Reducing Our Environmental Footprint

Reducing CO₂ Emissions

Climate change is a cause of various disasters such as floods, droughts, and forest fires, in addition to health damage such as heatstroke. In the future, in addition to such damage becoming more severe, there are concerns that new damages such as the loss of land in island nations and the loss of biodiversity will become apparent. To maintain the global environment that supports a sustainable society and economy, the 1.5℃ target^*1 has been agreed as a global goal, and countries and regions around the world are continuing to strive to achieve net-zero emissions.
In corporate activities as well, there is a growing recognition that climate change is a critical business risk, and initiatives to reduce CO₂^*2 emissions, mitigate climate-related risks, and expand opportunities are underway.

*1: The global goal of holding the increase in global average temperature to below 1.5°Cabove pre-industrial levels.
*2: Greenhouse gases usually refer to CO₂, CH4, N2O, HFCs, PFCs, SF6, and NF3. In this report, unless otherwise specified, these greenhouse gases will be collectively referred to as “CO₂”.

Our Approach

There is a growing recognition that climate change is an issue of regional and intergenerational inequality, such as between developed and emerging countries that emit CO₂ and vulnerable developing countries and island nations, or between the current generation that emits CO₂ and future generations that will be affected. For a company with a global web of raw material supply chains and sales networks, climate change—which has a global impact, including an impact on developing countries—goes beyond a mere environmental issue and becomes a factor of business risks such as environmental regulations, tax systems, and damage from natural disasters. In addition, damage from rising temperatures and climate disasters is expected to become more severe over time, and there are concerns that delays in mitigation and adaptation efforts will lead to an expansion of business risks. Shiseido Group supports the Paris Agreement and the Glasgow Climate Pact, and has set net-zero emissions in 2050 as its long-term objective. As an interim target to achieve this, we have set CO₂ emissions reduction targets aligned with the 1.5°C trajectory toward 2030 based on the Science Based Targets^* initiative, and have obtained certification from the SBTi.

Through proactive energy conservation at our sites, the introduction of solar power generation facilities, and the expanded use of renewable energy, we are steadily reducing CO₂ emissions from the electricity and fuel used at our sites. At the same time, we are working with stakeholders to reduce indirect emissions from the value chain excluding our sites (Scope 3).
By transparently disclosing our governance, strategy, risk management, and metrics and targets related to these climate issues, along with financial impacts and the progress of our initiatives, we are fulfilling our accountability to investors and other stakeholders.

*Scope 1, Scope 2, and Scope 3 emissions. Certification was obtained from the Science Based Targets initiative (SBTi).

Environmental Policy

SCIENCE BASED TARGETS

Metrics and Targets

2030 Targets：

Scope 1 and 2　46.2% reduction_*1（SBTi）
Scope 3 　　55% reduction_*2（SBTi）

*1：From all Shiseido Group sites (compared to 2019). Including our target of achieving carbon neutrality by 2026 (including carbon offsetting).
*2：Throughout our value chain, excluding all Shiseido Group sites, economic intensity target (compared to 2019).

Reducing CO₂ Emissions from Energy Consumption (Scope 1 and Scope 2)

Increasing the Use of Renewable Electricity

Shiseido Group is constantly working to increase the use of renewable electricity at all of our factories, offices, and research centers globally. Renewable electricity accounted for 94% of all the electricity used company-wide in 2025. We have already completed switching 100% of the electricity at all 11 factories, our distribution centers, and all of the company-owned buildings of Shiseido Japan to renewable energy. Ten of our facilities^* in different countries and regions are equipped with solar panels. In the China Region, we completed a 100% switchover at all sites in 2023.

Moreover, at the Beijing Office, which includes the factory of Shiseido Liyuan Cosmetics Co. Ltd. in China, we fulfilled requirements under the code for carbon neutrality certification (PAS 2060:2014) and obtained the certification.
In addition, We are a member of the RE100 global initiative, which brings together businesses committed to using 100% renewable electricity in their activities. We will continue to accelerate the transition from fossil resource-derived energy to renewable energy.

SCIENCE BASED TARGETS

Solar panels at the Val de Loire factory in France

*Kakegawa Factory, Osaka Ibaraki Factory, Fukuoka Kurume Factory, Shanghai Factory, Beijing Factory, Hsinchu Factory (Taiwan), East Windsor Factory (US), Gien Factory (France), Val de Loire Factory (France), and Global Innovation Center (Yokohama).

