We coexist with Nature by committing to “Water Sustainability” and reducing environmental impact.

Reducing the Environmental Impact Reducing the Environmental Impact Across the Entire Value Chain

The Suntory Group is working on water conservation and energy conservation at plants, developing lighter containers and packaging, and installation of energy-saving vending machines in order to reduce environmental impact throughout the entire value chain.

The Lowest Level of Water Usage Achieved per Unit Enhanced 3Rs for Water to Reduce Water Usage Production in the Industry The Suntory Group’s plants use a great deal of water in, A variety of activities related to the 3Rs are being for example, cleaning production equipment and cooling, implemented at the Minami Alps Hakushu Water Plant of in addition to that used as an ingredient in our products. Suntory Products Ltd. In particular, thanks to our use of a In order to conserve limited water resources, we sophisticated “water cascade*” process, we are an intensify our activities to achieve targets toward 2020 of industry leader in terms of per unit production in relation “Reduce water consumption at the Suntory Group*1 plants to the volume of water used. 2 by 35%* ” through enforcement of 3Rs for water, ensuring * Water used in the manufacturing process is classified into fiverades, g such that the minimum amount of water is required (Reduce), as coolant water and cleaning water, based on cleanliness. This technology water can be used repeatedly (), and water can be allows plants to recycle water to be used in subsequent processes, for example, using the highest grade water in the most demanding process, processed and used elsewhere (Recycle). In 2013, Suntory and recycling it for use in a process with less stringent requirements. plants carried out water conservation activities, and achieved 21% reduction compared to 2007 in water usage Comprehensive Water Management per unit production. The Suntory Group established voluntary standards for *1 The group of companies that covers more than 80% of the Suntory Group’s waste water that are stricter than the legal regulations and sales for 2012 (including overseas companies) manages quality so that we may release waste water in a *2 Reduction per unit production based on the business areas in 2007 state as close to nature as possible. Waste water from our plants is first purified using anaerobic waste water Water usage (at 24 plants in Japan) treatment facilities* and other equipment before it is ■Usage Per unit production released into sewers and rivers. Inspectors use measuring (1,000m3) (m3/kℓ) equipment to take daily readings of things like water 25,000 20,427 20,186 20,879 21,395 21,562 15.0 quality under a constant monitoring regime. 20,000 12.0 7.0 15,000 5.9 5.8 5.6 5.2 9.0 * A treatment method that decomposes pollutants using microbes 10,000 6.0 (anaerobic bacteria) 5,000 3.0 0 0 ’07 ’10 ’11 ’12 ’13

Overview of business activities and environmental impact (from January 1 to December 31 in 2013, manufacturing facilities in Japan, excluding outsourcing contractors)

INPUTS Business Processes OUTPUTS

• Packaging materials 404,000t • Glass 107,000t • Aluminum cans 41,000t • cans 65,000t Procurement • PET bottles 70,000t • Cardboard boxes 99,000t • Others 22,000t

• Ingredients 423,000t Production volume 4,169,000kℓ • Waste water 16,830,000m3 (alcoholic and non-alcoholic beverages) • BOD*1 released into public water bodies t • Water 21,562,000m3 45 2 Production • Air emissions CO2* 342,000t SOx t • Electricity 299 million kWh 2 NOx 139t • Waste and by-products t • Fuel (converted to crude oil) 109,000kℓ 266,000

• Air emissions CO2 t Distribution 110,000 NOx 288t

• Containers 7,471 million Glass bottles 316 million Consumption Aluminum cans 2,479 million Steel cans 1,997 million PET bottles 2,679 million

Promoting container reuse and recycling

*1 BOD (biochemical oxygen demand): an indicator of water pollution

*2 CO2 emissions from electricity are calculated using an emission coefficient based on the actual emissions of each electric power company

29 Suntory Group CSR Report 2014 Prioritized Initiatives

■ Promoting the Use of Renewable Energy Reducing CO2 Emissions throughout We have been increasing the use at our plants of various the Value Chain kinds of clean, renewable energy, including the use of solar We have set challenges for each division to reduce power, micro-hydro power, snow ice, and biomass. 1

CO2 emissions throughout the value chain related to our The Minami Alps Hakushu Water Plant of Suntory domestic operations, from product development and Products Ltd. is installed with the largest photovoltaic manufacture to distribution and sales. We are further panels in the beverages industry*, capable of generating Prioritized Initiatives strengthening activities to meet our targets toward 2020 approximately 490kW of electricity. They provide about 1 of “Reduce CO2 emission in the entire Suntory Group* 20% of the plant’s power on clear days, and make it 2 value chain by 24%* .” In 2013, we reduced the weight possible for us to reduce our CO2 emissions by of our product containers, utilized recycles materials, approximately 205 tons per year compared to when installed heat pump-equipped vending machines, and we buy electricity from a power company. used renewable energy in our manufacturing activities, as In addition, the Haruna Plant of Suntory Products Ltd. 2 well as offset emissions by purchasing CO2 emission rights. and the Kyushu-Kumamoto Brewery of Suntory Beer Ltd.

