Kao further accelerates actions towards its
ESG Strategy – the Kirei Lifestyle Plan

Kao steps up its efforts in responsibly sourced materials, use of renewable energy and recycled packaging
 
Kao Corporation released its Kao Sustainability Report 2023 on the progress of its ESG (Environmental,
Social, and Governance) strategy—the Kirei Lifestyle Plan.  

New Initiatives to Promote a Kirei Lifestyle Release of Results of 2022 Activities for the Three Kao Commitments
 
The ESG strategy the Kirei Lifestyle Plan consists of the vision, the three Kao commitments and 19 leadership action themes (Kao Actions) to empower people to enjoy more beautiful lives. The three Kao commitments with a target year of 2030 are “Making my everyday more beautiful,” “Making thoughtful choices for society” and “Making the world healthier & cleaner.”  While substantial progress was made for the first two commitments and further action was taken to support “Making the world healthier & cleaner”,
more progress needs to be made in this third pillar to achieve the 2030 goal. See here for details. 

Key Leadership Action Themes: 2022 Activity Results
Decarbonization
As Kao  works toward the goal of becoming carbon zero (reducing CO2 emissions to net zero) by 2040, and becoming carbon negative by 2050, besides aiming to reduce CO2 emissions in its own business activities, Kao also aims to contribute toward realizing a decarbonized society by helping to reduce emissions in society as a whole, and through carbon fixation to reduce the amount of carbon dioxide in the atmosphere.
 
In 2022, Kao used its internal carbon price, offered products that contribute to CO2 reductions and formulated new mid- to long-term initiatives for reducing Scope 3[1] emissions, which account for a large amount of CO2 emissions related to procurement of raw materials and product use. For more
information, please see the news release on decarbonization progress made in 2023.  

Zero Waste
Inspired by a philosophy of “Wastefulness – Mottainai, never today, nor tomorrow.”, Kao aims to contribute to the realization of a zero waste society by ensuring that used products and product packaging are utilized to the maximum possible extent, if necessary by changing their function.
 
Aiming to realize resource circulation in society, regarding plastic containers used and released in its business activities, Kao publicly set the target of achieving net zero waste[2] for plastic packaging by 2040
and negative waste[3] for plastic packaging by 2050 in the Sustainability Report 2022 released last year. In
2022, the reduction of plastics used in Kao’s packaging was 144,000 tons. Kao has also been using  recycled plastic in packaging for several of its brands, with 69% of PET plastic containers sold in Japan using recycled PET plastics in 2022, up markedly from 19% in 2021. For more information, please see the May
2023 news release on Kao’s 2022 progress toward the zero waste targets.

Responsibly Sourced Raw Materials
Source our raw materials in a more sustainable way that protects natural resources, the environment, safety
and human rights through supply chain traceability and dialogue with suppliers.
 
Kao has been taking action to help realize sustainable material procurement of one of its main raw materials―palm oil. Key actions include purchasing certified (RSPO[4] certified) sustainable palm oil and providing support to oil palm smallholders in Indonesia. Kao aims to use 100% RSPO certified palm oil for consumers and industrial applications by 2025. In 2022, the rate of usage was 34%.
 
In the SMILE (SMallholder Inclusion for better Livelihood & Empowerment) program launched in 2020, Kao,
together with Apical Group, a global palm oil processor and exporter, and Asian Agri, a plantation and palm oil company, is striving to build a sustainable palm oil supply chain and supporting productivity improvements and RSPO certification at independent oil palm smallholders in Indonesia. In Phase 2 of the program, which began in November 2022, an agricultural land risk survey and survey of current plantation conditions for an additional 1,688 smallholders were undertaken. A demonstration experiment was conducted on the use of Kao’s Adjuvant[5] series in North Sumatra starting in February 2022. Based on the results, Kao plans to begin distributing Adjuvant free of charge to approximately 600 smallholders in the provinces of North Sumatra, Riau and Jambi starting June 2023.
 
In addition, in September 2022 Kao began operation of the Kao Grievance Mechanism, managed in collaboration with Caux Round Table Japan (CRT Japan)[6], an NPO that forms a network of business leaders to promote sustainable and socially responsible business. 