Promoting Energy Conservation and Energy Efficiency

Every year, we set CO₂ emissions reduction targets at all company-owned factories and distribution centers in countries and regions around the world. We are working to reduce energy consumption with the target of reducing CO₂ emissions by 4% year-on-year in FY2026. We also monitor our progress against the targets on a monthly basis based on our ISO 14001 environmental management system^*, and implement measures.

*We are working to obtain ISO 14001 certification at all factories and distribution centers (obtained at all factories by the end of 2023, and at four distribution centers in Japan and overseas by the end of 2025).

Specific Initiatives

In addition to using LED lighting to reduce energy consumption and electric forklifts to reduce CO₂ emissions at factories and distribution centers, we installed Energy Management Systems (EMS)_* to visualize and optimize the energy use and CO₂ emissions of equipment that uses electricity, steam, or compressed air.
At the Kakegawa factory, based on EMS data analysis, we optimized the operation of air conditioning according to the number of people in the room and the operating status of the equipment, thereby reducing CO₂ emissions by approximately 40 tons per year.
At the Shanghai factory, we utilize solar-powered industrial water heaters and replaced part of the water heating process, moving away from boiler steam, thereby reducing natural gas usage and CO₂ emissions.

*A system that realizes efficient use of energy such as energy saving and load leveling by visualizing the energy usage status using information and communication technology. It has been introduced at all domestic factories and some overseas factories (Beijing factory, Hsinchu factory, Gien factory, and Val de Loire factory), and will be gradually introduced at other factories in various countries and regions.

Internal Awareness-Raising Activities

At Shiseido Group, we conduct sustainability e-learning programs for all employees in Japan to raise awareness of the significance of everyone working together to solve environmental issues, such as the level of CO₂ emissions in our business activities and the promotion of power and energy saving. Upon completion of the program, a check test is conducted to ascertain employees' understanding. In addition to basic training programs on energy saving and decarbonization, factories promote activities tailored to their specific conditions.

At the Osaka Ibaraki factory, we fostered environmental awareness through environmental patrols, where workplaces mutually check energy saving and waste sorting, and the “Eco-Proposal Election” to solicit ideas for environmental improvement. Meanwhile, at our distribution center in the United States, we promote awareness of power saving and actions toward reduction through energy saving awareness training.
Globally, we conduct a sustainability awareness survey targeting all Group employees to discover the degree of understanding and identify any issues in our sustainability strategy (society and environment) and specific actions by country/region, department, and job type. Through feedback to management, this helps instill organizational understanding and encourage action.

Digital signage displaying environmental information (Osaka Ibaraki factory)

Introduction of Internal Carbon Pricing

At Shiseido, approximately 50% of CO₂ emissions from energy used in our activities originate from production activities at our factories. For this reason, we decided to introduce an internal carbon pricing (ICP) system in 2023 to make investment decisions on factory equipment. We have set an internal carbon price, and in 2025, we continued to apply it when making decisions on decarbonization investments in energy-efficient facilities, renewable energy facilities, and the like at our factories.

Initiatives to Reduce Indirect CO₂ Emissions in Value Chain (Scope 3)

To reduce emissions across the entire value chain, it is necessary to track indirect emissions and take a proactive approach. We have been calculating indirect emissions in our value chain based on the Life Cycle Assessment (LCA) method since 2011. Based on these continuous evaluation results, we identify activities with large CO₂ emissions in our business, set long-term reduction targets based on scientific evidence, and advance reduction efforts in collaboration with our stakeholders.
In 2025, Scope 3 emissions were approximately 880,000 tons of CO₂. While this represents a 47% absolute reduction compared to the base year, our economic intensity based on core operating profit increased by 34% driven by the core operating profit itself. As our strategic shift toward a highly profitable corporate structure progresses toward 2030, we expect to see further reductions in economic intensity as well.

