Establishment and Operation of the Group CSV Committee

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