Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Protection

Environmental Achievements

• Acquired ISO14001 certification for Tokyo Terminal (September 2001), Narita Terminal (January 2003), No. 4 Baraki Terminal (January 2006), and Central Japan International Airport Terminal (March 2007).
• Started cleanup campaigns in areas surrounding Narita Terminal and Kintetsu Logistics Systems Inc.’s Tokyo Terminal (2006).
• Replacing sales vehicles with hybrid vehicles.
• Kintetsu World Express Delivery Co. Ltd. introduced three hybrid vehicles (September 2006).

Social Achievements

• Appointed two locally employed presidents of subsidiaries in Russia and Dubai.
• Received “Fiscal 2006 IR Prime Business Award Premium” from the Japan Investor Relations Association (November 2006).

Governance Achievements

• Adopted an executive officer system (June 2006) to strengthen Board of Directors’ supervisory functions and speed up decision-making.
• Established the KWE Group Top Strategy Meeting and Executive Committee to discuss general management policies and important business matters.
• Established a Compliance Committee and a Risk Management Committee to oversee companywide compliance and risk.

Climate Goals & Targets

Environmental Challenges

• Stubbornly high oil prices impacting transport costs.
• Shifting of some products from air to sea shipment due to declining market prices.
• Losses at Benelux subsidiary.
• Dependence on electronics-related products for freight forwarding revenues.

Mitigation Strategies

• Increased fuel surcharge collection rate.
• Lowered freight cost ratio by negotiating with airlines.
• Management improvements at Benelux subsidiary, including warehouse closure in Liège, Belgium.
• Expanding handling of automobile, medical, chemical products, and products with increasing worldwide transport demand (machine tools, construction machinery, aircraft-related products).

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• Fiscal 2006 IR Prime Business Award Premium

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Corporate Governance

Environmental Achievements

• Acquired ISO 14001 certification at six locations in Japan and ten overseas locations by July 2009.
• Reduced CO2 emissions through energy-efficient machinery, temperature control, and equipment shut-off.
• Reduced gasoline consumption in company vehicles by using hybrid cars and energy-efficient driving techniques.
• Implemented the "3Rs" of waste reduction: reduce, reuse, recycle.

Social Achievements

• Initiated "Sunshine Meetings" and a "Sunshine Blog" to improve internal communication and employee engagement.
• 88% of Japanese employees reported feeling pride in working for the company.
• Increased dividends by two yen per share.

Governance Achievements

• Established a Compliance Committee and formulated the KWE Group Conduct Compliance Standards.
• Established a Risk Management Committee to oversee company-wide risk.
• Implemented measures to improve transparency and communication with shareholders and investors.

Climate Goals & Targets

Environmental Challenges

• Worldwide recession severely impacted performance, leading to a decline in freight volume.
• Sharp appreciation of the yen negatively affected financial results.
• Alleged violations of antimonopoly statutes resulted in cease and desist orders and penalty payments.

Mitigation Strategies

• Implemented KWE Innovation Project (KIP1) focusing on organizational, personnel, and systemic innovations.
• Implemented KWE Innovation Project Phase II (KIP2) for cost reduction measures across all areas.
• Formulated a Short-Term Management Plan for the year through March 2010, aiming for cost reductions and securing net sales.
• Created an "Operational Compliance Q&A" and "Antimonopoly Compliance Manual", and held compliance training sessions.

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• Supplier Excellence Award 2007 from Texas Instruments Inc.

