and reduces CO2 emitted in incineration and is applied to about half of all labels produced in Japan.
• Opened new label plants in Indonesia and Poland with positive air pressure systems to prevent contamination.

Social Achievements

• Appointment of Chief Wellness Officer.
• Initiatives to improve employee health and organizational productivity.
• Efforts to raise English proficiency level throughout the company.
• Regular dialogue between senior management and employees.
• SATO is a Diversity Management Selection 100 company.
• CEO signed a declaration to create “A Society in which Women Shine,” aiming for 25% female managers in Japan by 2020.

Governance Achievements

• More than half of directors are external and independent, including women.
• Regular meetings of the Audit Board.
• Directors chair the Board in rotation.
• Retirement of executive directors at age sixty.
• Committees offer advice on nomination and compensation.
• Establishment of a Group Compliance Department.
• Teiho (OIP Reports) system for daily employee feedback to top management.

Climate Goals & Targets

Environmental Challenges

• Sluggish performance of the Japan business.
• Increased costs resulting from yen depreciation and renewal of ERP system.
• Slower-than-expected product transition to the CLNX label printer series.
• Higher product procurement cost driven by currency headwinds.
• Depreciation expenses incurred from the revamped ERP system.
• Economic slowdown in emerging markets impacting sales of Argox compact printers.
• Operating losses in Europe prior to FY2013.

Mitigation Strategies

• Revised medium-term management plan.
• Changed management structure.
• Creation of the Chief Operations Officer (COO) post.
• Strategic investments for future growth.
• Organizational restructuring in Europe.
• Moving production of consumables from Germany to Poland.
• Opening a new labels plant and distribution center in Poland.
• Cost reduction initiatives at factories.
• Focus on strengthening solutions capabilities in Japan and overseas.
• Implementing DCS & Labeling model overseas.
• Acquisitions of primary label companies in emerging markets.

Supply Chain Management

Responsible Procurement

• Products and packaging materials contain no hazardous materials.
• Eco-friendly company cars.

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products
• ECONANO® technology

Sustainable Products & Innovation

• ECONANO® labels
• NONSEPA® linerless labels

Awards & Recognition

• Best Channel Vendor award for Product Reliability (SATO America)
• Best of the Best in Letterpress category at the 2016 Label Industry Global Awards

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Corporate Governance
• Supply Chain Management
• Human Rights
• Employee Well-being

Environmental Achievements

• Reduced Scope 1 and 2 emissions by 14.1% from FY 2016 and by 7.5% year-on-year in FY2021. Reduced Scope 2 emissions in Japan by almost one-third from the previous year.
• Recycled 69 percent more printers than in the previous year in FY2021. Started replacing damaged subcomponents instead of whole printer components in FY2022.
• Eco-friendly production of RFID consumables: reduced raw materials, less energy during production, and reduced waste.

Social Achievements

• Improved three-year retention rate for new graduate hires and average length of service in Japan.
• Recognized as a Certified Health & Productivity Management Outstanding Organization for the sixth consecutive year.
• Launched employee well-being programs, including flexible work arrangements and multitiered no-smoking policies.
• Introduced a global grading system to assess pay equity in overseas subsidiaries.
• Launched a learning management system (LMS) called EDGE for employee development.
• Implemented Make-a-Ripple Teiho to encourage employee-led improvements.

Governance Achievements

• Appointed first external director in FY 1999 and first female external director in FY 2004. External directors constitute the majority of the board since FY 2015.
• Established a Business Review Committee in April 2021 to manage risks.
• Established a Nomination Advisory Committee and an HR Development Committee in April 2021.
• Declared support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in 2021 and started applying them to climate actions.

Climate Goals & Targets

Environmental Challenges

• Rising costs due to material price surges and supply chain disruptions.
• Supply chain disruptions impacting printer delivery and stock-outs.
• Decreased per capita productivity in Japan due to higher one-off costs and growth investments.
• Complex and long sales cycles causing deals to take longer to close and impacting profitability in Japan.
• Increased Scope 3 emissions due to sales recovery.

Mitigation Strategies

• Sustained recovery trend in demand from existing customers and expansion of solution offerings.
• Close collaboration between experienced team and local suppliers to secure supply chain.
• Improved advanced forecasting to help factories focus on high-priority models.
• Implementing an “All-in sales” mindset and improving productivity with IT overhauls in Japan.
• Developing new solution innovations that drove efficiencies to meet tagging requirements.
• Transitioning to renewable electricity, installing more solar panels and LED lighting, and shifting to eco-friendly vehicles to cut Scope 1 and 2 emissions.
• Collaborating with material suppliers to cut Scope 3 emissions.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Establishing a socially responsible procurement system with suppliers, expanding procurement of sustainable forest resources.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events and natural disasters

Transition Risks

• Carbon pricing, raw material costs, energy source costs

Opportunities

• Demand for eco-friendly products and solutions that increase productivity and save energy.

Reporting Standards

Frameworks Used: TCFD, ISO 26000

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 9 (Industry, Innovation and Infrastructure)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)

SATO's solutions contribute to these goals through productivity improvement, traceability, supply chain optimization, and eco-friendly product development.

Sustainable Products & Innovation

• Eco-friendly RFID consumables, solutions for reducing food waste

Awards & Recognition

• IR Special Award from JIRA, Certified Health & Productivity Management Outstanding Organization, Commissioner of the Japan Patent Office Award

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Governance
• Supply Chain Management
• Human Capital

Environmental Achievements

• Reduced Scope 1 and 2 emissions by 27.0 percent from FY 2016 and by 15.1 percent year on year.
• Reduced Scope 3 emissions by 5.5 percent from a year ago.

