Sustainability Management

Since I joined Shiseido in 1991, I have been engaged mainly in overseas business, having worked with many local employees. Although I was perplexed by differences in culture and custom at times, what was common to all countries was that all of them were proud of working for Shiseido. I believe this is because they have been working by identifying with and sharing the spirit of Shiseido, which, since its foundation, has been taking on challenges to discover and create the value of beauty, bringing joy and excitement to people’s lives across the world through the power of beauty, and working to create social value through its core businesses in addition to economic value.

I myself have also been glad and proud to be part of Shiseido. Since I took office as President and COO of Shiseido in January 2023, we have been feeling the rapid changes in the market and the significance of their impacts. However, to take the difficult circumstances created by the changes as an opportunity for our future growth, we have been pressing ahead with a reform in a company-wide manner. Through this reform, each region and business will push forward with activities integrating business strategy and sustainability strategy of each, aiming to achieve our 2030 vision: Personal Beauty Wellness Company.

I would like to mention about environment, where expectations and demands from society are high. At Shiseido, we understand the importance of global initiatives and of cooperation with other companies in Japan, while also recognizing our own responsibility to lead the industry. Attaching importance to initiatives in the value chain in particular, we are driving three strategic actions: reducing our environmental footprint, developing sustainable products, and promoting sustainable and responsible procurement.

For climate change issues, we have set CO₂ reduction targets (SBTi) for the entire value chain toward 2030. We are proactive in taking measures to reduce CO₂ emissions, such as introducing renewable energy and sourcing sustainable raw materials, aiming to achieve net zero emissions by 2050. In 2023, we completed a transition to 100% renewable electricity at all 11 factories and Shiseido-owned distribution centers. In the China region, we have also completed the transition to 100% renewable electricity across all sites. We have positioned the reduction of Scope 3 CO₂ emissions, which accounts for the largest share of total emissions, as key actions for the future. We will enhance our collaboration with external stakeholders, including business partners.
We have also been proactive in taking initiatives on climate change and biodiversity. As a result of the 2023 survey by CDP, an international NPO that conducts environmental surveys and discloses information, Shiseido was selected as one of the companies in the A List, the highest-ranked group, in the fields of Climate Change and Forests. We were included in two A Lists for the first time. Regarding climate change and biodiversity, we disclosed the information in the Shiseido Climate/Nature-related Financial Disclosure Report this year again.

In product development, we will achieve sustainable value creation, which balances the results and high-quality design of our products with respect for and coexistence between people, society, and the global environment. In April 2023, we launched the BeauRing® project, a circular model project to collect and recycle plastic containers. To recycle collected containers into resources, we have started a pilot test by involving consumers, business partners, other companies, and other stakeholders who are important for building the collection scheme.
Sustainability has become even more important for corporate management than ever. I believe that, by taking this as a growth opportunity and integrating our business strategies with sustainability strategies, we can create value and new business opportunities. We will continue to work together with our diverse internal and external stakeholders to keep the transparency high and create social value through businesses.

We aim to realize a sustainable world where everyone can enjoy a lifetime of happiness through the power of beauty toward 2030, along with our corporate mission: BEAUTY INNOVATIONS FOR A BETTER WORLD. For this, we will contribute to building a society where everyone respects diversity and can enjoy life to the fullest and making the global environment sustainable, with people living in harmony with the nature.

At Shiseido, we work to promote sustainability across the entire Group, including 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, the committee was held regularly in 2023. 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.

In order to promote sustainability initiatives, we have a long-term incentive-type remuneration that incorporates multiple internal and external performance targets related to ESG including CO₂ emissions reduction and female ratio in managerial positions, for Directors (excluding external Directors and full-time members of the Audit Committee), Corporate Executive Officers, Executive Officers and leaders in critical positions in Japan and overseas. The actual value of this incentive remuneration increases or decreases depending on the achievement against each individual target.

At Shiseido, we are committed to creating a sustainable world and enhancing people’s sense of happiness and fulfillment through value creation, as we have done since our founding. To select social and environmental issues to be addressed through our business, we have extracted sustainability issues based on interviews, surveys, and dialogues with stakeholders. We first examined the importance of these issues to Shiseido’s business and to all of our stakeholders, from employees and consumers to business partners, shareholders, society, and the earth. Then, in 2019, we categorized and prioritized the issues along the two axes and defined 18 material issues. Additionally, in light of recent changes in the environment surrounding society and the industry, we are considering a review of our current materiality.

The following process was implemented to define material issues.

Shiseido has established three strategic actions based on the material issues we have defined in each area of society and the environment. We have allocated management resources on a priority basis in each department across the entire Group to implement these priority initiatives.