Establishment and Operation of the Group CSV Committee

Meeting Agenda

• Information sharing “GHG Reduction Initiatives (Scope 3)、Draft revision of ARP policy“
• Lecture by Kunio Ito, Director of CFO Education and Research Center, Hitotsubashi University : Deepening Sustainable Human Capital Management
• Discussions "Materiality for operating companies“(Kirin Brewery・Kirin Beverage・Kyowa Kirin・Blackmores)

Report/Share

• Information sharing “GHG Reduction Initiatives (Scope 3)、Draft revision of ARP policy“
  • Scope3
    • Although our Scope 3 target of 30% reduction in GHG by 2030 compared to 2019 was already announced externally, the reduction is expected to be 23% according to our current projection, so additional measures are needed to cover the 7% shortfall
    • To achieve the Scope 3 targets, set a target of "30% reduction by 2030" uniformly for all operating companies, and reflect reduction measures in business plans to ensure achievement of targets
  • ARP policy
    • The Group ARP policy is revised in response to changes in the external environment, customers, and competitors
    • Regarding the Group ARP policy, review the existing policy in order to respond to changes in the external environment, customers, and competitors
    • Key points of the revised ARP policy: 1)Describes commitment to non-alcoholic and low-alcoholic beverages 2)Describes positive aspects of the alcoholic beverages business 3)Describes collaboration with global industry associations
• Lecture by Kunio Ito, Director of CFO Education and Research Center, Hitotsubashi University : Deepening Sustainable Human Capital Management
  • ROESG approach, which considers not only economic benefits but also social and environmental benefits, and synchronization of social and corporate sustainability are necessary to increase corporate value
  • To deepen human capital management, it is important to link management strategy and human resource strategy, and to synchronize the company's and individuals' personal purpose and growth. In addition to visualization of wellbeing as a new indicator of human capital, leaders' role in creating a flow state* for members by holding dialogues with them is also important
    *A state of being so absorbed in the work that one forgets the passage of time
• Discussions "Materiality for operating companies“(Kirin Brewery・Kirin Beverage・Kyowa Kirin・Blackmores)
  • Kirin Brewery
    KB will incorporate KB's own materiality from 2025 management plan. Expressions such as "Imagining the Future of Alcohol in 2030" are exciting for employees, who have a hard time looking ahead due to Japan‘s declining population in the future. With regards to the materiality of “Sustainable development of communities in raw material production areas and business development regions" in GMM, KB is engaged in business with the purpose of “Bringing bonds and joy to customers", and KB's existing initiatives and business development itself contribute to the development of communities
  • Kirin Beverage
    From 2024, KBC has formulated the business plan based on its own materiality, and has also established the CSV commitment, which is linked to the action plan. In addition to containers and packaging and GHG, food loss reduction is also very important
  • Kyowa Kirin
    In "Initiating new approaches to meet the medical needs that go beyond pharmaceuticals", we collaborate with startup companies to provide solutions to patients’ problems
  • Blackmores
    Approach to Scope 3 reduction in collaboration with suppliers
    Accelerate collaborative efforts, especially with Tier 1 suppliers, and implement incentives in contracts with supply chain counterparties

Meeting Agenda

• Sharing the Kirin Group Environmental Investment Policy for 2025 and Beyond
• Exchange of opinions on updating GMM and CSV purpose for 2025 and beyond

Report/Share

• Sharing the Kirin Group Environmental Investment Policy for 2025 and Beyond
  
  • Clarify the process for discussing environmental investments (capital expenditures, increased renewable energy costs, etc.) and business profit targets between Kirin holdings and operating companies since the policy considers different situations (business size, emission volume, etc.) of business units
  • Kirin holdings proposes expectations on long-term financial and non-financial KPIs as inseparable agenda, and consents to the KPIs with the operating companies through discussions in the dialogs
• Exchange of opinions on updating GMM and CSV purpose for 2025 and beyond
  
  • GMM Update
    
    • Kyowa Kirin considers the "Creating and supplying life-changing pharmaceuticals" to be a top priority issue, as well as "Ensuring quality assurance and a stable supply of pharmaceuticals," which is positioned in the top right quadrant
    • The most important international environmental topic is climate change, but the reason for placing the four management issues in the same quadrant is that the Kirin Group Environmental Vision 2050 clearly states that the four management issues will be addressed in a holistic manner
  • CSV Purpose Update
    
    • Regarding the description of "mental and social" in the CSV Purpose of “Community Engagement“, the state of health includes not only “physical” health but also “mental” health. So the "mental" is included in the CSV Purpose of “Health and Well-Being“, it can be considered that the CSV Purpose of “Community Engagement“ should be limited to "social" health

Meeting Agenda

• Sharing the environmental changes surrounding ESG investment and the status of response
• Report on rating results by ESG rating agency