Selection and Use of Raw Materials that Reduce Our Environmental Footprint

To realize a net-zero society, we must transition away from our dependence on fossil resources—not only for power and fuel but also for chemically synthesized materials. At the same time, as the world shifts away from fossil resources, concerns are growing over the unintended consequences on deforestation and biodiversity loss.
Based on back casting from our net-zero vision and the principles of green chemistry, we have set a new milestone target for 2030: to ensure that 90% of our cosmetic ingredients are circular, meaning they are regenerated and circulated within both human social systems and natural systems.
Particularly regarding palm oil-derived raw materials and paper, which carry a high risk of deforestation, we support the NDPE^*1 principles and are actively engaged in traceability surveys. Furthermore, by utilizing certified paper and raw materials certified under the RSPO's^*2 physical supply chain model, we are preventing greenhouse gas emissions associated with land conversion while mitigating the risks of deforestation and biodiversity loss.

*1: No Deforestation, No Peat, No Exploitation
*2: Roundtable on Sustainable Palm Oil

Reducing CO₂ Emissions During Transportation

Shiseido Group is optimizing transportation routes and improving loading efficiency in its shipments. We are also expanding joint deliveries with other companies and the introduction of EV trucks.

At our West Japan Distribution Center, with the cooperation of our business partners, we have improved delivery efficiency by introducing measures such as increasing the number of products per package and bulk ordering. In addition, during palletization, we automatically detect the height of the contents in the cardboard boxes and adjust the box height, thereby improving loading efficiency.
Furthermore, we are working to reduce waste and CO₂ emissions by optimizing transport packaging and reusing transport protective packaging in collaboration with container suppliers with high delivery frequencies. By simplifying transportation materials as much as possible, we also contribute to waste reduction at stores. Furthermore, we are collaborating with a container supplier to conduct production at the site closest to our production facility.

Shipping line that optimizes cardboard box height to improve loading efficiency

Reducing CO₂ Emissions at the Point of Sale

In the production process of materials used at storefronts where cosmetics are sold, various resources are consumed, and CO₂ is emitted. For the purpose of mitigating climate change and biodiversity loss, we are adopting recycled materials for the acrylic resins used in tools for in-store displays, and using certified paper for paper-based promotional materials. Recycled acrylic resin is expected to reduce CO₂ emissions by 50-60% throughout the product life cycle compared to conventional virgin materials.

Paper products produced from properly managed plantations have positive impacts on both the environment and society, such as not only preserving natural forests but also preventing CO₂ emissions associated with forest development and creating employment in the producing regions.
By proactively using sustainable materials such as recycled materials and certified materials not only for the raw materials used in our products but also for various materials consumed in our activities, we will promote the transition to circular manufacturing throughout our value chain.

In-store display made from recycled materials

Long-term Incentive-type Remuneration for Corporate Officers Linked to Environmental Goals

In FY2019, Shiseido introduced performance-linked stock compensation (performance share units) in consideration of Directors' duties. The compensation that is paid annually is structured to serve as an effective incentive for creating medium-to-long-term corporate value. Social value metrics, one of the evaluation items, are given an evaluation weight of 20%. Social value metrics are comprised of multiple ESG-related performance indicators. The environmental aspect is evaluated according to the status of the achievement of the CO₂ emissions reduction target.

Awards Related to Reduction of CO₂ Emissions

CDP A List <Climate Change and Water Security>

Shiseido was selected by CDP, an international NPO, as one of the companies in the A List 2025 in recognition of its leadership in transparency and performance in the fields of Climate Change and Water Security. We were selected for the fourth consecutive year in Climate Change and for the second consecutive year in Water Security.

Climate Water CDP A List 2025

Participation in Initiatives

To quantitatively grasp the overall environmental footprint of our industry and reduce CO₂ emissions, we participate in industry associations and initiatives, exchanging knowledge and engaging in discussions.

Japan Cosmetic Industry Association (JCIA) Sustainability Guidelines
Life Cycle Assessment Society of Japan (JLCA)
Sustainable Packaging Initiative for CosmeTics（SPICE）
EcoBeautyScore Consortium（EBS）
Programs for Bridging the gap between R&D and the IDeal society (society5.0) and Generating Economic and social value