Analysis of the Relationship between Kao’s Business and Biodiversity Based on TNFD’s[7] LEAP[8] Approach
 
Kao operates by benefiting from many biological resources such as palm oil, paper and pulp. In 2011, Kao formed the Basic Policy on Biodiversity and has been working to realize sustainable raw material procurement and develop new technologies that contribute to biodiversity conservation. Kao revised the
basic policy last year with the goal of shifting from biodiversity loss to biodiversity regeneration by reducing its dependency and adverse impacts on nature and biodiversity and increasing actions that have positive impacts.
 
In order to promptly respond to developments regarding information disclosure, Kao has participated in TNFD Forum since April 2022 and is collecting information and providing feedback on the information disclosure framework currently under development. In the Kao Sustainability Report 2023, Kao releases the results of its analysis of the relationship between its business and biodiversity related to detergents, one of its leading product categories, based on TNFD’s LEAP approach. Kao identified material issues in each of the areas of upstream supply chain, direct operations and downstream supply chain as well as the risks and opportunities and examined what actions to take accordingly.
 
In addition to specifying the relationship between Kao’s business and biodiversity in collaboration with Accenture Japan Ltd., Kao examined scenarios taking into account future natural and economic conditions and changes in the consumer products market. The details of the analysis were released in a report titled “Business Risk and Opportunity on Biodiversity – TNFD case study with location analysis –” in April 2023.
 
Dave Muenz, Managing Executive Officer in charge of Kao’s ESG Division, commented on the progress of the Kirei Lifestyle Plan: “The global landscape continues to evolve rapidly, becoming more complex and presenting new challenges. Therefore, it is increasingly important that we drive forward our ESG strategy the Kirei Lifestyle Plan to realize a truly sustainable society while enhancing our business and minimizing risks. In 2022, we accelerated efforts towards our mid-term business strategy—K25—with the visions of ‘saving future lives’ and ‘sustainability as the only path.’ In the Kao Sustainability Report 2023, we share our progress on the three commitments of the Kirei Lifestyle Plan looking towards the year 2030. Some of our progress includes the launch of Bioré GUARD Mos Block Serum to save future lives in Thailand through our unique technology and key partnerships. We analyzed the relationship between our business and biodiversity using the Taskforce on Nature-related Financial Disclosures (TNFD)’s  LEAP approach to identify material
issues in order to ultimately diminish adverse impacts on nature and regenerate biodiversity loss. Our efforts in the palm oil supply chain saw the launch of the grievance mechanism for smallholders in Indonesia, aiming to provide a voice for rightsholders in higher risk environments. We will continue to evolve our efforts towards creating a Kirei Life for all, together with our partners and communities.”
 
These efforts have been recognized by the CDP, a leading international nonprofit organization, which included Kao in its prestigious ‘A List’ in all surveys across the three categories of climate change, forests and water security for three years in a row. Kao is one of only 12 companies out of more than 10,000
evaluated that were selected for inclusion in the top-rated A List across the three categories. In addition, the Ethisphere Institute, a leading US think-tank, has named Kao one of the World’s Most Ethical Companies® for 17 consecutive years.

[1] Greenhouse gas emissions by other than businesses and other entities.
[2] The amount of plastic used in Kao’s packaging containers and the amount that Kao was involved in resource recovery (the amount of recycled plastic that is converted into valuable products by Kao’s original technology + the amount of recycled plastic that Kao used in packaging containers + the amount of plastic Kao collected from society as a whole, which is then recycled, and turned into pellets) is roughly equal.
[3] Kao’s involvement in plastic recycling is greater than Kao’s plastic packaging container usage. 
[4] Roundtable on Sustainable Palm Oil: A roundtable to promote the production and use of sustainable palm oil. 
[5] A very efficient agricultural spreading agent developed by Kao that is derived from plant materials and helps spread pesticides when sprayed on plants.
[6] Established a comprehensive initiative support program in partnership with global initiative organizations that focuses on the implementation of the United Nations Guiding Principles for Business and Human Rights in companies.
[7] The Taskforce on Nature-related Financial Disclosures officially launched in 2021 in order to build a corporate risk management and disclosure framework related to the resources of nature.
[8] The analytical approach proposed by TNFD, which stands for Locate (identify priority areas), Evaluate (understand dependencies and impacts), Assess (identify and evaluate risks and opportunities) and Prepare (strategy, goal setting, evaluation and reporting).