The Kewpie Group is steadily installing renewable energy at its locations in Japan and abroad. Under the "on-site PPA model," the Kewpie Kobe Plant provides space on its rooftop for a solar power generation system, which is installed and managed by Kansai Electric Power Company. From December 2022, we switched to 100% renewable energy sources by supplying power from renewable energy sources through Kansai Electric Power Company and purchasing J-credits^* equivalent to the CO₂ resulting from the fuel (steam) supplied by Mitsui & Co. Ltd. This initiative is expected to result in the Kewpie Group's first net-zero plant, which will reduce CO₂ emissions by approximately 3,680 tons per year.
In August 2022, Kitakami Delica Co., Ltd. provided space for a solar power generation system, which will be installed and managed by Looop Inc. under the "on-site PPA model," generating 5.3% of the plant's total electricity consumption, which is expected to reduce annual CO₂ emissions by approximately 85 tons per year.
In addition, solar panels are scheduled to be installed at three sites in Japan around February 2023, and we will continue to actively switch to renewable energy sources for power consumption at the Group's offices and production sites.

*The J-credit system is a system in which the government certifies the amount of greenhouse gas emission reductions and absorption as credits.

The Kewpie Group has established the "Kewpie Group Basic Approach to Sustainability" to contribute to the improvement of social sustainability and achieve sustainable corporate growth. The Sustainability Committee, chaired by the director responsible for sustainability, formulates policies and plans to achieve targets on material issues related to sustainability, including climate change, and promotes sustainability initiatives. The Sustainability Committee submits reports to the Board of Directors in addition to the Management Committee (an advisory body to the Representative Director, President and Chief Executive Corporate Officer), and the Board of Directors discusses on the content of the Sustainability Committee's deliberations as appropriate, thereby ensuring supervision by the Board of Directors.
To realize the Kewpie Group's "Our Ideal" and the "Kewpie Group 2030 Vision," we will work with various stakeholders to solve social issues.

Material Issues and Promotion Framework

Corporate Governance

The Kewpie Group identifies the various risks and opportunities associated with climate change in the short, medium, and long term, according to their significance. We also periodically review our analysis and evaluation in light of changes in the external environment. For our analysis, we have identified two key scenarios in line with the scenarios published by Intergovernmental Panel on Climate Change (IPCC)^*1 and International Energy Agency (IEA).^*2 In the first scenario, the temperature will rise 1.5-2 degrees Celsius above pre-industrial levels by 2100, and environmental policies are developed (hereinafter referred to as the "Environmental Policy Progress Scenario"). In the second scenario, the temperature will rise 2.7-4 degrees Celsius above pre-industrial levels by 2100 and no additional measures are taken to address climate change (hereinafter referred to as the "BAU Scenario"). In the Contingency Scenario, the impact of climate change on our business in 2030 is calculated. We will consider measures to deal with the risks and opportunities identified, incorporate them into our single-year and medium-term management plans, and promote them.

*1IPCC
The Intergovernmental Panel on Climate Change (IPCC) is an intergovernmental organization established in 1988 by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP). It provides the scientific data needed for governments' climate change policies.

*2IEA
The International Energy Agency (IEA) is an autonomous organization established in 1974 after the first oil crisis within the framework of the Organization for Economic Cooperation and Development (OECD). It provides the medium- and long-term supply and demand forecasts needed for crafting energy policy.

<Environmental Policy Progress Scenario>
Strict environmental regulations and high carbon taxes will be introduced, and the world will achieve carbon neutrality. The agriculture, forestry, and fishery sectors will achieve zero CO₂ emissions, while suppliers' environmental response costs will rise. Consumers will become more health-conscious and will thus increase their intake of salads and other vegetables.
The risks and opportunities for the Kewpie Group identified in the Environmental Policy Progress Scenario are as follows.

*Definition of timelines
Short-term: up to 2024 Medium-term: up to 2030 Long-term: up to 2050

<BAU Scenario>
Despite the progress of low-carbonization initiatives, carbon neutrality will not be achieved by 2050 and temperature rise will increase the frequency and severity of natural disasters. Consequently, the frequency of flooding damage at suppliers' and companies' production sites will increase. Lower crop yields caused by heat stress will also lead to a rise in the cost of procuring raw materials.
The risks and opportunities for the Kewpie Group identified in the BAU Scenario are as follows.

*Definition of timelines
Short-term: up to 2024 Medium-term: up to 2030 Long-term: up to 2050

In response to the risks and opportunities identified through scenario analysis, we will promote the following themes/measures and utilize them to achieve sustainable growth.