Calculation Methods of Scope 3 Emissions by Category

Category	Explanation	Internal data	Emission factor
1.Purchased goods and services	Emissions generated from upstream of the supply chain, such as raw materials, packaging materials, advertising services, and land use change due to palm-derived material production	Raw material procurement volume POSM procurement volume, Advertising expenses Palm- and paper-related raw material procurement	AIST-IDEA v3.5 Ecoinvent 3.9 Reference-1 Reference-2
2.Capital goods	Emissions generated from making capital goods	CAPEX	Reference-1
3.Fuel and energy related activities	Emissions generated in the process of mining, extraction, refining, transportation of energy and fuels	Amount of energy consumption	AIST-IDEA v3.5
4.Upstream transportation and distribution	Emissions generated from procurement transportation, shipping transportation and waste collection	Raw material procurement volume Product volume Distance between our factories and sales sites/Means of transportation	AIST-IDEA v3.5 Ecoinvent 3.9
5.Waste generated in operations	Emissions generated in the process of waste treatment from our operations.	Waste generated by material type and disposal method	AIST-IDEA v3.5
6.Business travel	Emissions from employee business-related travel	Travel expenses Number of trips by destination Transportation distance	AIST-IDEA v3.5 Reference-1
7.Employee commuting	Emissions from employee commuting between home and Shiseido’s site	Commuting expenses	AIST-IDEA v3.5 Reference-1
8.Upstream leased assets	Leased property (such as warehouses)		AIST-IDEA v3.5
9.Downstream transportation and distribution	Emissions generated in storage and stores	Sales volume Product bottom area	Reference-4
10.Processing of sold products	Not applicable
11.Use of sold products	Emissions from product use, such as rinsing, drying up	Energy, water, and consumable goods consumed in product use	AIST-IDEA v3.5
12.End-of-life treatment of sold products	Emissions generated in decomposition of ingredients, and the process of transportation and waste treatment from products sold	Amount of carbon derived from fossil resources in the molecules that make up the ingredient and packaging components Waste generated by material type	AIST-IDEA v3.5
13.Downstream leased assets	Not applicable
14.Franchises	Not applicable
15.Investments	Emissions from unconsolidated affiliates and stock investees	Scope 1 and scope 2 emissions of unconsolidated affiliates and stock investees Shareholding Ratio	－

Calculation methods of Scope 3 emissions

1）Calculation method and Emission Factors for Reporting of Act on Promotion of Global Warming Countermeasures
2）Germer, J. et al. (2008) Environment, Development and Sustainability, 10, 697–716
3）Emission factor database for calculating GHG emissions of an organization through its supply chain v3.5
4）Keidanren Carbon Neutrality Action Plan: FY2025 Follow-up Results (Individual Industries)

Use and Conservation of Water Resources

Water is a natural resource that is essential for the lives of humans and all things living, and a resource shared among various stakeholders in the basin. It has great value not only for direct use in drinking, agriculture, and industry, but also for indirect benefits such as flood control and carbon storage, and as a resource that supports culture and economic security. Wastewater is processed in a treatment facility then returned to the basin to be used by homes and businesses in the community. In general, the state of water resources differs from one area to another. Even within a basin, it varies depending on the season and other environmental factors, including the availability of underground water and upwelling. It is also influenced by communities’ water usage. Therefore, in addition to managing water use at their sites, businesses must implement initiatives while also considering the basin and surrounding areas.

Our Approach

In the cosmetics business, water is used in every aspect, including the development of water-containing products such as lotions; the growth of plants as raw materials; temperature control and equipment cleaning at factories; consumption; and waste disposal. If the quantity or quality of water deteriorates, it will have a significant impact on product manufacturing volume, production costs, and quality. In addition, if water use competes with other industries in the areas where our factories are located, it could lead to a deterioration in relationships with local communities. Considering the unique characteristics of water resources, their circularity and uneven distribution, Shiseido Group promotes the sustainable use of water while respecting healthy water cycles in basins, water-related culture, and access to water and sanitation as human rights.

We have been promoting activities such as water conservation and recycling, especially focusing on sites in areas with high water stress or areas where rainfall is expected to decrease in the future due to climate change. During product manufacturing at our sites, we constantly monitor not only water intake but also the amount of water discharged, its temperature, and the quality of treated wastewater, treating it with purification facilities to ensure water quality equal to or higher than the standard values stipulated by laws and regulations.

We are also working on water resource management (Water Stewardship) with our stakeholders in the basin. For example, at our Nasu factory, we are conducting surveys to track the infiltration origin, the situation of the basin, and the water balance to understand where the groundwater used by the factory comes from and how it affects the area. By conducting these surveys in cooperation with local farmers and local high schools, we aim to realize water use that is in harmony with local communities and the natural environment.