CO2 emissions were, however, reduced by 20% per unit are continuing with their plans to begin operations

production relative to 2007 levels. in 2014 of solar roofs and large-scale solar generators, Prioritized Initiatives *1 The group of companies that covers more than 80% of the Suntory Group’s purchased from SOLAR FRONTIER K.K. sales for 2012 (including overseas companies) * As of April 30, 2014, for internal-consumption only *2 Reduction per unit production based on the business areas in 2007 Initiatives in Distribution

Initiatives in Manufacturing We are striving to reduce the environmental impact We are committed to energy efficiency at Suntory caused by our distribution and transport operations, from 3 Group plants through production activities harmonized procurement of ingredients and packaging materials to with the environment. Making records of and managing delivery of products to consumers. We are promoting a

the operational status centrally is useful for employing modal shift and a shift toward the use of larger vehicles, Prioritized Initiatives energy efficient activities in the production process. and also have introduced the Suntory Integrated Furthermore, we are working to combat global warming Transportation Arrangement® System, a highly efficient from a variety of angles, including by switching to low CO2 truck transport system in place thanks to a computerized emitting fuels and by using renewable energy. Every plant system we developed in-house. It aims to reduce the within Japan has a council of engineers that meets number of trucks in use and the time and distance trucks regularly, and activities are conducted across the board in run when their loads are empty. In addition, by combining 4 all Group companies equally. CO2 emissions totals and loads with those of other companies, we reduce losses in per unit emissions both decreased in 2013 despite transport times. a rise in production at plants in Japan in 2013, thanks Prioritized Initiatives to multifaceted energy-saving measures including CO2 emissions during transportation (business in Japan) reexamination of the conditions under which facilities ■Emissions Per unit were run. (1,000t) (t/1,000kℓ) 240 24

CO2 emissions (at 24 plants in Japan) 22.5 22.3 21.8 21.5

21.2 5 ■Emissions Per unit production 180 18 (1,000t) (kg/kℓ) 400 400 120 104 106 110 12 344 342 91 95 328 331 Prioritized Initiatives 307 300 300 60 6

200 200 0 0 ’07 ’10 ’11 ’12 ’13 105.6 95.4 91.1 90.3 100 82.1 100 6

0 0 ’07 ’10 ’11 ’12 ’13

* Along with a change in the coefficient for CO2 emissions from electricity in Fiscal 2013, there have been changes in the emissions and per unit production in Fiscal 2012 and before.

Suntory Group CSR Report 2014 30 We coexist with Nature by committing to “Water Sustainability” and reducing environmental impact.

Energy Conservation in Vending Machines Key Features of Suntory Vending Machines We introduce Japan’s top-class energy-efficient* vending machines to promote energy conservation.

Heat-pump Function Smart Energy-Saving Feature This allows to recycle the heat generated in Determines sales quantities and temperature the cooling chamber for the heating chamber. of products, reduces power consumption accordingly.

Peak-cut feature LED Illumination Cuts cooling for a fixed period of time to help Uses LED lighting for reduced power balance power usage during peak hours, up to consumption. a maximum of 11 hours, in summer.

Vacuum Heat Insulation Dimmer Function Improves energy efficiency to prevent loss of Incorporates light dimmer that reduces heating and cooling. brightness by 50%.

Zone Heating and Cooling Fluorocarbon measures Reduces power consumption through heating Use of coolants (CO2, R-1234yf) minimizing and cooling products just prior to actual sales. global warming to prevent destruction of the ozone layer.

Promoting a 24-hour Lights Out Initiatives to Reuse Vending With indoor vending machines having a 24-hour “Lights Machine Parts Out” rule and outdoor machines having no lighting In order to make use of parts retrieved from retired during daytime hours, the industry is now aiming for vending machines, Suntory has been working to develop 50% of the 2005 power consumption figure by 2020. both the technologies to reuse parts as well as a control system for stock of reuse parts.

