Promoting Sustainable and Responsible Procurement

In general, cosmetics are made from a wide variety of raw materials, including plant-derived, mineral-derived, petroleum-derived, and synthetic ingredients. While each of these raw materials possesses excellent characteristics and contributes significantly to the quality and sensory experience of our products, their procurement is closely linked to various environmental and human rights issues. In addition, because supply chains are long and complex, it is difficult to establish traceability for some raw materials, making it hard to determine whether any issues exist. To resolve these issues, companies are expected to practice responsible procurement. Moreover, an attitude of taking on challenges together with the industry and stakeholders is required.

Shiseido Group is committed to sustainable manufacturing across the entire value chain. To ensure that our consumers can choose our products with confidence and peace of mind, we believe it is crucial to identify and resolve environmental and social issues in the raw materials supply chain, and to realize sustainable and responsible procurement.
If we fail to address issues related to climate change, biodiversity, and respect for human rights in our raw material procurement, it could lead to production halts due to supply disruptions, lost sales opportunities, soaring procurement costs, product quality and safety risks, and eroded brand image. Taking responsibility for addressing these issues is essential for business continuity and contributes to enhancing the long-term resilience of our supply chain. Therefore, we support international standards such as the principles of the No Deforestation, No Peat, No Exploitation (NDPE). Furthermore, for raw materials with potential environmental or human rights concerns, we have established the “Shiseido Group Sustainable Raw Materials Procurement Guidelines” and are working to identify and resolve issues by ensuring traceability.
We strive to build a sustainable and responsible supply chain by ensuring traceability to gain a clearer, more detailed understanding of actual conditions, while implementing the Supplier Assessment Program to drive the PDCA (Plan-Do-Check-Action) cycle for identifying and resolving environmental and human rights issues across all active suppliers.

Shiseido Group Procurement Policy

Shiseido Group Supplier Code of Conduct

Shiseido Group Sustainable Raw Materials Procurement Guidelines

As a raw material for cosmetics, palm oil is an important plant-derived ingredient that meets high standards for functionality such as product sensory experience, quality stability, emulsifying and cleansing functionality, and long-term shelf life. On the other hand, its production has caused significant challenges, including the destruction of tropical rainforests due to agricultural development, development of peatlands, loss of wildlife habitats, conflicts over land use among local communities, and human rights violations against indigenous peoples and workers. Therefore, ensuring the procurement of palm oil produced through sustainable methods is a critical issue. In 2010, Shiseido Group joined the RSPO^*1, and in 2020, we disclosed our medium- to long-term target of achieving 100% sustainable procurement of palm oil by 2026. The relevant teams in our global and regional headquarters have been working closely together on initiatives to achieve this target. We request all suppliers dealing in palm oil-related raw materials to join RSPO and switch to certified palm oil^*2 based on the RSPO’s physical supply chain model. We thus work with suppliers to procure sustainable palm oil-derived raw materials and survey traceability.
In 2025, we replaced 86%^*3 of palm oil-derived raw materials with physical certified palm oil (breakdown: mass balance 99%, segregation less than 1%^*4). We also purchased RSPO credits equivalent to the remaining 13% of the palm oil-derived raw materials we procure. Furthermore, all of our factories are RSPO supply chain certified^*5.
We joined JaSPON^*6 in 2019, and are working to solve issues by strengthening collaboration with other companies. Additionally, we aim to enhance the traceability of all palm-derived materials through activities such as investigating palm oil mills via ASD^*7, and aim to secure traceability extending to palm plantations in the future. Further, through the Shiseido Camellia Fund^*8, we support WWF^*9 Japan’s activities in Indonesia, such as training smallholder palm farmers.