Metrics and Targets

By 2026: Water consumption 40% reduction_* (2025 Results for Water Consumption：Water consumption 58% reduction)
2030 Targets: Water consumption 50% reduction_*

Toward 2030, we have set a target of reducing direct water use at our production sites by 50% (economic intensity) compared to 2014, and will aim for more efficient water use in the factories’ production processes and sustainable water resource management.

*Economic Intensity across all our sites (compared to 2014)

Environmental Policy

Utilization and Reduction of Water Consumption in the Production Process

Regarding the direct use of water resources, we have been working to reduce water consumption in the production processes at each site worldwide. We have met our milestone targets every year since 2023.

Specific Initiatives

At our Val de Loire factory in France—an area where rainfall is expected to decrease in future—initiatives like saving water and redesigning the nozzles on our cleaning facilities successfully reduced the amount of water used per clean by 30%.
At our East Windsor factory in the United States, we have introduced a monitoring system that detects abnormal or excessive water use using individual meters, enabling maintenance and operational changes through real-time situational awareness and trend analysis.
As an initiative to reuse water, the Kurume factory reduced its annual water consumption by approximately 2,700 m3 by using wastewater from the water purification system for the sealing water of vacuum pumps, while the Shanghai factory reduced its annual water consumption by approximately 13,800 m3 by reusing water as supplementary water for toilets and cooling towers, as well as for greening and car washing.
In terms of internal awareness-raising and training, initiatives are underway to post the progress against water consumption targets inside the factories. At the Shanghai factory, training on water-saving methods and precautions at work and in daily life is provided to all factory employees through e-learning once every two years and lectures once a year to enhance basic knowledge.

Water Stewardship (Initiatives on Water Resources in Communities)

Since water is a shared resource that connects local people and nature through rivers and groundwater, companies are required to take responsible actions not only for water resource management related to their own business activities but also for water resources in the basin. Water stewardship is the concept of expanding a company’s responsibility as a water user beyond its own factories to the entire local community. In addition to in-house initiatives such as reducing water consumption and managing water quality, we are practicing water stewardship as a shared asset of the basin by paying attention to the situation of the regions sharing the water and engaging in secondary use in cooperation with local communities and initiatives set up with suppliers.

Specific Initiatives

At our Val de Loire factory in France—an area where rainfall volumes are expected to fall in future—we share information with other local industries on good water practices and legal regulations several times a year.
At our Shanghai factory in China—which is located in a water-stressed^*1 area—we participate in a local environmental protection association and proactively obtain environmental information, such as environmental laws and regulations regarding factory activities, and utilize them in our factory's water conservation activities. We also report monthly water consumption to the government and we are promoting water conservation and are working to improve water utilization rates and strengthen water conservation management.
The Nasu factory is taking steps to better understand the basin environment of the Nasunogahara area, where the factory is located, not only from a geological perspective but also from a local historical perspective. So far, through repeated dialogues with various stakeholders in the surrounding areas—including experts, government agencies, land improvement districts, farmers, and educational institutions such as high schools—we have conducted analyses of the seasonal variability of water flowing on the surface and underground, changes in flow volume due to groundwater pumping at the factory, and how wastewater from the factory infiltrates through agricultural canals and rice paddies in downstream areas, thereby deepening our shared understanding of the basin and water resource utilization. In addition, we are participating in the Nature Positive Nasunogahara Alliance led by Nasushiobara City. At the Nasunogahara Nature Positive Symposium held in July 2025, we gave a presentation on the Nasu factory's water circulation project.
At the Kurume factory in 2025, we conducted surveys on the groundwater recharge area, water balance, and boundaries. Based on the results obtained, we plan to carry out activities that contribute to the surrounding biodiversity in the future.
At the Kurume factory and Nasu factory, we have installed outdoor water supply facilities to provide water for domestic use at times of disaster, thereby supporting the safety and lives of local residents.
At each of our domestic factories in Japan, employees volunteer to take part in cleaning and beautification activities for nearby rivers.

In recognition of these initiatives, Shiseido was certified as a Water Cycle Active-company^*2

*1: A situation where there is not enough water of sufficient quantity to meet the demands of people and the environment.
*2: An enterprise certified under the "Water Cycle Company Registration/Certification Program" by the Secretariat of the Water Cycle Policy Headquarters, Cabinet Secretariat.