Report/Share

• Sharing the environmental changes surrounding ESG investment and the status of response
  • Regarding ESG investment, while there is a political backlash in the U.S., information disclosure and regulations relating to sustainability have been strengthened in Europe.
  • ISSB published disclosure standards for overall sustainability and climate change in June 2023. In Japan, following discussions at SSBJ, disclosure of non-financial information is scheduled to be institutionalized from the fiscal year ending March 2026 onwards.
  • Our group's non-financial information disclosure response has begun to broadly consider issues related to non-financial information disclosure for the group and each company. Considering compliance with ISSB, we are currently considering ways to resolve issues to ensure smooth and accurate operations related to non-financial information.
• Report on rating results by ESG rating agency
  • Our group's ESG ratings are almost on par with global alcoholic beverage companies, but the ESG levels of domestic and overseas food and daily product companies are improving, and our superiority is shrinking. In addition, the risk assessment for the alcohol sector has increased.
  • In order to become “a global leader in CSV”, we aim to enhance the rating as a leading company through the anticipatory initiatives of the chemical recycling of PET, Nature Positive and TNFD, in addition to transforming our business portfolio, such as shifting to the HS business.

Meeting Agenda

• Reports from three meetings under the Group CSV Committee(basic plans for the next year)
  • Group Environmental Meeting
  • Group Business and Human Rights Meeting
  • Group Health and Safety Meeting
    Group Sustainability Meetings on Specific Issues
• Update on GMM (Group Materiality Matrix)
• Sharing the latest trends in non-financial information disclosure

Key Opinions

• Update on GMM
  • Based on the results of a desktop survey of internal and external environmental changes and an employee survey, there is no update for the FY2024 plan.
  • Update schedule for the next 2025 medium-term business plan.
• Sharing the latest trends in non-financial information disclosure
  
  • ISSB standards require simultaneous disclosure of financial/non-financial information (including GHG Scope 3) by the same reporting entity (including all consolidated subsidiaries) for the same fiscal period as financial statements.
  • This year, the EU's Corporate Sustainability Reporting Directive (CSRD) mandated companies outside the EU to disclose their non-financial information in accordance with the European Sustainability Reporting Standards (ESRS). CSRD sets different due date of disclosures under ESRS depending on the size of the company. KKC/KHB Group's European subsidiaries are subject to disclosure and will need to take actions.
  • KH disclosed environment-related financial information in its environmental report, leading the world in integrating TCFD and TNFD β version (finalized version to be released in September this year).

Meeting Agenda

• Reports from three meetings under the Group CSV Committee
  • Group Environmental Meeting
  • Group Business and Human Rights Meeting
  • Group Health and Safety Meeting
  Group Sustainability Meetings on Specific Issues
• Lecture from Hiroshi Aoi, President and Representative Executive Officer of Marui Group Inc.
  • “Human Capital-Focused Management" of Marui Group
• Exchange of opinions on Goals, Current Status and Challenges of Measures to combat Climate Change

Key Opinions

• Exchange of opinions
  
  • Regarding the reduction of GHG emissions, additional investment is necessary to achieve the target after 2030
  • To promote environmental investment, we plan to introduce a mechanism linking environmental investment and performance evaluation
  • The mechanism should be able to accommodate business characteristics and business profit levels that vary by industry and region
  • It would be practical to have a process whereby profits and GHG emissions reduction (and the necessary investments and costs) are agreed upon simultaneously/as a set between Kirin Holdings and group companies
  • Avoid the risk of rushing too much to make additional investments to achieve the post-2030 target, considering uncertainties in technological innovation and energy prices

Meeting Agenda

• Report on expected achievement of CSV commitments in 2022
• Report the status of Kirin's ESG evaluation and confirmation of future issues
• Progress report on Environment
• Topics report on Social and Governance

Key Opinions

• Exchange of opinions
  
  • ESG ratings are being incorporated into corporate evaluations in many cases, and not only financial but also non-financial questions are increasing in dialogue with investors. The era in which we must meet expectations for addressing ESG issues in order to be valued by investors.
  • From the perspective of addressing ESG issues, the shift from an alcohol-centered business portfolio, which is currently underway, is the right direction.
  • In order to be properly evaluated by a wide range of stakeholders, not just investors, for addressing ESG issues
    • It is important to clearly distinguish cases of force majeure (e.g., natural disasters) as to why CSV commitments did not meet targets.
    • Experts, including investors, understand the importance of investing in chemical recycling, but more needs to be done to help consumers understand the importance as well.
  • In the future, simultaneous disclosure of financial and non-financial information will be required, and shortening the period for collecting non-financial information will be a major challenge.

