Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Governance

Environmental Achievements

• Introduced LED lighting at headquarters.
• Planning for renewable energy use in a new factory in China.
• Planned water usage reduction of 13,870t (5.9% reduction compared to 2022) by 2025 in the new Chinese factory.
• Using FSC-certified paper, promoting plastic-free packaging and shopping bags, introducing recycled materials, and implementing recycling activities.

Social Achievements

• Participation in "Kanagawa Women's Empowerment Group" since September 2016.
• Declaration of three actions to further promote women's empowerment in September 2022 (details on male childcare leave, female managers, and flexible work systems).
• Promoting diverse hiring methods (mid-career hiring, secondments, transfers).
• Establishment of a purpose and vision to guide the company's social responsibility and value creation.
• Implementation of a new performance evaluation system to improve employee motivation.

Governance Achievements

• Establishment of a Sustainability Committee in May 2023 to address sustainability issues, including climate change.
• Implementation of a revised mid-term management plan, ATSUGI VISION 2024, focusing on strengthening the business portfolio, enhancing the profit base through production system restructuring, and capital efficiency.
• Establishment of a Nomination and Remuneration Advisory Committee composed of a majority of independent directors.

Climate Goals & Targets

Environmental Challenges

• Shrinking stocking market and intensifying competition.
• Rapid yen depreciation.
• Rising raw material costs.
• High energy and logistics costs.
• Increased labor costs.
• Concentration of production in China.
• Potential risks from Chinese government regulations, difficulty in securing human resources, and currency appreciation.
• Fluctuations in crude oil prices.
• Market risks such as changes in fashion trends, adverse weather conditions, deflation, and increased imports of low-priced goods from overseas.
• Risk of bad debts.
• Risks related to product liability and intellectual property.
• Risks from disasters, power outages, and infectious diseases.

Mitigation Strategies

• Shifting production overseas (to China).
• Rebranding the main stocking brand "ASTIGU" to improve sales.
• Implementing BCP measures by diversifying production bases.
• Considering diversification of procurement sources and incorporating environmental initiatives into supplier selection criteria.
• Implementing hedge transactions to reduce risks from currency fluctuations.
• Strengthening the company's EC sales.
• Expanding sales of products with cooling and UV-cut functions.
• Sharing information company-wide to facilitate decision-making and strengthen sustainability promotion activities.
• Developing a comprehensive risk management system.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather events
• Droughts
• Production disruptions
• Cotton crop failures
• Changes in seasonal product demand

Transition Risks

• Carbon tax introduction
• Policy and regulatory changes
• Raw material price increases

Opportunities

• Increased demand for environmentally friendly products
• Reduced financing costs through ESG investments
• Increased demand for EC sales and cooling functional products

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• Clear Beauty Active sports innerwear using sustainable materials (recycled polyester, polyurethane, and nylon).
• Cooling socks.

Environmental Metrics

ESG Focus Areas

• Environmental Load Reduction
• Social Issues Resolution
• Governance Enhancement

Environmental Achievements

• Switched 10% of total electricity usage to solar power
• Introduced water-saving equipment for energy saving
• Collaborated with the recycling project "BRING" to recycle used clothing
• Reduced plastic use by 1.42 million plastic bottles annually by using paper packaging for ASTIGU plain stockings

Social Achievements

• Launched "Femsapo™" initiative to promote Femtech activities
• Revised the evaluation system to promote employee development and optimal personnel allocation
• Further promoted remote work, introduced flextime system, and extended the retirement age to 65

Governance Achievements

• Revised the term of directors from 2 years to 1 year
• Revised the board composition to increase the number of independent outside directors to a majority
• Increased the number of female executives

Climate Goals & Targets

Environmental Challenges

• Significant underperformance in the first year of ATSUGI VISION 2024 due to rapid exchange rate fluctuations, rising raw material costs, increased energy and logistics costs, and minimum wage increases.
• Weak appeal of value proposition to customers
• Weakening brand power and diluted market presence
• Fragile organizational culture that hinders innovation
• Stagnation of the main stocking market
• Decreased demand for apparel sales in some wholesale sectors
• Rapid market changes due to uncertain events such as the Corona pandemic

Mitigation Strategies

• Revised mid-term management plan ATSUGI VISION 2024
• Shift to a customer-centric approach to value creation
• Strengthening brand power to clarify market position
• Implementing corporate culture reform to build a strong organization
• Realizing a business model that breaks away from conventional thinking
• Maximizing added value
• Cost structure reform
• Capital efficiency
• Organizational reform (investment in human capital)

Supply Chain Management

Responsible Procurement

• Use of sustainable materials

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• Paper packaging for ASTIGU plain stockings

Environmental Metrics

ESG Focus Areas

• Climate Change
• Human Rights
• Diversity & Inclusion
• Workforce Development

Environmental Achievements

• Improved transportation loading efficiency, reducing transportation costs and fuel consumption in 2023.
• Planned water usage reduction of 13,870t (5.9% reduction compared to 2022) by 2025 in a new Chinese factory.
• Use of FSC-certified paper, promotion of plastic-free packaging and shopping bags, introduction of recycled materials, implementation of recycling activities, and simplification of packaging in EC sales.

Social Achievements

• Launched a new brand "Minna no, Minna no." focusing on easy-to-wear, skin-friendly, easy-to-handle, and environmentally friendly items in a wide range of sizes.
• Implemented a revised personnel system aimed at fostering employee autonomy and a challenge-oriented mindset, including a partially performance-linked compensation system.
• Initiated a femtech project team ("Femsapo® Team") to promote femtech activities and proposals.
• Participation in "D&I Kanagawa Members," a D&I initiative in Kanagawa Prefecture.

Governance Achievements

• Established a Sustainability Committee in May 2023 to address sustainability issues, including climate change.
• Established a human rights policy in December 2023.

Climate Goals & Targets

Environmental Challenges

• Transition risks related to carbon tax introduction and other policies/regulations, raw material price increases.
• Physical risks related to severe weather events, droughts, and rising average temperatures, potentially leading to production disruptions, cotton crop failures, and changes in seasonal product demand.
• Risks associated with over-reliance on Chinese production facilities, including government regulations, difficulties in securing human resources, and currency fluctuations.
• Fluctuations in crude oil prices affecting the cost of nylon yarn and energy.
• Market risks such as changing fashion trends, adverse weather affecting seasonal sales, deflationary pressures, and increased imports of low-cost products.

Mitigation Strategies

• Introduction of LED lighting at headquarters and consideration of renewable energy use in a new Chinese factory.
• Development of alternative sourcing strategies and inclusion of environmental considerations in supplier selection criteria.
• Diversification of production sites to mitigate risks associated with over-reliance on China.
• Implementation of BCP measures to address potential production disruptions.
• Price adjustments for some products and optimization of production systems by concentrating production in Chinese factories.

Supply Chain Management

Responsible Procurement

• Consideration of environmental factors in supplier selection criteria.

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather events
• Droughts
• Rising average temperatures

Transition Risks

• Carbon tax introduction
• Other policy/regulatory changes
• Raw material price increases

Opportunities

• Increased demand for environmentally friendly products
• Reduced financing costs through ESG investments
• Increased demand for EC sales and cool-comfort products due to climate change.

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• Minna no, Minna no. brand with environmentally friendly materials and design.
• New "ASTIGU" brand items with sustainable features.