Skylark Group's Materiality

Materiality

To realize a sustainable society and improve our corporate value through the provision of food and food-related services, based on our Sustainability Policy, we have identified our materiality from an analysis of their importance, for Skylark Group and for its stakeholders.

	Theme	Materiality
Society	Help All People Lead Enriched Lives	Food Safety & Security
		Health & Nutrition
		Customer Orientation
		DX
	Contribute to Realizing an Enriched Society	DX
		Workstyle Reform
		Responsible Procurement
Environment	Environmental Conservation	Food Loss & Waste Reduction
		Plastic Countermeasures
		Decarbonization
		Water Resource Conservation
		Biodiversity

Steps in Identifying Our Materiality

STEP1 Identifying Issues

Issues are identified based on social requirements such as SDGs and evaluation criteria of ESG rating agencies
Each division identified issues from their own business areas from a long-term perspective

STEP2 Ordering by Priority

Identified issues are then analyzed and prioritized based on their importance to Skylark Group and importance to its stakeholders.

“Importance to Skylark Group” is evaluated from the perspective of policies and strategies, social demands and issues to be addressed by capturing the nature of the business, and environmental and social considerations, while “Importance to Stakeholders” is evaluated from the perspective of trends in the world, stakeholders' expectations of the Company, and impact on the environment and society.

“Issues of Extreme Importance to Skylark Group.”
Food safety and security, responsible procurement, customer orientation, food loss reduction, decarbonization, nutrition, health maintenance and promotion, success and development of diverse human resources, improvement of working environment, DX, response to changing food preferences, health management, stable logistics.

“Issues of Very High Importance to Our Stakeholders.”
Food safety and security, responsible procurement, customer orientation, food loss reduction, decarbonization, plastic countermeasures, pollution prevention and environmental considerations, water conservation, biodiversity, education, child and forced labor.

STEP3 Identifying Materiality

Prioritized issues are discussed by executives of relevant divisions and then at the Group Sustainability Committee before they are determined as materiality and reported to the Board of Directors.
In identifying the materialities, the company exchanged opinions with external stakeholders at executive study sessions and added “DX” and “biodiversity” to the list.

We review this same process every year and the materiality for 2025 is described below.

Skylark Group's Materiality and Risks/Opportunities

Materiality	Main Risks	Main Opportunities
Food Safety and Security	Reduction in customer trust based on food-related accidents	Gain customer trust
Health & Nutrition	Reduction in customers based on late response to creating health-oriented menus	Increase in customers based on creating health-oriented menus
Customer Orientation	Loss of customers due to late response to customer feedback/needs Customer Overall Satisfaction Level	Increase customer satisfaction Gain customer trust
DX	Decline in competitiveness due to delayed response	Ensure competitive advantage in overall business
Workstyle Reform	Slow growth due to lack of human resources and lack of diversity Increase in labor costs	Acquisition of excellent human resources Improved productivity Improved employment and retention rates
Responsible Procurement	Decline in trust in the Company and suppliers due to delayed response to social and environmental issues	Stable product offerings Increase in customers based on creating menus focused on ethical eating
Food Loss Reduction	Reduction in customers based on late response to food loss	Gain customer trust Decrease in costs and increased earning capacity
Plastic Countermeasures	Reduction in customers based on late response to reducing plastic consumption	Gain customer trust
Decarbonization	Stricter regulations and increased costs related to decarbonization efforts Business and distribution network stoppages due to natural disasters	Gain customer trust Cost reductions based on energy-savings
Water Resource Conservation	Business stoppages due to natural disasters Reduction of product quality due to deterioration of water quality Business stoppages due to water use limitations	Stable water use due to decrease in water risks Cost reductions due to water conservation
Biodiversity	Decrease in customers due to delay in responding to biodiversity issues Difficulty in procuring food ingredients and rising ingredient costs	Gain customer trust Increase in customers based on creating menus focused on ethical eating

Goals based on Materiality Issues

The Sustainability Committee conducts an annual materiality analysis and reviews the materiality-based goals.

Initiatives on Materiality Issues and Evaluation Linkage

Compensation for the Company's directors (excluding outside directors and directors who are members of the Audit and Supervisory Committee), executive officers, and presidents of group companies consists of a fixed base salary and performance-linked compensation, the amount of which varies depending on the Company's performance and other factors. Performance-linked compensation consists of a financial bonus based on consolidated business results for each fiscal year, and compensation for which the existence of payment and the amount of payment are linked to the stock price during a certain period (“phantom stock”). Beginning with Phantom Stock in 2022, in addition to the stock price requirement, we are adding an evaluation by the international ESG assessment organizations of DJSI and CDP Climate Change as an ESG indicator, in addition to the above requirements, from 2024 we will add the achievement of “employee engagement target value,” “customer satisfaction target value,” and “CO₂ emissions reduction target value” as ESG indicators, and introduce a mechanism to link the promotion of our sustainability management and executive compensation.
In addition, KPIs related to materiality, such as decarbonization and food loss reduction, identified by the Sustainability Committee, are set for each executive officer and director (general manager level) in charge, and the achievement or failure of these KPIs is linked to individual evaluation. The evaluation of these KPIs influences the range of bonus fluctuation as well as the annual evaluation class of each individual. The KPIs set by each director are shared with the members of each department to promote their efforts.

Food Safety & Security