Mica is a mineral used in a wide range of industries due to its beautiful light-reflecting properties and heat resistance. As a cosmetic ingredient, mica possesses unique properties that impart a natural and elegant gloss and transparency to eyeshadows, foundations, lip products, and more. It is used as an important raw material because alternative ingredients capable of replicating the same texture and color payoff are limited. On the other hand, it has been pointed out that mica sourced from India and used in cosmetics may be associated with child labor during its mining. Shiseido Group has been a member of the Responsible Mica Initiative (RMI) since its establishment in 2017 to sincerely address human rights issues within the supply chain of mica sourced from India.
RMI aims to eliminate child labor and forced labor at mining sites in mica-producing countries and establish mica as a sustainably and responsibly produced raw material. In the eight years from 2018 to 2025, RMI supported 235 villages and reached over 114,000 households, including more than 50,000 children. Through comprehensive support ranging from individual children to entire communities—such as educational support, the provision of drinking water facilities, and health and nutrition camps—steady progress is being made in solving labor-related issues. RMI initially focused on two states in India. Today, it is active in Madagascar as well. We source mica produced in India through RMI member companies and confirm that there are no human rights issues. We will continue to strive to use mica supplied by producers with no social responsibility issues, focusing on RMI member companies.

We use a wide variety of raw materials, including materials listed in the Shiseido Group Sustainable Raw Material Procurement Guidelines. We aim to identify and address raw materials-related issues promptly.

The loss of biodiversity and the degradation of ecosystem services are issues that affect corporate operations, supply chains, and the investment and lending portfolios of financial institutions. From this perspective, companies are required to ensure transparent information disclosure regarding the relationship between their business and natural capital, and to conserve biodiversity.
The cosmetics business is an area that highly depends on biological resources throughout its value chain, making it highly susceptible to the direct impact of biodiversity loss on business continuity. If risks materialize, they could lead to significant business risks, such as raw material procurement constraints, price fluctuations, and a decline in corporate credibility and brand value.
Cosmetics contain many ingredients derived from biological resources, such as plant oils and fermented ingredients, and paper and biomass plastics are also utilized in their packaging. Therefore, identifying and mitigating risks related to nature and biodiversity is essential for the stable continuity of our business. We must balance sustainable raw material procurement with business competitiveness by identifying raw materials that have a significant impact or high dependency, and conducting analysis and management based on ingredient characteristics, the regionality of production areas, and procurement structures.

Shiseido Group’s business activities rely heavily on the bounties of the Earth and its rich biodiversity, including raw materials, water, forests, and ecosystem services. If this natural capital is degraded or lost, it could potentially affect the stable procurement of raw materials, quality assurance, cost structures, and even brand value. Therefore, we recognize biodiversity not merely as an environmental issue, but as a key management issue linked to our medium- to long-term business value.
Based on this recognition, we utilize the framework of the Taskforce on Nature-related Financial Disclosures (TNFD) to advance the identification and analysis of risks and opportunities from the perspectives of both our dependencies and impacts on nature resulting from our business activities.
Through evaluation in line with the TNFD’s LEAP approach, we have confirmed that our business has a particularly significant impact on terrestrial biodiversity, and that forest-derived raw materials such as palm oil-derived raw materials and paper can be directly linked to physical risks (procurement instability, price increases) associated with natural capital degradation and transition risks (stricter regulations, changes in market demands). Based on these analysis results, for palm oil-related materials and paper, we support the principles of No Deforestation, No Peat, No Exploitation (NDPE)^*1, and are promoting the transition to certified raw materials and recycled materials while complying with the laws and regulations of each country, as well as international treaties and agreements^*2. Specifically, we are focusing on ensuring traceability going back to upstream oil mills and plantations, not limited to Tier 1 suppliers, and advancing the construction of a sustainable supply chain that includes respect for the rights of local communities. In addition, we are exploring innovative approaches to reduce our actual dependence on natural capital, such as developing alternative ingredients with a lower environmental footprint and utilizing biotechnology.
We position these initiatives as leading not only to the reduction of negative impacts on biodiversity, but also to the reduction of negative financial impacts through the avoidance of future procurement risks, the suppression of cost fluctuations, and the enhancement of supply chain resilience.
Going forward, through disclosure based on TNFD, we will continue to link non-financial information related to biodiversity to our business strategy and financial decision-making, and strengthen activities with a view to contributing to Nature Positive, which aims for the recovery of nature, moving beyond mere risk management. While also remaining conscious of synergies with climate change initiatives, we will roll out effective actions globally through collaboration with diverse stakeholders, aiming for sustainable corporate value creation through coexistence with nature.