See page 11 “Feature 1: Suntory Environmental Vision toward 2050” for more details about the latest initiatives. * As of April 2014, among the 25 selection vending machines which are the main selection type in major Japanese vending machine makers

Three Rs of Containers and Packaging Mechanical recycling Decontaminate with heat, The Suntory Group works to develop containers and Wash Pulverize Refining process vacuum, etc. packaging that give consideration to the environment, for PET bottles based on the Three Rs of “Reduce, Reuse, and Recycle.” We work on designs that take into account usability PET resin Preform PET from the point of consumption by the customer to recycling, and focus on designs that are lighter as well as

use materials that have a lower impact on the environment Petroleum

and are easier to recycle. We also work in collaboration Raw PET materials with various recycling organizations and local governments to promote recycling. *1 B-to-B: “Bottle to bottle,” signifying the creation of a new PET bottle from a recycled one. *2 Mechanical recycling: The pulverization, cleansing, and return of used ■ RePET Bottles for Horizontal Recycling of products to a material status. Recovered resin is processed for a regulated PET Resin in Japan period under high temperatures and low pressure to remove impurities In 2011, Suntory Beverage & Food Ltd. partnered with from the regenerated materials, yielding reclaimed PET resin suitable for use in bottle production. Kyoei Sangyo Co., Ltd. to develop the Japanese beverage *3 Compared with virgin resin industry’s first B-to-B*1 mechanical recycling*2 system for PET bottles. With roughly a year of results under our belts, we In addition, we are promoting innovative 3Rs, including expanded the reused PET resin from 50% to 100%. Doing product labels recycled from PET bottles. so has made it possible for us to manufacture recycled PET

bottles that can reduce CO2 emissions including those generated when manufacturing PET resin by 83%*3 compared with bottles made completely from petroleum- based resources.

31 Suntory Group CSR Report 2014 Prioritized Initiatives

■ Collaboration for Container Recycling By-products and waste emissions (24 domestic plants) We are committed to recycling containers in ■Emissions Per unit production collaboration with industry organizations and local (1,000t) (kg/kℓ)

400 80 1 governments, as well as with our consumers. 64.6 61.7 61.1 60.8 56.2 The Suntory Group— which naturally abides by the 300 60 232 208 210 224 234 Container and Packaging Recycling Law and meets its 200 40 recycling obligations as a business operator— is working Prioritized Initiatives hard to create an efficient recycling system. 100 20 0 0 ’09 ’10 ’11 ’12 ’13 Container recycle rate

1 (%) 93.4 94.7 Glass bottles* 92.7 87.3 92.6 92.6 100 85.1 89.1 90.4 90.8 2 88.5 89.4 Aluminum cans* Reducing Sludge with Anaerobic Waste Water 2 Steel cans*3 Treatment Facilities 80 89.9 85.8 81.2 82.2 83.5 85.0 PET bottles*4 We have introduced anaerobic waste water treatment 69.6 60 65.0 68.0 67.1 68.1 (municipal & 63.9 business recycling rates) facilities for processing waste water generated from cleaning

40 production equipment and other processes to our plants. Prioritized Initiatives *1: Glass 20 Promoter Association Website Anaerobic treatment uses microbes called anaerobic *2, 3: Japan Steel Can Recycling Association Website bacteria that are active when there is no oxygen. This 0 *4: PET Bottle Recycling Annual ’07 ’08 ’09 ’10 ’11 ’12 Report method breaks down water contaminants and makes it possible to generate significantly less sludge compared to

the method of aerobic waste water treatment, which uses

Promoting the Reduction and Recycling of Waste 3 aerobic bacteria (that require oxygen). In turn, the methane We are committed to reducing the by-products and gas generated from those processes is used as a fuel at waste emissions generated in the manufacturing those locations.

processes at Suntory Group plants in Japan, and recycling Prioritized Initiatives resources 100%. Comprehensive Legal Compliance based on In 2013, our plants in Japan (including Group Electronic Manifest companies) generated 234,214 tons of by-products and Starting in 2013, Suntory is equipping manufacturing waste. This meant a 1% year-on-year increase, yet a 7.5% plants and research centers with a new management system decrease per unit production. We also achieved a 100% based on an electronic manifest, providing a comprehensive resource recycling rate. renewal of its industrial waste processing system. 4 Prioritized Initiatives

Flow for reuse of by-products and waste generated at each production process A variety of by-products and waste are generated in the manufacturing process. The largest source of waste is vegetable waste derived from produce used as ingredients in our products. Next largest is the sludge from our waste water treatment processes. 5 Western Bottling Preparation Fermentation Distillation Casking Aging Blending Boxing Shipping Liquors Canning Consumer Plant waste water Bottling Beer Preparation Fermentation Aging Filtration Canning Boxing Shipping

Plant waste Prioritized Initiatives water Foods Leaf Bottling Extraction Mixing Sterilization PET bottles Boxing Shipping (Oolong Tea) separation Canning

Waste water treatment

Mash Tea Cask Label PET Glass Aluminum cans Plastic Wooden Methane Waste dregs Yeast leaves materials bottles bottles Steel cans crates Cardboard pallets Gas Sludge 6

Reuse Animal feed Toilet paper Glass bottles Plastic pallets Chips for plywood Organic fertilizer applications Tiles Solid fuel

Aluminum cans Organic fertilizer Furniture PET bottles Steel cans Fuel Textile products, etc. Recycled steel Recycled cardboard

Suntory Group CSR Report 2014 32