Reducing Waste

As population growth continues and income levels and purchasing power rise globally, both resource consumption and waste continue to increase. To make more effective use of limited resources, it is important to shift from a disposable, linear economic model to a circular economy where resources are repeatedly and effectively reused. Companies must strive to comply with laws and regulations related to waste management established in each country and region, while optimizing the use of resources throughout the entire value chain and reducing waste generation.

Our Approach

To realize circular products and manufacturing, Shiseido aims to optimize resources throughout the entire value chain by incorporating the concept of a circular economy. As part of this effort, we are working to reduce waste, and we have continuously worked to reduce, reuse, and recycle the waste we generate in-house over the long term.

Metrics and Targets / Results

2025 Results：Waste to be landfilled directly 0%_*1
2030 Targets：Waste to be recycled or recovered for energy 100%_*2

As part of our efforts to realize a circular economy, Shiseido Group is working to reduce and recycle waste. By strictly sorting waste, we promote its reuse as valuable resources, and by 2030, we will recycle or recover for energy all waste discharged from our factories.

*1：Excluding waste designated as landfill by law. Continued achievement the target since 2022.
*2：Applicable to factory industrial waste. Where both options are available, recycling shall be prioritized

Environmental Policy

Initiatives for Waste Reduction

The amount and type of waste discharged from each factory are confirmed with the Headquarters on a monthly basis to promote reduction and recycling. At our domestic factories in Japan, we use management data from electronic manifests to confirm the disposal status, ensuring data transparency and strict legal compliance.
At each factory, we use dehydrators and dryers to reduce the volume of sludge generated during wastewater treatment.
At the Shanghai factory, we switched the cardboard boxes used when receiving exterior materials such as product packaging to returnable boxes, reducing waste by approximately 60 tons per year.
At the employee cafeterias of each factory, we are reducing food waste and single-use plastics.
At the Osaka Ibaraki factory, we recycle used cooking oil as a raw material for Sustainable Aviation Fuel (SAF).
To promote reuse, unneeded equipment is tracked by the environmental secretariat and transferred to employees or departments in need. In addition, unneeded equipment and fixtures are transferred between factories for effective use.

Employee Education

In Japan, we arrange online seminars for managers and employees in charge of waste management at Shiseido Group companies to facilitate understanding of waste management laws and reduction activities. When outsourcing waste disposal from our factories or offices to third-party contractors, we emphasize the importance of conducting supplier assessments, ensuring proper disposal of industrial waste, strictly managing manifests, and performing on-site verifications. Following the seminars, each participant strives to ensure strict legal compliance with the help of our original checklists.

Climate/Nature-related Financial Disclosure

Climate/Nature-related Financial Disclosure Initiatives

Given the seriousness of the impact of climate change issues on business growth and environmental sustainability, Shiseido has been disclosing information with reference to the frameworks of TCFD, TNFD, and ISSB/SSBJ. We conducted qualitative and quantitative analyses of the risks and opportunities associated with the transition to a decarbonized society and changes in the natural environment due to climate change for both the 1.5／2℃ and 4℃ scenarios over the short, medium, and long terms. Regarding nature and biodiversity, we identified quantitative long-term risks in consideration of species extinction risks and the dynamic states of water resources, and disclosed them in the Shiseido Climate/Nature-related Financial Disclosure Report.

Strategy

We adopted a double materiality approach, assessing both the impact of Shiseido’s activities on the environment and society, and the risks and opportunities that these environmental and social factors present to the company. For climate-related risks and opportunities, we conducted scenario analysis aligned with the Representative Concentration Pathways (RCPs) and Shared Socioeconomic Pathways (SSPs), assuming a range of potential societal and environmental changes from 1.5／2℃ to 4℃. With regard to transition risk, we analyzed the impacts under each scenario by considering factors driven by shifts in policy, regulation, technology, markets, and consumer awareness associated with the transition to a decarbonized society. For physical risks, we examined acute and chronic drivers, such as water-related issues and weather conditions resulting from rising temperatures.