Social Achievements

• Launched J-ECOL (Japan Earth Conscious Labeling Association) for label liner recycling.
• 79% of employees felt positive toward SATO Values.
• Implemented Teiho and Make-a-Ripple Teiho systems for employee engagement and innovation.
• Established SATO Campus for employee development.

Governance Achievements

• Established Nomination Advisory Committee and Remuneration Advisory Committee.
• Introduced a global grading system for managers at overseas subsidiaries.
• Revised compensation for locally hired managers heading overseas subsidiaries.

Climate Goals & Targets

Environmental Challenges

• Scope 3 emissions (primarily from purchased goods and services, use of sold products, and end-of-life treatment of sold products).
• Gender wage gap (69.2%).
• Low paternity leave uptake (20.6% in FY 2021).

Mitigation Strategies

• Engaging with suppliers for green procurement, using refurbished components, making/selling energy-efficient printers, and promoting recycling.
• Promoting women’s empowerment and building a more diverse workplace.
• Encouraging more male employees to take paternity leave.

Supply Chain Management

Responsible Procurement

• Green procurement initiatives.

Climate-Related Risks & Opportunities

Physical Risks

• Rising raw material costs

Transition Risks

• Increased costs for operations

Opportunities

• Demand for reliable traceability systems
• Development and offering of more eco-friendly products/solutions
• Expansion of business for data collection or utilization

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• Energy-efficient printers

Environmental Metrics

ESG Focus Areas

• Sustainability
• Climate Change
• Human Capital Management
• Corporate Governance
• Supply Chain Management

Environmental Achievements

• Reduced Scope 1 and 2 emissions by 27.0 percent from FY 2016 and by 15.1 percent year on year in FY2022.
• Reduced Scope 3 emissions by 5.5 percent from a year ago in FY2022.

Social Achievements

• Launched J-ECOL (Japan Earth Conscious Labeling Association) for label liner recycling.
• Implemented Teiho and Make-a-Ripple Teiho for employee engagement and idea sharing.
• Established SATO Campus for employee development and career progression.
• Improved eNPS (employee net promoter score) compared to other manufacturers.

Governance Achievements

• Established the Nomination Advisory Committee and the HR Development Committee to enhance governance.
• Introduced a global grading system and compensation benchmarking for overseas subsidiaries.
• Revised compensation for locally hired managers in overseas subsidiaries.
• Strengthened board oversight and decision-making processes.

Climate Goals & Targets

Environmental Challenges

• Rising material costs
• Longer sales processes for high-profit products
• Slowdown in China
• Slow-moving printer inventory at resellers
• General economic slowdown

Mitigation Strategies

• Price revisions for labels and tags
• Streamlining workflow and sales capabilities
• Value chain reform to enhance operational efficiency
• Resource reallocation
• Developing and executing a refined printer product roadmap
• Expanding use of renewable energy
• Promoting energy efficiency and conservation
• Engaging with suppliers for green procurement
• Using refurbished components
• Making/selling printers that consume less energy
• Promoting the recycling of end-of-life printer parts

Supply Chain Management

Responsible Procurement

• Green procurement initiatives
• Collaboration with suppliers for decarbonization

Climate-Related Risks & Opportunities

Physical Risks

• Rising raw material costs

Transition Risks

• Increased costs for operations

Opportunities

• Demand for reliable traceability systems
• Development and offering of more eco-friendly products/solutions
• Expansion of business for data collection or utilization

Reporting Standards

Frameworks Used: TCFD

UN Sustainable Development Goals

• SDG 9: Industry, Innovation and Infrastructure
• SDG 12: Responsible Consumption and Production
• SDG 13: Climate Action

SATO's solutions contribute to supply chain optimization, resource efficiency, and decarbonization.

Sustainable Products & Innovation

• Eco-friendly printers
• Temperature-sensing RFID solutions

Environmental Metrics

ESG Focus Areas

• Sustainability
• Corporate Governance
• Human Capital Management
• Environmental Responsibility
• Supply Chain Management
• Circular Economy
• Decarbonization

Environmental Achievements

• Groupwide Scope 1 and 2 emissions down 27.0% relative to FY 2016 (FY2022)
• Groupwide Scope 3 emissions down 5.5% relative to FY 2021 (FY2022)

Social Achievements

• Successfully automated blood product management in a supply chain spanning collection sites, blood centers, and medical institutions
• Implementation of Teiho reporting system to integrate employee ideas into organizational decisions

Governance Achievements

• Appointment of an executive officer to oversee compliance and governance
• Welcomed Hiroshi Nagumo as a new external director with expertise in governance and global business operations
• Appointment of SATO Values Leaders at each subsidiary to promote corporate values

Climate Goals & Targets

Environmental Challenges

• Rising costs and changes in product mix lowered profitability in Japan
• Geopolitical tensions and other risks impacting global business
• Labor shortages affecting operations in developed countries
• Supply chain disruptions

Mitigation Strategies

• Medium-term management plan (FY 2024-2028) focusing on restoring profitability in Japan and seeking sustainable growth overseas
• Organizational restructuring for optimization and efficiency
• New evaluation scheme for sales departments focusing on profitability
• Delegating more responsibility to group companies for local decision-making
• Investing in innovative tagging solutions (Perfect and Unique Tagging)
• M&As and partnerships to acquire necessary technologies/solutions
• Improving capital efficiency and generating cash flow with financial discipline

Supply Chain Management

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• SDG 12 (Responsible Consumption and Production)

Reducing food waste through tagging technology

Sustainable Products & Innovation

• RFID and automation solutions

Awards & Recognition

• JIRA IR Special Award (2021)