Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions in production (though specific numbers are not clearly stated and increased slightly overall due to sales growth)
• Implemented energy-saving measures in factories and offices (LED lighting, co-generation system)
• Reduced resin usage in packaging
• Expanded the "SAVE the BLUE" project to 6 Asian countries and regions

Social Achievements

• Launched the "fukushima sakura project" to support Fukushima's recovery
• Increased the proportion of regular employees among beauty staff to approximately 90%
• Implemented support systems for employees with childcare or nursing care responsibilities
• Supported women farmers through the "Agriculture Women's Project"

Governance Achievements

• Established a CSR committee and a risk management/compliance committee
• Implemented regular compliance training
• Revised the personal information protection management regulations

Climate Goals & Targets

Environmental Challenges

• Decreased coral reefs in Okinawa due to global warming and other factors
• Environmental pollution in Thailand
• Recovering from the Great East Japan Earthquake
• Maintaining high quality standards in outsourced production

Mitigation Strategies

• Implemented the "SAVE the BLUE" project to protect coral reefs
• Supported marine ecosystem conservation and sea turtle breeding in Thailand
• Participated in the "fukushima sakura project"
• Implemented audits and quality control measures for outsourced production

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• CSR procurement considering social and environmental aspects
• Joint development with suppliers for sustainable materials

Climate-Related Risks & Opportunities

Physical Risks

• Climate change impacts on coral reefs

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI Sustainability Reporting Guidelines (G4), Ministry of the Environment's Environmental Reporting Guidelines (2012)

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Environmentally friendly packaging

Awards & Recognition

• Encouragement Award at the Enterprise Telephone Reception Contest

Environmental Metrics

ESG Focus Areas

• Quality and Safety
• Customer Satisfaction
• Environmental Sustainability
• Social Responsibility

Environmental Achievements

• Implemented ISO14001-based environmental management system
• Promoted resource reduction, recycling, and waste reduction
• Developed eco-friendly raw materials and packaging
• Participated in environmental conservation activities

Social Achievements

• Established a customer consultation center focusing on listening, empathy, speed, and trust
• Developed a “Smile Data System” to share customer feedback and improve products/services
• Launched “Kosé Idea Box” to gather customer opinions for product development
• Created Braille labels for visually impaired customers

Governance Achievements

• Established a CSR Committee and CSR Promotion Committee to oversee CSR activities
• Implemented a system for reporting and responding to quality issues and accidents
• Maintained a policy of not conducting animal testing (except under specific circumstances)

Climate Goals & Targets

Environmental Challenges

• Meeting evolving customer needs and scientific advancements
• Maintaining high safety standards in cosmetics
• Balancing environmental sustainability with business operations

Mitigation Strategies

• Active participation in ISO committees and research on safety testing methods
• Development and implementation of alternative testing methods to reduce animal testing
• Continuous improvement of environmental management system and practices

Supply Chain Management

Responsible Procurement

• Focus on ethical sourcing and environmental considerations in material selection

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ISO 14001

Awards & Recognition

• Encouragement Award at the Enterprise Telephone Reception Contest

Environmental Metrics

ESG Focus Areas

• Climate change
• Diversity and Inclusion
• Sustainable Supply Chain
• Environmental Conservation
• Human Rights

Environmental Achievements

• Switched all purchased electricity at Gunma Factory to electricity from renewable energy sources
• Achieved zero emissions (recycling rate of 99.5%) at Gunma Factory and Sayama Factory in 2005. Currently, all factories in Japan have achieved zero emissions.
• Reduced SCOPE 1 and 2 CO2 emissions by -12%
• Reduced water intake intensity by -4.0%

Social Achievements

• Launched “KOSE IKUPAPA Support System,” to encourage male employees to take paternal leave
• Supported sports through participation in professional dance league
• Supported medical professionals and care workers with cosmetic donations
• Provided tuition support (scholarships) at a girls’ junior high school in Tanzania

Governance Achievements

• Established the KOSÉ Group Human Rights Policy
• Established a Compliance Help Desk
• Established the Sustainability Committee chaired by the President & CEO
• Announced support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impact on sales and profits
• Insufficient integration of e-commerce and offline activities in Japan
• Climate change risks (transition risks and physical risks)
• Supply chain disruptions due to climate change

Mitigation Strategies

• Cost control measures
• Strategic investments in Chinese and travel retail markets
• Scenario analysis in line with TCFD recommendations
• Development of alternative sourcing strategies
• Promoting car sharing to reduce the number of sales vehicles used
• Establishment of a new eco-friendly facility

Supply Chain Management

Supplier Audits: Questionnaire survey of suppliers accounting for 95.8% of procured goods by cost

Responsible Procurement

• Sustainable Procurement Guidelines for suppliers
• Annual monitoring of suppliers for sustainable procurement
• Promoting detailed information exchange with suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (floods, etc.)
• Increased raw material procurement risk due to climate change
• Production restrictions due to water intake restrictions

Transition Risks

• Stronger restrictions on greenhouse gas emissions
• Introduction of carbon pricing
• Substitution of plastic materials due to restrictions on plastics
• Shift in consumer demand to environmentally friendly products

Opportunities

• Increased demand for sunscreen and UV protection products
• Increased demand for cooling products
• Improvement of brand value due to reduction of environmental footprint
• Development and expansion of products with reduced environmental impact

Reporting Standards

Frameworks Used: ISO 26000, UN Global Compact, SDGs, TCFD

Certifications: Science Based Targets initiative (SBTi)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• SEKKISEI CLEAR WELLNESS series