1. *1：Procurement of palm oil and paper is conducted in accordance with the principles and criteria of the RSPO and forest-related certification systems, respectively. We protect High Conservation Value (HCV) areas and High Carbon Stock (HCS) forests, and prohibit new development on peatlands regardless of depth, as well as the use of fire for land clearing or plantation development. To respect and protect the rights of indigenous peoples and local communities, Free, Prior and Informed Consent (FPIC) is ensured.
2. *2：Includes CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora), Convention on Biological Diversity (CBD), OECD Guidelines for Multinational Enterprises, ILO Core Labour Conventions, Ten Principles of the United Nations Global Compact, and United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), etc.

Our Environmental Policy and Environmental Management

Shiseido Group engages in a wide range of biodiversity protection activities through many of its brands and business operations in regions. Since 2019, SHISEIDO has been implementing the SHISEIDO BLUE PROJECT, a global initiative to protect the oceans under the theme “Respect for the Ocean.” To help create more beautiful oceans, the brand has been working continuously with Shiseido teams in many different countries and regions, local communities, and NGOs on beach clean-ups, dune planting, and other environmental activities. In 2025, in cooperation with Tateyama City, Chiba Prefecture, the birthplace of our founder Arinobu Fukuhara, we conducted a beach clean-up at Tateyama Coast together with local children.

SHISEIDO BLUE PROJECT

As part of the SHISEIDO BLUE PROJECT, SHISEIDO continues to advance the M.A.R.E. initiative, supporting marine research and education. In 2025, the Shiseido Europe Innovation Center conducted a study to assess the impact of pollution and human activity on the marine microbiome^*1 using eDNA sampling across the central Mediterranean.
Moving beyond traditional biodiversity studies, this research focuses on the still underexplored marine microbial ecosystem. The findings reveal highly resilient and homogeneous communities, including cyanobacteria^*2 and pollutant-degrading bacteria, providing key insights into ecosystem health while opening up promising avenues for sustainable and environmentally respectful cosmetic innovation.

1. *1：A concept referring to the entire ecosystem, including microorganisms living in the ocean and their interactions with the marine environment.
2. *2：Prokaryotes that perform oxygen-producing photosynthesis using water.

In Japan, in 2022, we began nature conservation activities on Mt. Ibuki^*. In addition to opening our own medicinal herb garden and cultivating herbs, we are working alongside the Reiho Ibukiyama Association—which works to protect the nature around the mountain—to restore vegetation and preserve the abundant nature in the mountain’s foothills. In 2023, to make full use of unused herbs from Mt. Ibuki, we developed SOYU, a herb bath powder, jointly with Matsuda Chemical Industries. We used this product as a reciprocal gift in crowdfunding for nature conservation activities on Mt. Ibuki. In addition, extracts from the Japanese Enmei herb cultivated in a medicinal herb garden are incorporated into the Future Solution LX series in SHISEIDO.

• *A semi-independent peak among the Ibuki Mountains, which connect Maibara City in Shiga Prefecture and the Ibi/Fuwa districts in Gifu Prefecture. It is 1,377 meters high and is one of the 100 famous mountains of Japan.

The brand BAUM, which embraces the theme of “coexistence with trees,” promotes the sustainable procurement and circulation of product ingredients and wooden parts for packaging as part of its efforts to promote the circulation of forest resources. As a specific activity, we continue to plant seedlings grown in stores in BAUM Forests located in two areas in Japan. Through tree planting in the BAUM Oak Forest in Iwate Prefecture—the home of the oak used as raw material for the wooden parts upcycled from furniture offcuts—and the BAUM Hinoki Forest in Aichi Prefecture, the production area of the hinoki water formulated in its main skincare line, we are realizing sustainable circulation that considers the natural environment in both packaging and ingredients.