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Acquired ISO 14001 Environmental Management System certification at nine group companies (30 facilities)
• Selected as a constituent stock in the S&P/JPX Carbon Efficient Index since 2018

Social Achievements

• Introduced work-life balance initiatives including childbirth leave, maternity leave, child nursing leave, child rearing leave of absence, shortened working hours for child rearing, caregiving leave of absence, shortened working hours for caregiving, and a re-employment program for retirees
• Hong Kong, Philippines, Taiwanese, and Indian subsidiaries acquired certification to the OHSAS 18001 occupational health and safety management system
• Philippine subsidiary supported victims of the Taal Volcano eruption
• Thailand subsidiary donated used calendars to a school for the blind

Governance Achievements

• Strengthened group governance by instating seven corporate divisions, establishing “Japan Regional Headquarters”, and fortifying the oversight of KWE Japan and domestic affiliates
• Established a Nomination and Compensation Committee (comprised of three independent officers and two internal Directors)
• Established a Risk Management Committee chaired by the Chief of Risk Management
• Established a COVID-19 Task Force to ensure the safety of its employees

Climate Goals & Targets

Environmental Challenges

• Global economic uncertainty over the U.S.-China trade friction, leading to decreases in sales and profits
• Continued spread of COVID-19, causing countless casualties, obstructing significant parts of the global economy
• Risk of global recession, coupled with geopolitical risks represented by the U.S.-China struggle and climate change risks
• U.S.-China trade friction and uncertainties over the global economy, resulting in sluggish air and sea freight
• COVID-19 continues to impact the international logistics market, reducing global production, disrupting supply chains, stagnating consumer markets, and impeding trade
• Imbalances in transportation capacity and freight rate volatility

Mitigation Strategies

• Focus on business continuity and sustainable growth
• Protecting its workforce and cultivating its business in the face of business environment changes
• Strengthening group governance, introducing next-generation IT, strengthening global human resources development, and improving financial soundness
• Responding quickly and appropriately to changing market trends and customer needs
• Securing cargo space, carrier relationships, and purchasing power
• Collaborating with APLL to strengthen its business platform in a post-COVID-19 world
• Leveraging APLL’s full potential: from its longstanding history with customers in automotive, retail, and consumer goods industries, to its time-honored experience in sales, handling expertise, procurement, infrastructure, and management
• Utilizing its experience and knowledge to globally collaborate on human resources, compliance, and risk management
• Ongoing Business Continuity Plans under “COVID-19 Task Force”
• Proactively adopted telework at its facilities in Japan and overseas, and also encouraged its employees to take paid leave

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO₂ emissions (KWE Japan non-consolidated): Scope 1 emissions 433 tons, Scope 2 emissions 7,027 tons. Overall CO2e reduction of 9.9% compared to FY2011 despite significant business growth.
• Switched Japan HQ office electricity use to 100% renewable energy sources
• Participating in Sustainable Aviation Fuel (SAF) programs
• Using Green Power Certificate System
• Shifting from fuel burning to electric forklifts
• Promoting lower greenhouse gas emission rail transport
• Reduced use of paper
• Switched to limestone-based material for business cards
• Installed solar energy generating system at Narita Terminal

Social Achievements

• Held periodic information security training for all employees (87% participation)
• Women in management positions across the group: 32%
• Informed vendors worldwide of the KWE Vendor Code of Conduct (82% signed)
• Implemented workplace vaccination program in Tokyo

Governance Achievements

• Appointment of a Group General Counsel in April 2021
• All KWE Group employees participated in a compliance training program
• Established a new role for the Group General Counsel to advise on legal and regulatory requirements

Climate Goals & Targets

Environmental Challenges

• Climate change and carbon reduction
• Regulatory risks (EU, U.S.)
• IMO CO2 emissions targets for the shipping industry
• Supply chain management
• Employee’s safety and health (overtime)
• Diversity and inclusion
• Demand for further transparency and reporting
• Emerging competition
• Continuous conflict between U.S. and China

Mitigation Strategies

• Analyzing risks and opportunities associated with climate change
• Gathering basic data on group-wide CO₂ emissions to set reduction goals
• Participating in SAF programs and carbon offset schemes
• Shifting to LED lighting, electric forklifts, and renewable energy
• Promoting rail transport
• Reducing paper use
• Improving customer relationships and increasing sales
• Enhanced technology to improve customer experience
• More proactive management