The response to climate change is a top-priority issue for the Kewpie Group due to the high expectations of stakeholders and the social impact of the Kewpie Group.

Material Issues and Promotion Framework

We operate the cross-organizational TCFD Response Project to identify and assess the climate change risks affecting the Kewpie Group. The TCFD Response Project was established by a resolution of the Sustainability Committee comprising the committee leaders: director of Management Promotion Division, secretariat: Sustainability Promotion Department, Corporate Planning Department, and Risk Management Office. The Sustainability Committee approves the climate change risks and measures identified by the TCFD Response Project and manages its progress. The project’s output is reported to the Management Committee and the Board of Directors.

The indicators we use to measure and manage climate change risks and opportunities are as follows.

In calculating CO₂ emissions, we refer to "Japan Ministry of the Environment, Law Concerning the Promotion of the Measures to Cope with Global Warming, Superseded by Revision of the Act on Promotion of Global Warming Countermeasures (2005 Amendment)."

The indicators used to measure and manage the risks and opportunities associated with the "effective use and recycling of resources" are as follows.

Note: The "Food waste reduction rate" indicator also includes the "effective utilization rate of unused portions of vegetables."

Having analyzed the risks and opportunities in the value chain, these material issues were identified by analyzing the risks and opportunities associated with social change and identifying the social issues that the Kewpie Group should address through its business operations, with reference to the Sustainable Development Goals (SDGs). Next, for each social issue, we assessed the level of expectation from stakeholders and the level of impact on society that the Kewpie Group can have in order to identify "Material Issues for Sustainability." In assessing materiality, we refer to the international sustainability standards GRI, ISO 26000, and SASB and various ESG assessments, and reflect the ideas of the "Kewpie Group 2030 Vision."

Each of the sustainability targets is linked to "Material Issues for Sustainability" and is an indicator of what the Kewpie Group will be working on. The sustainability goals announced in 2019 have been reviewed in light of the rapidly changing social situation. Specifically, for the purpose of contributing to the mitigation of the climate crisis and implementing adaptation measures, we have upwardly revised our "reduction rate in CO² emissions" target by reorganizing our manufacturing sites, reviewing our manufacturing processes, and promoting renewable energy planning. We have also upwardly revised our targets for the "effective utilization rate of unused parts of vegetables" and "reduction rate in volume of product waste."
The greenhouse gas (GHG) emissions for Scope 1, Scope 2, and Scope 3 are as follows.

ESG Data Sheet

The Scope 3 GHG emissions data is for Kewpie Corporation on a non-consolidated basis. We will continue to monitor the data for the entire Group.

Additionally, the remuneration of directors varies according to the achievement of the key indicators of the medium-term business plan (including sustainability targets and goals for employees) and the mission of each individual.

The Kewpie Group is committed to saving energy by improving the efficiency of production processes and by installing new equipment. We are converting from using Heavy Fuel Oil A to city gas and natural gas, and we are promoting the use of co-generation and solar power. We are also working to reduce CO₂ emissions by sharing and developing the outstanding initiatives taken by group plants.

The Kewpie Group is promoting the "visualization of energy use" by installing energy measurement devices in all processes at production sites, improving facility operation and maintenance, and introducing energy-saving equipment to promote energy conservation.

Energy consumption at Kewpie Group production plants in FY2021 was 3,365,000 GJ, a decrease of 1.8% from the previous fiscal year. Energy consumption per ton of production volume (basic unit) was 4.37 GJ, a 1.8% decrease from the previous fiscal year.
The decrease in consumption and the basic energy unit is mainly due to efficient production through factory reorganization regarding condiment products, efficient production through business reorganization in the egg business, and planned energy-saving facility upgrades for each business.

The Kewpie Group is installing energy-saving equipment and working to optimize the operation of our facilities. By incorporating natural refrigerants when upgrading our freezer units, we have reduced CO₂ emissions and eliminated fluorocarbon use.
In 2018, we introduced natural refrigerants when we upgraded the freezer units at our Nakagawara Plant (Fuchu, Tokyo). We are continuing to verify their effectiveness in reducing CO₂ emissions.

The Shibuya office (Shibuya Toyu Building) of the Kewpie Group has a double-skin glass facade that achieves a high degree of thermal insulation from natural ventilation between the glass layers. The office has installed highly efficient air conditioners, LED lighting, and other energy saving equipment.

*Project for receiving interest subsidies to promote green financing: These are projects selected through a public offer by the Ministry of the Environment to receive a subsidy for part of the interest paid on the financing of capital expenditures addressing global warming.