For companies expanding their businesses globally, the procurement process of raw materials and products is an area where social issues such as environmental impact and human rights violations are likely to emerge. Environmental and social risks occurring within the supply chain not only lead to procurement stagnation and impact on business continuity, but also potentially result in reputational risks that impair corporate credibility and brand value. Furthermore, against the backdrop of stricter laws and regulations and increasing demands from stakeholders in recent years, practicing responsible procurement has become an essential element for the continuity of business activities. Under these circumstances, there is a strong need to address environmental and social issues across the entire supply chain and build a stable and resilient business foundation.

Shiseido Group positions the response to environmental and social issues in the supply chain as one of the key management issues that support the sustainability of its business activities and corporate value. In the process of raw material procurement and manufacturing, risks such as increased environmental footprint and human rights violations are likely to become apparent. If the response to these risks is insufficient, it may lead to procurement instability and affect business continuity, as well as cause a decline in corporate credibility and brand value. In addition, driven by stricter laws and regulations in various countries and regions and heightened expectations from investors and society, companies are required to take responsible actions throughout the entire supply chain.
As standards and policies related to procurement, we have established the Shiseido Group Procurement Policy and the Shiseido Group Sustainable Raw Materials Procurement Guidelines, among others, complying with them as the foundation of our procurement activities. In particular, based on the principles of “Building a good partnership,” “Fair purchasing transactions,” “Performance of contract,” “Promoting responsible procurement,” and “Respecting diverse values” set forth in the Shiseido Group Procurement Policy, we conduct business with more than 800 suppliers^* across countries and regions worldwide. Furthermore, to ensure the effectiveness of these policies, we require our suppliers to comply with the Shiseido Group Supplier Code of Conduct and have built a management framework aimed at identifying and mitigating environmental and social risks across the entire supply chain. Along with monitoring through supplier assessments and audits, we establish appropriate global KPIs to verify whether procurement activities are practiced in accordance with the code of conduct and policies. The progress of these KPIs is regularly reported and deliberated at Chief Procurement Officer meeting and the Sustainability Committee. Through supplier management, we aim to build a sustainable supply chain that is highly resilient to change and uncertainty, working in collaboration with our suppliers.

• *Companies within the same group are counted as one company (Tier 1 suppliers only). If there is an overlap across categories, they are counted as one company.

Our procurement policy is to respect all our suppliers as well as ensure sustainable procurement taking society and the environment into account. This is because we aim to provide safe products with high quality which satisfy our customers.
We state a policy to create social value with suppliers in addition to economic one such as cost and quality. We define social value as fair transactions, compliance with laws and regulations, respecting different cultures and set of values, respecting human rights and protection of the environment.

To actively promote more sustainable and responsible procurement together with our suppliers, we revised the policy and announced it in February 2022. In the new Procurement Policy, we formulated requirements for our suppliers regarding the environment and human rights as well as introducing a strict, objective risk identification and correction process through third-party audits, clearly stating that we will evaluate our suppliers from the perspective of sustainability.

Shiseido Group Procurement Policy［ PDF : 524KB ］

We joined The United Nations Global Compact and took this opportunity to establish the Shiseido Group Supplier Code of Conduct. This code of conduct articulates norms related to human rights, compliance with laws and regulations, labor practices, protection of intellectual properties, protection of confidentiality, protection of the environment and fair transactions. We request all suppliers who have transactions with us to comply with these standards.
To ensure sustainable procurement together with our suppliers, we regularly conduct supplier assessment and the supplier assessment program, which includes corrective actions after the assessment.
In the event that any supplier is identified to have violated the code of conduct, they are requested to implement corrective actions, and we support and educate them.

Shiseido Group Supplier Code of Conduct (Issued in Jun 2019)［ PDF : 876KB ］

We take actions to resolve issues of raw materials that are determined to have a high probability of serious environmental and human rights issues in the country of origin, such as switching to materials with third-party certification of zero involvement and joining international initiatives.

In particular, palm oil-derived raw materials, paper and mica cause deforestation and labor issues which have been frequently revisited. Therefore, we announced targets and measures to resolve the issues and set out a guideline to ensure sustainable procurement.

