ESG Strategy

Under the Kao Group Mid-term Plan 2027 “K27,” the Kao Group has positioned becoming a company indispensable to a sustainable society as a core element of its basic policy, and aims to achieve profitable global growth and enhance corporate value over the medium to long term. Kao’s approach to sustainability is an initiative to promote the creation of environmental and social value in tandem with business growth and, based on economic rationality, translate these efforts into the establishment of a sustainable competitive advantage and the enhancement of corporate value. The ESG strategy that underpins this approach is the Kirei Lifestyle Plan (KLP). By evolving Yoki-Monozukuri from an ESG perspective and through mitigating risks and creating opportunities that may impact the medium- to long-term enhancement of corporate value, we seek to achieve both profitable growth and contributions toward a sustainable society. Additionally, we have established the concept of “Maximum with Minimum” to represent our approach for promoting business growth while simultaneously maximizing value and minimizing negative environmental and social impact. We are pursuing efforts to implement this approach in all business activities.

Five perspectives for the KLP to enhance K27

Reinforcing K27 through the KLP

The KLP reinforces K27’s four strategic frameworks in a multifaceted manner to achieve profitable growth and address social issues based on the following five perspectives.

(1) Strengthening our business by anticipating future consumer needs across the globe

In light of the needs of diverse consumers around the world as well as the growing severity of social issues, we act swiftly to seize market opportunities with high social usefulness and enhance our competitiveness by displaying unique qualities in technologies and products that can be realized by Kao. As a result, we will create new added value and contribute to building Global Sharp Top businesses.

(2) Strengthening the human capital necessary for global expansion

We develop people who can create value in response to diverse consumer issues, promote an approach in organizational management that allows us to fully demonstrate our unique technologies and product value globally, and fortify our Global Sharp Top human capital strategy.

(3) Optimizing investments to accurately reflect future risks and opportunities from a global perspective

We increase business resilience by reducing ESG-related risks and creating opportunities, and we allocate capital with a focus on fields that have high social usefulness and in which Kao can demonstrate its unique value, thereby promoting capital efficiency and profitability improvement.

(4) Enhancing mutual empathy with our partners and strengthening co-creation

To address social issues that Kao cannot easily tackle on its own, we collaborate with partners in industry, local communities, retail, and other fields, utilizing Kao’s unique technologies and insights to promote business development through co-creation with our partners.

(5) Enhancing risk reduction and opportunity creation in the entire value chain

We reduce ESG-related risks at each step in the value chain, including procurement, production, distribution, retail, use, and disposal and recycling, while also creating opportunities to boost social usefulness, thereby increasing the sustainability of our business and enhancing stability in supply.

ESG management framework

The overall execution of ESG has a governance structure centered on the ESG Managing Committee chaired by the Representative Director, President and Chief Executive Officer. The ESG Managing Committee, which consists of management, discusses and decides on the direction of ESG-related activities, refers significant matters to the Management Board as appropriate, and reports the status of activities to the Board of Directors. The ESG Managing Committee positions key themes related to forward-looking financial impacts on the mid-term management plan, effects on capital markets and credit ratings, and future risks as its highest priorities. In addition, the ESG External Advisory Board, which is comprised of outside experts, provides reports and recommendations in response to consultations from the ESG Managing Committee, and reflects the third-party perspectives from management experts.
We have established the cross-functional ESG Promotion Meeting, which works to achieve the KLP, and the ESG Steering Committees, which steadily execute reliable and timely execution of priority issues. Based on the decision made by the ESG Managing Committee, the ESG Promotion Meeting promotes ESG-related activities throughout the Kao Group and monitors the progress of each division. The ESG Promotion Meeting is chaired by the Senior Vice President and the Executive Officer of the ESG division, and the meeting attendees are made up of the people responsible for business divisions, regions, functional Divisions, and corporate divisions. The ESG Steering Committee will promote initiatives based on the priority issues of decarbonization, plastic packaging, human rights and DE&I, and chemical stewardship, respectively. Executive Officers are responsible as the owners of each issue and are granted a certain level of decision-making rights. The ESG Steering Committee works in conjunction with the ESG Managing Committee to ensure that initiatives are implemented promptly and reliably in each area.
ESG-related risk management is carried out by the Internal Control Committee (which meets twice a year and is chaired by the Representative Director, President and CEO) and the ESG Managing Committee (which meets six times a year and is chaired by the Representative Director, President and CEO), and opportunity management is conducted by the ESG Managing Committee.

ESG governance structure