Awards & Recognition

• CDP Climate Change A List 2020
• Supplier Engagement Rating Leaderboard 2020
• Women’s Support Brand Award
• Semi-Nadeshiko Brand for Fiscal 2021

Environmental Metrics

ESG Focus Areas

• Adaptability
• Support for a beautiful, healthy and happy life
• Help create a world with true gender equality
• Use the theme of beauty to help solve environmental issues
• Environmental conservation programs in areas where KOSÉ operates
• Lower the overall environmental impact of business operations

Environmental Achievements

• Waste Recycling Rate at Factories 100%
• Total Area Planted with Coral Reefs (Cumulative) 12,270 m²
• Reduced manufacturing-related CO2 emissions by around 9% for the regular size and 10% for the large size of MEDICATED SEKKISEI BRIGHTENING ESSENCE LOTION by using FSC-certified paper and biomass plastic for the container and outer packaging.
• Scope 1 and 2 CO2 emissions reduction: 45.1% (total emissions reduction vs. 2018, before verification by third parties)
• Scope 3 CO2 reduction: 26.5% (total emissions reduction vs. 2018, before verification by the third parties)

Social Achievements

• Ratio of Female Employees in Leadership Positions 33.2%
• Launched Visée NENMAKU FAKE ROUGE lipsticks, offering genderless colors
• Held UV protection seminars aimed at students
• Various activities to support the revitalization of local communities
• Various activities to support those experiencing difficulties in their daily lives
• Supported promotions of sports: 121 (cumulative since fiscal 2020)
• KOSÉ Family Day—Meet KOSÉ! 2023 event at KidZania Tokyo with 98% employee satisfaction

Governance Achievements

• Compliance training for 300 management personnel
• Incorporation of employee engagement scores in remuneration criteria for internal directors

Climate Goals & Targets

Environmental Challenges

• Sluggish consumption in China due to slow economic recovery and impact of Fukushima wastewater release
• Reduced purchases of merchandise by travel retailers in South Korea and China
• Significant delay in progress toward net sales and profit margin targets under VISION2026 due to substantial changes in the business environment
• Changes in legal regulations and response to demand fluctuation risk
• Abrupt changes in the political situation in countries and regions where the Company does business
• Securing outstanding talent
• Problems related to product accidents
• Leaks of confidential or personal information

Mitigation Strategies

• Focus on customer creation and stronger marketing for end consumers, aiming to increase brand value and improve profitability
• Focus on developing new markets for KOSÉ brands in the United States, Europe, ASEAN and India
• Revision of existing sales methods in response to changes in the Chinese market
• Strengthening sales structures in ASEAN and India
• Accelerating OMO measures, including CRM activities and centralizing online and offline customer data
• Establishment of the Product Headquarters to build a flexible and agile supply chain
• Compliance training and establishment of internal and external consulting channels
• Establishment of Risk Management and Compliance Regulations and a Risk Management Promotion Committee
• Creation of a framework based on Crisis Management Regulations

Supply Chain Management

Supplier Audits: 161 suppliers (95.5% of total cost of goods procured) completed SAQs in fiscal 2023

Responsible Procurement

• Basic Procurement Policy
• Sustainable Procurement Guidelines
• RSPO certified raw palm oil procurement
• Participation in Sedex Working Team

Climate-Related Risks & Opportunities

Physical Risks

• Increase in raw material procurement risk due to climate change
• Suspension of production or logistics operations due to damage from floods or other disasters
• Damage to production facilities and supply chain disruptions caused by abnormal weather

Transition Risks

• Shift in consumer demand to environmentally friendly products
• Stronger restrictions on greenhouse gas emissions
• Substitution of plastic materials due to introduction of restrictions on plastics
• Production restrictions due to introduction of restrictions on water intake and discharge

Opportunities

• Increased demand for sunscreen and UV protection products
• Increased demand for cooling products and makeup smudging prevention products
• Improvement of brand value due to reduction of the environmental footprint
• Development and expansion of products and services with reduced environmental impact
• Improved cost competitiveness from renewable energy and energy-saving equipment

Reporting Standards

Frameworks Used: ISO 26000, United Nations Global Compact, SDGs, TCFD, TNFD

Certifications: ISO 9001, ISO 22716, RSPO Supply Chain Certification Standard (SCCS), SBT (Science Based Targets)

UN Sustainable Development Goals

• Goal 3: Good Health and Well-being
• Goal 5: Gender Equality
• Goal 6: Clean Water and Sanitation
• Goal 7: Affordable and Clean Energy
• Goal 12: Responsible Consumption and Production
• Goal 13: Climate Action
• Goal 15: Life on Land

Initiatives contribute to these goals through various programs and targets outlined in the KOSÉ Sustainability Plan.

Sustainable Products & Innovation

• SEKKISEI CLEAR WELLNESS series with reduced CO2 emissions and plastic usage
• MEDICATED SEKKISEI BRIGHTENING ESSENCE LOTION with reduced plastic packaging
• ADDICTION makeup compact case made using 94% recycled resin material
• Metal-less pump using plastic instead of metal

Awards & Recognition

• CDP Climate Change A List 2023
• CDP Water Security A List 2023
• Nadeshiko Brand 2023
• 2024 Certified Health & Productivity Management Outstanding Organization
• Consumer Affairs Agency Commissioner’s Commendation at the fiscal 2023 Good Practices of Consumer-Oriented Management Awards
• Certified as Advanced at the D&I Awards 2023