Response to TNFD Recommendation

・Our Response to Climate Change

・Annual Securities Report 2 [Approach to Sustainability and Initiatives] (Japanese text only)

• We have formulated the Group Human Rights Policy and Procurement Policy based on respect for human rights as set forth in the United Nations Guiding Principles on Business and Human Rights and other international standards. We also endorse the United Nations Global Compact and have expressed our commitment to it.
• When selecting suppliers, we not only consider financial reliability and quality stability, but also employee management (e.g., ensuring occupational health and safety), human rights considerations (e.g., child labor, forced labor, discrimination, harassment, freedom of association, collective bargaining, long working hours), environmental considerations (e.g., energy, climate change, pollution prevention, waste management, water resources, biodiversity, other environmental issues, food loss, resource use), ethical compliance (e.g., anti-corruption, conflict of interest, anti-competitive behavior), and other anti-social behavior. By incorporating ESG criteria, we give priority to suppliers that fulfill their social responsibilities. Rather than making judgments based on the laws, customs, and current conditions of each region, we make judgments based on whether there is a significant deviation from the applicable Japanese laws, and we strive to procure responsibly by implementing a strict policy of not initiating transactions if there is a problem.
• Implementation plans and progress of sustainability-related initiatives, including respect for human rights, are approved and managed by the Group Sustainability Committee and reported to the Board of Directors.
• In order to ensure FPIC (free, prior, and informed consent) of indigenous peoples as one of the requirements when selecting suppliers, and to strengthen the effectiveness of “responsible procurement,” one of our group's materiality, the whistle-blowing service is also open to suppliers to prevent violations and promote activities to disseminate the information throughout the supply chain.

• Dependence on services to supply water and foodstuffs at the raw material procurement stage
• Dependence on services to supply water during the processing stage of raw materials in factories
• Dependence on services to supply water during the processing and cooking stages in stores
• Dependence on various raw materials (agricultural, livestock, and marine products) supplied by nature

• Impact of land use on raw material procurement stage
• Impacts from the use of water resources and waste emissions during the processing stages of raw materials in stores and factories
• Impacts from greenhouse gas emissions, water use, waste, and other emissions throughout the value chain

• Risk of increased procurement costs due to supply chain disruptions caused by more frequent and severe extreme weather and weather disasters
• Risk of higher average temperatures leading to increased precipitation and drought adversely affecting the yield and quality of agricultural, livestock, and fisheries products and causing raw material prices to skyrocket.
• Risk of increased beef procurement costs due to switch to alternative meats and livestock products with lower CO₂ emissions as a result of focus on forest conservation, animal welfare, and other initiatives and carbon pricing.
• Risk of opportunity loss due to shutdown of factories, facilities, and stores or transportation disruptions caused by floods and storm surges
• Opportunities to gain empathy and high evaluation from customers and stakeholders as we actively promote sustainability
• Opportunities for extreme heat summers and extremely cold winters due to extreme weather conditions, which will allow cold and warm products to sell well to customers.

• Risk that the introduction of a carbon tax will increase raw material prices, packaging material prices, and logistics prices, resulting in a larger carbon tax burden.
• Risk of higher procurement costs and capital investment costs associated with higher electricity prices and a shift to the use of renewable energy sources
• Risk of reduced crop yields due to a decrease in the number of farmers ・ Risk of reduced yields of major raw material crops due to global warming and drought
• Risk of our brand value declining due to the operation of the facility during a drought or the release of contaminants into the wastewater from the facility
• Opportunities to increase sales by developing services for decarbonization and plastics-free products as consumer behavior and preferences change
• Opportunities to increase sales by developing menus that contribute to climate change and biodiversity protection

• Our sites located in water risk areas where there is a risk of decline in the quantity or quality of water resources were surveyed using WRI Aqueduct's Water Risk Atlas, and no sites were located in “very high water risk” or “high water risk” basins at the end of 2023. Regarding water-stressed areas, one site was located in Japan and one outside of Japan in a “highly water-stressed” watershed.

• In identifying, assessing, and prioritizing risks and opportunities, we strive to address them appropriately, taking into account the size and characteristics of our group's business. Regarding climate change, the IEA's “World Energy Outlook 2023,” the Ministry of Land, Infrastructure, Transport and Tourism's “Recommendations for Flood Control Planning in Light of Climate Change,” and the Ministry of the Environment's “TCFD Guidance” were used. With regard to natural capital, the WRI Aqueduct “Water Risk Atlas” is used to collect water-related data and identify risks and opportunities.

• The Group Risk and Compliance Committee, chaired by the President and Representative Director and composed of the Chairman and Representative Director and all executive officers, oversees risk management for the entire Group. In addition, the Group Sustainability Committee, chaired by the President and Representative Director and vice-chaired by the Chief Sustainability Officer (CSO) and composed of the Chairman and Representative Director, all executive officers, and presidents of Group companies, under the supervision of the Board of Directors, manages sustainability-related risks such as climate change and natural capital, as well as measures to deal with climate change and nature-related issues.
  
  

• Identify “business and other risks” that may have a significant impact on investors' decisions, and implement risk management on an ongoing basis. This business and other risks are reviewed once a year and emerging risks are established to enhance our sustainability.

• Greenhouse gas emissions (Scope 1, 2, and 3) are established and monitored as indicators for assessing and managing climate-related risks and opportunities.

• As indicators for evaluating and managing nature-related risks and opportunities, we have set the following targets: water withdrawal reduction, environmental impact reduction (waste discharge, disposable plastic discharge), biodiversity conservation (switching to JGAP certification for domestic vegetables, RSPO certification for palm oil, FSC/PEFC certification for paper products, etc.), and zero deforestation, and we are monitoring the results.