Reducing Our Environmental Footprint

The impact of climate change, including extreme weather events caused by global warming, is becoming more apparent each year. Shiseido has set long-term targets for addressing environmental issues and engages in various company-wide activities to achieve the targets, with the aim of preserving the natural environment and its biodiversity while simultaneously ensuring the sustainable growth of society, economy, and its businesses.

Shiseido has adopted an Environmental Policy as its requirements for addressing environmental issues and has defined the reduction of CO₂ emissions, the reduction of water consumption, and waste reduction as priority domains in actions for reducing the environmental footprint of its business activities. We will continue to work with stakeholders throughout our value chain to create sustainable impact within each of these actions.

To mitigate climate change, we are committed to reducing CO₂ emissions from the electricity and fuel used in our business activities. As part of our efforts, we use renewable energy where possible and constantly seek to improve energy efficiency in our factories, offices, and other facilities.

Fukuoka Kurume factory
In 2023, we expanded solar power generation facilities at our Fukuoka Kurume factory, thus increasing the total capacity of the facilities to 1.9MW. The total power-generating capacity of all factories of Shiseido has reached 6.8MW.

Our indirect CO₂ emissions also result from our business activities but they are not directly under our control – for example, emissions that derive from the manufacturing and shipping of raw materials or the use and disposal of our products. As part of our work to reduce the impact of our business activities on climate change, we have established science-based long-term reduction targets for our indirect CO₂ emissions, and we are working with our suppliers and other stakeholders to reduce emissions across our entire value chain.

Shiseido is promoting sustainability initiatives through our brands and regional businesses. Sustainability Committee was set up to ensure timely management decisions related to sustainability efforts and their proper implementation across the Group. In 2023, the committee was held regularly. The committee decides on Group-wide sustainability strategies, policies, and discusses specific topics such as risks and opportunities related to climate change and the natural environment, and actions for human rights, as well as monitors the progress of medium-to-long-term goals. The committee consists of the representative corporate executive officers and executive officers in charge of Corporate Strategy, Research & Development, Supply Network, Corporate Communications, and our Brand Holders, to discuss a range of issues from different perspectives. Important matters in the execution of business, which require approvals are proposed or reported to the Global Strategy Committee or the Board of Directors.
In order to ensure executing and promoting of sustainability actions, a Sustainability TASKFORCE was set up under the Sustainability Committee, consisting of the heads of key relevant functions. At the Sustainability TASKFORCE, practical approaches to achieve our long-term targets are discussed with relevant functions, regional headquarters, and local subsidiaries as necessary.

We conducted our scenario analysis for both the transitional and the physical risks/opportunities in terms of the 1.5/2°C and 4°C scenarios, respectively, based on the Representative Concentration Pathways (RCPs) and Shared Socioeconomic Pathways (SSPs) provided by the IPCC. Regarding transitional risk, the elements associated with the transition to a decarbonized society — such as policy, regulation, technology, market, and consumer perceptions — were considered. Physical risks related to the acute or chronic phenomena caused by the rise in temperature — such as floods and water shortages — were also considered. Based on these considerations, the financial impacts of the 1.5/2°C and 4°C scenarios were then analyzed.
The influence of carbon tax was identified as the transition risk, with projections pointing toward approximately JPY 0.05-0.87 billion in 2030. For physical risks, JPY 0.89 billion of floods and JPY 3.5 billion of water shortage were forecasted potentially. As for opportunities, in the 1.5/2°C scenario, high awareness by consumers means there is a market for sustainable brands and products. Similarly, the 4°C scenario identifies sales opportunities for products that can help people to live with high temperatures. At Shiseido, we aim to leverage these findings — by mitigating risks and making the most of opportunities to provide sustainable products to consumers and promote our beauty innovations.

For nature-related risks and opportunities, we conduct a quantitative analysis of the impact on biodiversity throughout the value chain by means of a Life Cycle Assessment. This revealed that the impact is great, particularly in raw material procurement. In response, we assumed places of origin of cosmetics raw materials with high dependence on biodiversity in line with the LEAP approach recommended by TNFD. We thus monetized ecosystem services by pollinators, such as honey bees, as physical risk analysis in the aspect of dependencies. At the same time, we analyzed risks on sustainability-related regulations as transitional risks along with climate change issues.

We assess and identify the impactful risks holistically from a mid-to-long-term perspective. “Environmental (Climate Change, Biodiversity, etc.)” and “Natural Disaster, Infectious Disease and Terrorism” are listed as the categories related to sustainability. Climate-related and biodiversity-related risks are analyzed based on scientific and socioeconomic evidence and integrated into the enterprise risk management system as one of the elements related to climate change or natural disasters. According to their significance, the risks and their countermeasures are deliberated by the Global Risk Management & Compliance Committee and the Global Strategy Committee. The material risks are also proposed or reported to the Board of Directors as necessary.