Meeting Agenda

• Reports from three meetings under the Group CSV Committee
  • Group Environmental Meeting
  • Group Business and Human Rights Meeting
  • Group Health and Safety Meeting
  Group Sustainability Meetings on Specific Issues
• Progress report on the initiative for the global leader in CSV
  • R&D Initiatives for Plastic Packaging Containers
• Exchange of opinions on Non-Financial Information Response Beginning with Climate-Related Information Disclosure

Key Opinions

• Exchange of opinions
  • Investors are demanding ESG-related explanations even as they are also requesting to achieve financial targets, and companies need to be accountable through disclosure of non-financial information.
  • It is important to continue brushing up in order to become a global leader in CSV.
  • When pursuing non-financial information compliance, it is important to organize the ties between non-financial and finance matters and achieve results not only in terms of value preservation, but also in terms of value creation, such as commercialization and purpose branding.
  • Among disclosure of non-financial information, it is important to have a comparability in the case of climate change and a uniqueness in the case of human capital that is associated with the management strategy of individual companies.
  • In order to expand the disclosure of non-financial information in Securities Reports, which are legally required disclosure documents, it is necessary to improve the literacy of organizations regarding non-financial information.

Meeting Agenda

• Progress report since the FY2020 Group CSV Committee
  • Addressing human rights in the supply chain
  • Initiatives to achieve the Kirin Group Environmental Vision 2050
• Lecture from Yoshihito Yamada, President ＆ CEO, OMRON Corporation
  • Corporate management based on OMRON Principles
• Exchange of opinions on the Group Materiality Matrix for the next medium-term management plan

Key Opinions

• Exchange of opinions on the Group Materiality Matrix for the next medium-term management plan
• "Dealing with alcohol-related problems" is of high importance to both stakeholders and our company.
• Human rights are of high interest to stakeholders, and we need to strengthen our efforts in this area.
  Japanese companies tend to not disclose actions to human rights issue because addressing the issue is a matter of course, but the effort to address human rights issue in the workplace or value chain should be disclosed outside the company.
• Exchange of opinions on other matters
  • In order to become "a global leader in CSV," which is our long-term management vision, we must increase each employee's empathy with the CSV philosophy and strengthen their capabilities to execute CSV on-site.
  • Promoting CSV in product brands is important not only for customers but also for internal communication.

Meeting Agenda

• Renewal of Group Materiality Matrix for Second Medium-Term Business Plan
• Lecture from Kenji Ikemori, Founder and Honorary Senior Advisor of FANCL CORPORATION
• Discussion on “Addressing Human Rights in the Supply Chain”
• Status on investigation of measures in line with revisions to Long-Term Environmental Vision, etc.

Key Opinions

Discussion on “Addressing Human Rights in the Supply Chain”

• Business partners, NGOs, investors, and other stakeholders request that human rights in the supply chain be addressed, which will affect the Company’s reputation.
• Demand for response increasing from business partners, in particular, and consumer awareness of issue will eventually grow as well.
• Issues in the supply chain are also management issues for business partners, and therefore it is important to work together.
• A project team will be assembled to investigate future efforts aimed at putting the Company’s response among the highest levels within the industry.

Meeting Agenda

• Major developments in fiscal 2018 and future issues
• Aiming to be “a global leader in CSV” and working toward stronger management resilience
  • Addressing ESG evaluations
  • Discussion on TCFD(Task Force on Climate-related Financial Disclosures) scenario analysis and transition plan
• Lecture from an external proffessional

Key Discussions

Realizing CSV management

• The Kirin Group’s CSV management efforts are moving forward; however, the level of demand on companies from stakeholders, including consumers, business partners, investors, political factors, and NGOs are increasing.
• As a company, we need to adopt the mindset of a long journey toward achieving our goals, as opposed to a short-term perspective or a medium- to long-term perspective simply based on “stacking up achievements.”
• It is important that we also be aware of regional differences (at economic by country or region) as we proceed with our CSV initiatives. Our goal as the Kirin Group is to be at the top level in each business region.

Efforts to mitigate climate change

• As our transition strategy on climate change, we are proceeding with initiatives at each operating company and sector to formulate a business continuity plan to increase production and distribution resiliency, promote plastic recycling and alternative materials, and expand the use of renewable energy to further reduce greenhouse gas emissions and establish internal systems that utilize carbon pricing and other methods.
• It is necessary to recognize the limits of one company to promote these initiatives, and that it is important to work not only within the industry but also with retailer and other non-competing areas.
• We must view climate change both as a risk and an opportunity.
• We reflect the results of the scenario analysis in the new long-term environmental vision and GHG emission reduction targets and revise them.

Main Agenda Items

• Status of progress toward CSV Commitment, etc.
• Renewal of Group materiality matrix
• Exchange of opinions regarding the next Long-Term Management Vision
• Lecture from Yoko Ishikura, Professor Emeritus, Hitotsubashi University

Main Agenda Items

• Lecture from Minoru Matsubara, Chief Manager, Asset
  Management Business Planning Division, Resona Bank, Limited
• Status of progress toward CSV Commitment, etc.
• Discussion on shared Commitment topics

Main Agenda Items

• Lecture from Toshio Arima, Representative Director, Global
  Compact Network Japan
• Selection of major Group CSV themes over the medium to long term
• Discussion on approach to major themes going forward