Supply Chain Management

Supplier Audits: 82% of vendors have signed acknowledgment of the KWE Vendor Code of Conduct

Responsible Procurement

• KWE Vendor Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Disaster damage to ports and surrounding facilities
• Disaster damage to logistics sites

Transition Risks

• Carbon tax
• Demand to reduce CO2
• Enhanced emissions-reporting obligations
• Demand for low GHG transport modes

Opportunities

• Enhanced reputation among customers due to adopting SAF
• Enhanced reputation among customers due to applying carbon offset

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Standards, TCFD

Certifications: ISO 14001, ISO 45001, ISO 9001, ISO 13485, TAPA, GDP, AEO

Environmental Metrics

ESG Focus Areas

• Energy
• Social impacts in the supply chain
• Diversity and equal opportunity
• CO₂ emissions
• Effluents and waste
• Anti-corruption
• Occupational safety and health
• Data security

Environmental Achievements

• Achieved 100% renewable energy sourced power consumption at our sites in Japan with the purchase of FIT non-fossil fuel energy certificates
• Increased participation in Sustainable Aviation Fuel (SAF) programs
• Obtained third-party verification of greenhouse gas emissions in Japan
• Set FY2030 reduction targets for Scope 1 and 2 CO₂ emissions
• Promoting container round use and matching systems in our sea freight business
• Expanding the use of hydrotreated vegetable oil (HVO) fuel for truck transport
• Reduced use of paper documents

Social Achievements

• Established KWE Group Occupational Safety and Health Policy
• Established KWE Group Diversity and Equal Opportunity Policy
• Announced Health and Productivity Management Declaration (Kintetsu World Express (non-consolidated))
• Improved employee training in cyber-security
• Implemented global employee training in human rights and equal opportunity
• Recommended that our male employees take childcare leave and expanded our continued education programs

Governance Achievements

• Appointed Head of Group Compliance
• Established a new Audit & Supervisory Board in place of prior Audit & Supervisory Board
• Established our global whistleblower hotline

Climate Goals & Targets

Environmental Challenges

• Climate change and CO₂ reduction
• Stricter regulation in EU and the U.S.
• IMO CO₂ reduction targets for shipping
• Employee safety and health (overtime)
• Diversity and inclusion
• Women at leadership level
• Involvement with local communities
• Demand for transparency and reporting
• Emerging competition such as GAFA
• Delays in technological innovation
• U.S.-China trade friction

Mitigation Strategies

• Set GHG emissions targets and fulfill them on an ongoing basis
• Shift to eco-friendly vehicles and electric forklifts
• Change to renewable energy source electric power
• Pass along freight charges appropriately
• Plan investments while monitoring social trends and new technology
• Participate in pilot programs and consider implementation while evaluating cost
• Actively participate in SAF programs and promote social implementation
• Approach governments and associations toward increasing adoption in the industry
• Develop sea and rail transport services in line with customer needs and build a business model adapted to the changing market
• Develop low environmental impact air transport products leveraging SAF in collaboration with airlines
• Propose low CO₂ emission routes and transport modes leveraging AI
• Work on improving reputation with customers by including active environmental initiatives in business strategy
• KWE and service providers respond to flood and other damage in the case of logistics warehouses owned by KWE, and KWE coordinates with lessors to respond in the case of rented warehouses
• Select alternative forwarding warehouse facilities and routes to build a stable logistics network
• Manage risks in coordination with the KWE Risk Management Committee
• Work with local authorities and business partners to respond to flood and other kinds of damage
• Manage risks in coordination with the KWE Risk Management Committee

Supply Chain Management

Supplier Audits: Planned for 2024

Responsible Procurement

• KWE Vendor Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Rising sea levels

Transition Risks

• Carbon tax
• New technologies
• New fuels
• Modal shift

Opportunities

• Lower carbon tax and other regulatory costs with reduced GHG emissions
• Development of new services and expanded business areas