Scenario Analysis of Risks and Opportunities

Classification of Materiality	Midpoint Indicator	Financial Impact	Damage Target	Financial Impact
Impact Materiality	Climate change	JPY　10.0 billion	Human health	JPY 3.7 billion
	Water resources	JPY 30 million	Social assets	JPY 8.4 billion
	Others	JPY 7.6 million	Biodiversity	JPY 3.2 billion
	Others	JPY 7.6 million	Primary production of plants (Ecosystem services)	JPY 2.4 billion

Classification of Materiality	Classification of Risks and Opportunities			Driver	Event	Financial Impact
Financial Materiality	Opportunities			Climate change	Expanded sales opportunities for UV care products	JPY 1.6 billion
				Climate change	Decreased dependence on fossil resources through the introduction of renewable energy and energy conservation	—
				Climate change, nature	Expanded sales opportunities for circular products such as refillable products	—
	Risks	Transition factors		Climate change	Increased operating costs due to the expanded introduction of carbon taxes	JPY 53 million – 2.2 billion
		Transition factors		Climate change	Increased procurement costs due to the expanded introduction of carbon taxes	JPY 3.5 billion
		Physical factors	Acute	Climate change	Suspension of production and logistics due to natural disasters (floods)	JPY 870 million
			Acute	Climate change	Destabilization of oil palm production due to natural disasters (floods,droughts, heat waves)	JPY 140 – 290 million
			Chronic	Climate change	Suspension of production activities due to water shortages	JPY 3.2 billion
			Chronic	Nature	Increased raw material procurement costs due to a decrease in pollinators	JPY 2.6 billion

Risk Management

Taking a holistic and multifaceted approach, we assess and identify the impactful risks that affect our mid- to long-term business strategy. These include sustainability-related risks, such as “environmental risks (climate change, loss of biodiversity, etc.),” “DE&I,” and “natural disasters, infectious diseases and terrorism”. These factors, which affect business continuity and strategy, are analyzed based on scientific and socioeconomic evidence and integrated into the enterprise risk management system.
The identified risks are evaluated by the risk management department across three axes: "impact on business," "likelihood of occurrence," and "vulnerability." At the same time, the risks and their countermeasures at both the company-wide level and for individual cases are regularly considered by the Global Risk Management & Compliance Committee, which is chaired by the CEO and consists of officers and regional CEOs, and by the Global Strategy Committee.
The material risks identified and evaluated annually are reflected in the Group's management strategy. Furthermore, to mitigate the impact, risk owners are assigned to each risk, operating under a consistent system from formulating countermeasures and monitoring progress to conducting regular discussions with the aforementioned committee members and the Board of Directors.

Metrics and Targets

In 2026, we disclosed our new medium- to long-term environmental and social targets for 2030. They are established environmental targets focus on mitigating climate- and nature-related risks. They are structured to enhance business resilience while reducing Scope 1, 2, and 3 emissions through targeted initiatives, ensuring to achieve our SBTi-certified^*1 CO₂ reduction targets aligned with the 1.5 ℃ scenario. In 2024, we decided to introduce an internal carbon pricing system, applying a carbon price of 130 USD per ton of CO₂ equivalent to guide our decarbonization investment decisions.
In addition to climate change, we are strengthening the development of sustainable products that address biodiversity conservation and the circular economy. For plastic packaging, to meet our goal of achieving 100% sustainable packaging by 2025, we have promoted reuse through refillable packaging, designed for recyclability via mono-materials, reviewed material selection, and reduced packaging weight. As a result, we have completed sustainable design for 98%^*2 of target products.
Looking ahead to 2030, we have set a new target to increase the utilization ratio of PCR^*3 and bio-based materials to 15% through active adoption. Furthermore, we aim to achieve a 30% PCR material ratio specifically for PET plastic containers, driving the “Circular Product Lifecycle Design” and CO₂ emissions reduction. Regarding biodiversity, we have disclosed targets for switching to deforestation-free alternatives for raw materials linked to high deforestation risks, such as certified materials. This advances sustainable and responsible procurement that minimizes our impact on nature and biodiversity.

*1：An international initiative that encourages companies to set science-based greenhouse gas emissions reduction.
targets to achieve the goals of the Paris Agreement.
*2：For plastic primary packaging, on a design basis.
*3：Refers to materials recovered and processed from used products so that they can be reused as components or raw materials for new products. PCR stands for Post-Consumer Recycled.