ESG-Driven Management

Features of Kao's ESG-Driven Management

(1) An ESG-Driven Management shaped from the consumer's point of view

Since our founding, our mission has been to contribute to the prosperity of society through our business activities. In the 1990s, we began initiatives such as the development of environmentally conscious packaging and containers and universal design to offer products that are easy for everyone to use, such as notched containers so that shampoos and conditioners can be distinguished by touch. In 2009, we announced our Environmental Statement, and we have been promoting environmentally conscious initiatives in collaboration with stakeholders throughout product lifecycles.
We cannot be bystanders when it comes to serious global issues such as climate change, aging societies, resource scarcity and plastic waste. In addition, with dramatic changes in global awareness and the spread of ethical consumption, in which consideration for the environment and human rights is a factor in purchasing decisions, we have a strong sense of crisis that people will no longer choose our products unless we step up our efforts.
Therefore, in 2019 we announced our environmental, social and governance (ESG) strategy, the Kirei*1 Lifestyle Plan, and declared a major shift in course to ESG-driven management. The concept of ESG is not new to Kao, but we set forth a new strategy because of our desire to help resolve social issues globally at a higher level and to contribute through technology.
The foremost feature of the Kirei Lifestyle Plan is that consumers play the leading role. We defined the Kirei Lifestyle as a sustainable lifestyle that consumers seek, and formulated the plan to address the feelings and behaviors of consumers who want to live sustainable lifestyles that suit them as individuals. We believe that the role of a company is to provide options so that consumers can make choices that suit them, and we want to be closely involved in helping them realize their individual values.

  • * 1 The Japanese word "kirei" means beautiful or clean, not only on the outside but also on the inside. At Kao, Kirei is the value we want to bring to everyday life with our brands, products and services - now and in the future.

(2) Cooperation with various stakeholders

Solving global environmental and social issues is difficult, and a single company cannot do it alone. It requires cooperation and collaboration with various partners including local communities, national and local governments, NGOs and NPOs, academia, industry associations, and other companies.
For example, to help realize plastic resource circulation, we are collaborating with Lion Corporation in the recycling of film packaging. In addition, to build a sustainable supply chain, we are working with Apical Group, which is engaged in palm oil production and sales, and Asian Agri, a plantation company, in a program to help Indonesian palm oil smallholders improve their yields and acquire sustainability certification for their palm oil. In both cases, the companies pool their knowledge and know-how to solve problems that cannot be accomplished by one company on its own.

Oil palm smallholder in Indonesia

Collection box for used refill (Outlined in red)

(3) A strong governance structure that conducts initiatives for social issues

We are building an ESG governance structure to realize more flexible and robust ESG activities so that we strengthen our resilience to the major changes taking place globally and ensure expansion of business opportunities.
Our ESG governance structure functions under the Board of Directors and consists of the President and CEO and subordinate organizations. The ESG Managing Committee discusses and decides the direction of activities related to the ESG-Driven Management, and reports the status of activities to the Board of Directors. Comprising outside experts, the ESG External Advisory Board provides external viewpoints that are input into our ESG activities. The ESG Promotion Meeting works to achieve the ESG-Driven Management, and the ESG Task Force proposes activities for focus themes, while divisions implement activities.
To ensure that actions are quickly taken for priority issues, ESG Steering Committees were setup for the first time in 2022 in four key areas. The priority issues are decarbonization, plastic packaging, human rights and DE&I, and chemical stewardship.
Under the committee owners, who are executive officers, the steering committees coordinate with the ESG Managing Committee and have the ability to make suggestions to divisions and group companies.
Through this ESG governance structure, we gain an understanding of our global ESG activities and make management decisions on strategy, investments and other matters based on their impact on our business and society.
In 2021, we introduced and began using a new evaluation framework that includes ESG perspectives. In the framework, called Objectives and Key Results (OKR)*2 , all employees including executive officers set a portion of their total targets as ESG targets, and they are evaluated based on the degree of challenge in the undertaken activities. Using this system is anticipated to result in all employees working together to tackle ESG issues and ramp up the level of activity.

  • * 2 An objectives management system

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