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Standards, TCFD

Certifications: ISO 9001, ISO 14001, ISO 13485, ISO 45001, TAPA, GDP, AEO

Third-party Assurance: SGS Japan (for Kintetsu World Express (non-consolidated) FY2021 data)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Emissions
• Energy
• Data Security
• Diversity and Equal Opportunity
• Social Impacts in the Supply Chain
• Anti-Corruption

Environmental Achievements

• Inaugurated KWE Green Consolidation to share SAF value with customers (December 2023)
• Formed strategic partnership with Roper Rhodes related to the use of Sustainable Marine Fuel (SMF) (February 2024)
• Participated in Japan Airlines’ SAF usage demonstration project (March 2024)
• Concluded contract with IAG Cargo regarding the use of SAF (June 2024)
• KWE Thailand introduced electric trucks in order to reduce emissions (June 2024)

Social Achievements

• The Kintetsu Group Holdings signed the United Nations Global Compact (October 2023)
• The Kintetsu Group donated funds to help victims of the Noto Peninsula Earthquake (February 2024)
• Certified as a 2024 Health and Productivity Management Outstanding Organization (March 2024)
• The Kintetsu Group donated funds to help victims of the Taiwan Eastern Offshore Earthquake (April 2024)
• Formulated the KWE Group Diversity and Equal Opportunity Policy (fiscal year ended March 2024)
• Established a global whistle-blowing system (May 2023)

Governance Achievements

• Established the KWE Group Ethics and Compliance Committee (April 2024)

Climate Goals & Targets

Environmental Challenges

• Sluggish transport demand caused by high inventory levels and semiconductor shortages
• Intense competition that cut into profitability
• Global economic slowdown
• Inventory accumulation in various regions
• Modal shift from air to sea freight
• Accelerated decline in sales prices following the post-COVID resolution of freight capacity shortages
• Intense price competition
• Geopolitical risks such as the Russia-Ukraine crisis, the situation in the Middle East, the U.S.-China feud
• Economic recessions in Europe and China
• Rising resource prices
• Continued high interest rates, especially in developed countries
• Declining profitability resulting from intensifying price competition and imbalance between costs and sales prices in some lanes
• Labor shortages

Mitigation Strategies

• Focusing on identifying and addressing key issues, reaffirming our unique value, and ensuring this value is shared and strengthened throughout the Group
• Promoting handling volume expansion measures, targeting key markets such as semiconductors, healthcare, and automotive products
• Strengthening relationships with carriers, enhancing purchasing capabilities at each subsidiary, and implementing centralized purchasing that takes advantage of economies of scale
• Applying appropriate controls over indirect costs, such as selling, general, and administrative expenses
• Improving organizational capabilities and boosting productivity through the development of a Group-wide business platform and organizational structures, as well as the clarification of roles and responsibilities for each organization and individual
• Evolving our sales strategy and expanding the range of items we transport
• Bolstering investments in human capital and IT infrastructure
• Reinforcing sustainability initiatives from a business perspective
• Expanding participation in Sustainable Aviation Fuel (SAF) programs
• Entering a partnership for Sustainable Marine Fuel (SMF)
• Strengthening cybersecurity measures
• Promoting digital transformation
• Implementing human rights due diligence initiatives
• Focusing on anti-corruption educational activities
• Diversifying funding methods
• Promoting efficient management of Group funds
• Enhancing cooperation with actual transport companies and centralized procurement
• Using foreign exchange forward contracts and currency swap contracts
• Improving APLL’s asset efficiency and maximizing its profit
• Enhancing guidance by each Regional Headquarters and Internal Control Division as well as internal audit functions
• Promoting labor-saving and increasing productivity through the improvement of operational efficiency by using AI, RPA and other advanced technologies
• Recruiting experienced people for specific purposes along with regular recruitment of new graduates
• Establishing the BCP system

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards

Sustainable Products & Innovation

• KWE Green Consolidation service

Awards & Recognition

• 2024 Health and Productivity Management Outstanding Organization