Regarding direct use of water resources, we have set reduction of water consumption at our sites as a target and apply various methods to achieve this target. For example, as each Shiseido factory has various facilities and equipment tailored to the kind of cosmetics it produces, we design specific water reduction initiatives for each site. Examples of our water-saving initiatives include using automatic cleaning to ensure the manufacturing equipment is cleaned more effectively and consolidating the washing locations of equipment parts. In addition, we are identifying locations and facilities with high water usage by increasing the number of monitoring points (measurement points) for water usage in our factories. The water usage of all factories is reported monthly, and we have established a system to track progress towards our targets and to develop measures to achieve them.
For instance, at our Kakegawa factory, we analyze data from measurement points and conduct training for environmental representatives in each workplace to identify the areas for water consumption reduction and find solutions. This initiative has raised our employees' awareness regarding water conservation, resulting in the development and execution of effective measures to reduce water consumption.

At our Val de Loire factory in France–an area where rainfall is expected to drop in future–initiatives like reduction of water consumption and redesigning the nozzles on our cleaning facilities successfully reduced the amount of water used per clean by 30%.
At our Shanghai factory in China, we have introduced a system for collecting, storing, and reusing wastewater from production of pure water used for cosmetics production. We reuse the wastewater as cooling water for cooling tower and for various other purposes. As a result of these aggressive reduction activities, in 2023 the overall water consumption at the Shanghai factory decreased by no less than 20% from the previous year. At our Hsinchu factory in Taiwan, we reuse 100% of the wastewater from our water purification systems as cooling water for cooling tower.

To ensure more effective use of water, we focus on circular systems that clean water and reuse or recycle it within the process. We process the used water through water treatment facilities and conduct regular monitoring of the treated water to ensure that the water quality meets the standards established by regulations. At our Kakegawa factory, we launched a Discharged Water Recycling System in 2023. With this system, we recycle some of the discharged wastewater to use it as makeup water for motive power facilities, in an effort to make efficient use of water resources and reduce their consumption. This has enabled cyclic use of wastewater from production process, which was discharged before. Use of this system enables to reuse approx. 12,000 ㎥ of water every year. It means water reduction equivalent to approximately 15.6% of water consumed at the Kakegawa factory. At our Osaka Ibaraki factory in Japan, we introduced a circular system that utilizes re-used water to cool the manufacturing tanks. This system enables an annual reduction in water consumption of around 65,000 ㎥. Other new water utilization initiatives include optimizing our pure water manufacturing equipment — as we have done at our Nasu factory in Japan, for example. Pure water manufacturing consumes approximately half of all water used at the factory. Through this initiative, as well as other water recycling schemes, we reduced our annual water consumption by around 72,000 ㎥, an amount that is approximately one third of the factory’s annual water usage.

At our Gien factory in France, we switched from water-based cleaning to alcohol-based cleaning for our fragrance manufacturing equipment and transportation components. The alcohol used is cleaned and reused in the process repeatedly.

As our Water Stewardship initiative, we have been engaging with local governments and relevant organizations from the watershed of Nasunogahara, where Nasu factory is located, based on our scientific understanding of the overall area obtained through our research. We have also had the research findings and direction of our initiatives reviewed by external academic experts. Shiseido aims to build a Water Stewardship in collaboration with its stakeholders, towards a more comprehensive, sustainable use of water resources, and moreover for protection of biodiversity in watersheds. We ask our suppliers to provide information on their water usage through self-assessment questionnaires such as Sedex and Shiseido SAQ, and strive to ascertain water-related environmental impacts.

As population growth continues and income levels rise, resource consumption and waste increase.
To make more effective use — and reuse — of limited resources, it is important that businesses shift from a disposable, linear economic model to a circular economy. At Shiseido, we are doing this by optimizing the use of raw materials and reducing waste throughout our entire value chain, while complying with all relevant waste management rules in the countries and regions where we operate.

All our waste reduction initiatives are driven by our PEOPLE. Therefore, we arrange online seminars and training sessions for newly appointed managers and employees in charge of industrial waste in Japan. When we outsource the disposal of waste from our factory or office to a waste disposal contractor, we make sure to assess the contractor, ensure that industrial waste is disposed of appropriately, ensure that a manifest is delivered, and inform the importance of onsite confirmation to the contractor. Following the seminars and training sessions, each participant should be able to identify how to effectively manage waste with the help of our internal guidelines and checklists.