Shiseido Group Sustainable Raw Materials Procurement Guidelines ［ PDF : 186KB ］

Critical risks^*1 from direct and indirect transactions suppliers^*2 　Zero

1. *1：Severe issues like child labor and forced labor
2. *2：Including upstream suppliers (Tier 2 and beyond)

Based on the "Shiseido Group Procurement Policy," Shiseido Group purchases goods and services from suppliers in various countries and regions around the world. Items to be purchased include direct materials such as packaging, raw materials, and fragrances for our products, sales support tools, as well as OEM products and contract manufacturing goods.

Flow of Transactions

Once a year, Shiseido Group evaluates the performance of its suppliers from the perspectives of QCDST and sustainability. Evaluation results are provided to suppliers as feedback during business meetings and other occasions, and along with requesting improvements, results are also reflected in procurement strategy (policy for purchasing goods and services). Evaluation weight for sustainability criteria is 20% of the total, and evaluation criteria includes results such as supplier self-assessment.

We define strategic suppliers as suppliers^* we want to strategically partner with to become the most trusted personal beauty wellness company in 2030. Strategic suppliers are selected based on our procurement strategy as well as share of purchase amount, QCDST, sustainability performance, and whether they have key technology and innovation capability to support our core competencies.

• *Strategic suppliers include suppliers who provide critical components and who are hard to replace.

Number of strategic suppliers

To promote responsible procurement, we participate in various industry organizations and initiatives. The major initiatives are as follows:

• ・ASD: Action for Sustainable Derivatives
• ・TRASCE: TRaceability Alliance for Sustainable CosmEtics
• ・RBI^*: Responsible Beauty Initiative
• ・RMI: Responsible Mica Initiative
• ・RSPO: Roundtable on Sustainable Palm Oil

• *RBI is an initiative related to sustainability in the cosmetics industry. Through the sharing of best practices among member companies and discussions about issues that affect the entire industry, we work to improve sustainability throughout the supply chain. The Vice President of the Procurement Department of our EMEA Regional Headquarters is a member of the RBI's steering committee, which is its highest decision-making body.

Our aim is to create a sustainable supply chain built on responsible procurement and to minimize risk across the entire supply chain. To do so, we are promoting the implementation of the Supplier Assessment Program. We implement the program based on the "Shiseido Group Procurement Policy" which was revised in 2022. We do not work with suppliers if they are categorized as high-risk by the assessment and do not correct critical non-conformances identified by audits.

When starting business with all suppliers, we first conduct a self-assessment from the perspective of sustainability (human rights, occupational health and safety, environment, and business ethics) to confirm that they are not high-risk. Then, we start business with them after obtaining their agreement to comply with the "Shiseido Group Supplier Code of Conduct".

For existing suppliers, we continuously confirm compliance with the "Shiseido Group Supplier Code of Conduct" using the above assessments.

In conducting self-assessments, we use the questionnaire provided by EcoVadis^*1. Based on the self-assessment results, we identify high-risk suppliers, and conduct third-party audits^*2 for those categorized as high-risk. Additionally, we give all suppliers feedback on the assessment results either face-to-face or online, and, if necessary, our employees visit the suppliers' sites to discuss improvements.

During third-party audits, site visits, employee interviews, and the verification of required documentation are conducted. We request suppliers to correct the issues discovered during the audits. In the event of critical non-conformances, we conduct further third-party audits to confirm the correction status. If issues are not corrected within a set period, we consider the suspension of business.

The policy and the results of the Supplier Assessment Program are reviewed by the "Sustainability Committee," and then, proposals and reports are made to the Board of Directors.

1. *1：We discontinued the use of Sedex and Shiseido SAQ (Self-Assessment Questionnaire) at the end of 2025. EcoVadis measures the quality of a company's ESG management system through its policies, actions, and results. The assessment focuses on sustainability criteria that are grouped into four themes: Environment, Labor & Human Rights, Ethics, and Sustainable Procurement. The questionnaire is customized according to the industry type, location, and company size of the respondent. Supporting documents are required when submitting answers.
2. *2：WCA audit (a sustainability audit program by Intertek, a third-party audit company)

We are gradually expanding the scope of our Supplier Assessment Program from the perspectives of purchasing items, region, and supplier tier. From a purchasing item perspective, we globally assess suppliers that provide direct materials, OEM products, contract manufacturing goods, sales support tools, and indirect materials^*. From a supplier tier perspective, we assess not only direct suppliers but also upstream suppliers (Tier 2 and beyond).

