Sustainability Management

I believe Shiseido has a unique role as a Japanese company that brings joy and excitement to people’s lives across the world through the power of beauty. I have always been proud to be part of Shiseido. I became President and COO in January 2023, and in line with our corporate mission of BEAUTY INNOVATIONS FOR A BETTER WORLD, we are committed towards 2030 to the realize a sustainable world where everyone can enjoy a lifetime of happiness through the power of beauty. To realize our mission and become an essential company globally, I believe it is important to set social value at the core of our value creation.

At Shiseido, we see sustainability as encompassing the environment, society, economy, as well as corporate entities like us. In 2022, we incorporated functions to embed Shiseido Group’s overall sustainability approach into our Corporate Strategy department. We also established new sustainability functions within our major departments to drive the strategic actions we are taking to solve material issues.

In regard to “Society”, we see diversity and inclusion (D&I) as a key part of our corporate strategy. We aim to create a society where people from different backgrounds and environments respect each other and can live their own unique lives. In Japan, gender equality is seen as particularly challenging. Here, we are actively working to promote women’s empowerment through a range of initiatives, including support for a better work-life balance, mentoring programs, and our ‘New Leadership for Women’ development program. As a result of these actions, I am pleased to say that the percentage of managerial positions filled by women rose to 37.6%^*. We contribute to advancing gender equality by sharing best practices to the Japanese society. As a company, Shiseido has also promoted the “Shiseido Life Quality Beauty” initiative. It helps people of all ages, people with diseases, and people with disabilities take unique steps forward by expressing and enjoying their own beauty. We have been using cosmetics to empower people in Japan who live with cancer. In 2022, we started to extend the program to four other countries and area: China, Singapore, Thailand, and Taiwan to make change globally.

For “Environment”, as part of our initiatives to help mitigate climate change, we are switching to renewable energy and reduce of CO₂ emissions at our domestic and overseas sites. In 2022, we obtained certification for our science-based targets to reduce CO₂ emissions by 2030 throughout the entire value chain. We also joined RE100, a global initiative that brings together companies committed to transitioning to 100% renewable electricity in business operations. When it comes to products, we promote sustainable procurement by working with suppliers to improve the traceability of raw materials connected to environmental and social issues. We are also reducing CO₂ emissions and plastic volume by expanding the use of ‘refillable’ packaging and raising awareness among consumers. Furthermore. In 2022, in collaboration with companies from other industries that have expertise in the field, we began ‘BeauRing’, a pilot project to test the circular model in plastic packaging.

Finally, as part of our sustainability through business, we have issued “Sustainability-Linked Bonds”. These are tied to our Sustainability Performance Targets in the areas of environment and society, and they help achieve our goals in these important areas. A key strategic action in environment and society has been to set up evaluation indices focused on “Reducing Our Environmental Footprint” and “Advancing Gender Equality”, respectively. These will be used to assess and measure the impact of our activities moving forward.

There is no doubt that sustainability is increasingly important for our business. By recognizing sustainability as a new opportunity, we are making a commitment to create social value through our business for the growth, while maintaining absolute transparency towards our stakeholders, both internally and externally.

Shiseido has established 6 strategic actions based on different material issues, three each in the areas of environment and society, in order to realize a sustainable world where everyone can enjoy a lifetime of happiness through the power of beauty.
Our strategic actions for society focus on addressing social issues, primarily through our diversity and inclusion (D&I) initiatives. These three strategic actions are: “Advancing Gender Equality”, which we will implement by leveraging our strengths as a beauty company; “Empowering People Through the Power of Beauty”, which will help people shine in their own ways; and “Promoting Respect for Human Rights”, which underlies all our activities.
Our actions for the environment are based on the idea of banbutsu shisei^* the phrase from which our company name “Shiseido” originates. We are working to develop technologies and business models that can reduce environmental impact and realize a circular economy. To do so, we are taking the following three strategic actions throughout the entire value chain: “Reducing our environmental footprint”, “Developing sustainable products, and “Promoting sustainable and responsible procurement”.

At Shiseido, we work to promote sustainability across the entire company through our brands and regional businesses. In 2022, the Sustainability Committee met regularly to ensure timely management decisions related to sustainability and their implementation. The committee decides on Group-wide sustainability strategies and policies, discusses specific topics such as TCFD reporting and human rights actions, and monitors the progress of medium-to-long-term goals. The committee consists of the representative directors and executive officers^* in charge of Corporate Strategy, R&D, Supply Network, Corporate Communications, and our brands, as well as other executive officers from different fields, allowing us to discuss a range of issues from different perspectives. In addition, the Global Strategy Committee and the Board of Directors are specifically consulted when a decision is needed on important matters related to business execution. We also publish an annual sustainability report for our global stakeholders in which we disclose the medium-to-long-term targets we have for actions we can take toward sustainability in our core business, as well as the progress toward those goals. Furthermore, in order to promote sustainability initiatives, we have introduced 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 Auditors), 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.