• *Indirect materials refer to services and purchased goods that are not direct materials but are necessary for business activities. This category does not include sales support tools.

In addition to direct materials and POSM^*1 up to 2024, from 2025 we have also included indirect materials^*2 as target purchased items for the Supplier Assessment Program, and conducted self-assessments and corrective actions. For indirect materials, we targeted 156 companies identified as a result of risk screening^*3 conducted globally on approximately 20,000 companies in 2024.

1. *1：Categories: direct materials, OEM products, contract manufacturing goods, and sales support tools
2. *2：This refers to services and purchased goods that are not direct materials but are necessary for business activities. This category does not include sales support tools.
3. *3：The scope of the assessment is based on priorities derived by using IQ Plus, a screening tool from EcoVadis, which screens suppliers based on country, industry sector, spend and other criteria.

Tier 1 Suppliers Assessment Results (Direct Materials, POSM)

2025 Results and Corrective Actions (Direct Materials / POSM / Indirect Materials)

• *The five companies for which the assessment could not be completed are scheduled to undergo the assessment in 2026.

In 2025, we conducted third-party audits on six companies (one supplier of OEM products and five indirect material suppliers). During the year, suppliers took the following corrective actions and confirmed their completion:

• ・Established a new human rights policy at a supplier that previously lacked one.
• ・Established a new occupational health and safety policy at a supplier that previously lacked one.
• ・Implemented leakage countermeasures and conducted internal training at a supplier with inadequate waste liquid management.

Regarding the two indirect material suppliers where actions are incomplete, we aim to complete the corrective actions during 2026.

For Tier 2 and beyond (upstream) suppliers, we conduct assessments by prioritizing and limiting the targets. Specifically, important manufacturing suppliers that our strategic suppliers (Tier 1 and Tier 2) identified are in the scope. As a result, we assessed 27 companies in 2025, and no suppliers were classified as high-risk. Cumulatively, we have completed evaluations for 416 companies by the end of 2025.

At Shiseido Group, in addition to the hotlines/helplines for Shiseido Group employees, we have established hotlines in each region for our business partners, including suppliers. These hotlines allow them to report human rights and compliance violations arising from their business transactions with Shiseido Group companies.

Shiseido carries out the following trainings and other programs periodically to increase the ESG performance of its suppliers and deepen their understanding of our human rights and environmental policies.

Over the past three years, we have held the following explanatory meetings and seminars. We are working out a plan to enable us to provide more suppliers with training programs.

To implement sustainable and responsible procurement across the entire Shiseido Group, we provide various training programs for employees in the Procurement department, covering topics such as human rights, occupational health and safety, and the environment. For example, regarding the Supplier Assessment Program, we regularly brief employees on our policies, KPIs, and the roles of individual buyers. We also hold study sessions on international standards and regulations related to responsible procurement—such as the CSRD^*—to help employees understand the latest sustainability trends.

• *CSRD（Corporate Sustainability Reporting Directive）

Shiseido invites the top management of suppliers that have shown high performance to Shiseido Suppliers' Day, in order to share information about Shiseido's Medium-Term Strategy, policies on procurement activities and expectations of suppliers. 2021 was the first time the Shiseido Suppliers' Day was held online globally. As part of this event, we requested the understanding and cooperation of suppliers, explaining our sustainability medium-term targets and action, in addition to describing what we expect from them in terms of human rights, the environment and society. We plan to continue holding these events on a regular basis.

Shiseido announced its Partnership Building Declaration in March 2023. This is a statement made by a representative of a purchasing company detailing the company’s commitment to cooperation and mutual prosperity throughout the supply chain. Promoted by the Small and Medium Enterprise Agency in Japan, the objective is to achieve sustainable growth throughout the supply chain by strengthening partnerships with suppliers and influencing upstream suppliers through direct transaction suppliers. We endeavor to increase mutual prosperity with suppliers by preventing business practices that hinder partnerships and improving business customs.

Declaration of Partnership Building