Kao Sustainability Data Book Kirei Lifestyle Plan Progress Report 2020 Contents Kirei Lifestyle Plan Contents Editorial Policy Editorial Policy ………………………………………… 3 2019 Our initiatives Walking the right path CEO Message ………………………………………… 4 Realization of the Kao Corporate Philosophy ……… 36 Effective corporate governance …………… 134 Kao’s Corporate Philosophy ………………………… 5 Full transparency …………………………… 144 Message by Dave Muenz …………………………… 6 Making my everyday more beautiful CEO Message Respecting human rights …………………… 146 Making my everyday Kirei Lifestyle Plan—Kao’s ESG Strategy …………… 7 Improved quality of life ………………………… 42 more beautiful Human capital development ……………… 151 Stakeholder Engagement …………………………… 34 Habits for cleanliness, beauty & health ……… 47 Inclusive & diverse workplaces …………… 162 Universal product design ……………………… 50 Employee wellbeing & safety ……………… 175 Safer healthier products ……………………… 57 Responsible chemicals management …… 192 Kirei Lifestyle Plan KPI definitions

How to Use This PDF Making thoughtful choices for society Kirei Lifestyle Plan KPI definitions………………… 202

Sustainable lifestyle promotion 60 choices for society ……………… External recognition ……………………………… 207 Making thoughtful The navigation buttons, the category tabs, and the Purpose driven brands ………………………… 65 table of contents buttons are located at the right Independent assurance report …………………… 209 edge of each page for easy page scrolling. The link Transformative product innovation …………… 68 GRI Standards table ………………………………… 210 buttons to relevant pages and external sites are also Responsibly sourced raw materials ………… 72 ISO 26000 table …………………………………… 222 available in the text. TCFD Index ………………………………………… 224

Navigation buttons Category tabs Making the world healthier & cleaner Independent assurance report Click a title to Click the left arrow to Decarbonization ………………………………… 83 Contents

go to the top Kirei Lifestyle Plan

go back one page. ➡ Information about our approach to the Kirei healthier Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-16 page of the Zero waste …………………………………… 103 Making the world Lifestyle Plan is reported on the following category. Editorial Policy Click the right arrow to Water conservation 117 webpage: Kao’s ESG Vision go forward one page. ………………………… A Kirei Lifestyle is enjoying today, with the peace of this lifestyle. A Kirei Lifestyle means living a beautiful life inside and out. mind that those joys will be there tomorrow. It’s why we do what is right, not what is easy. &

CEO Message Air water pollution prevention 125 Click the return arrow Making my everyday & …………… A Kirei Lifestyle is full of compassion. It’s the chance to express who you truly are, with the We put our innovation and imagination to the task Kao Sustainability Data Book 2020 more beautiful Where making your own life clean and beautiful never confi dence that youto are go walking back the right to path. the Even in of enriching lives byClick fi nding waysthe for tabpeople theto cleaner compromises the beauty and cleanliness of the world around the smallest, everyday moments. world over to live the Kirei Lifestyle. www.kao.com/global/en/sustainability/pdf/ you. That’s why, at Kao,previous everything we do page. is in service of see the table of contents. Kirei Lifestyle Plan KPI defi nitions Product lifecycle and environmental impact … 130 Report content choices for society MakingMakingMaking MakingMakingMaking MakingMakingMaking Making thoughtful Environmental accounting ………………… 132 Corporate governance Biodiversity my everydaymy everydaymy everyday thoughtfulthoughtfulLinkthoughtful buttons the worldthe worldthe world more more more choiceschoiceschoices healthierhealthierhealthier Risk and crisis Communication with beautifulbeautifulbeautiful for societyfor societyfor society & cleaner& cleaner& cleaner Click the icon to go to management consumers Walking the right path

the relevant page in Independent assurance report Responsible care activities Corporate citizenship

healthier activities this data book. Making the world Product quality Click the icon to go to management Main corporate citizenship & the relevant external cleaner Information security activities of worksites and site. Advanced Digital group companies Process Safety and Disaster Walking the right path Technology Strategy Intellectual property Prevention BY 2030 BY 2030 BY 2030 We will aim to empower all people, 100% of Kao brands will make it easy for 100% of our products will leave a full lifecycle Tax strategies Major sustainability at least 1 billion by 2030, to enjoy more beautiful people to make small but meaningful choices environmental footprint that science says our indicators lives — greater cleanliness, easier aging, better that, together, will shape a more resilient and natural world can safely absorb health and confi dence in self expression compassionate society

Kao Kirei Lifestyle Plan Progress Report 2020 8

Kao Kirei Lifestyle Plan Progress Report 2020 2 Contents Kirei Lifestyle Plan Editorial Policy 102-50, 102-51, 102-52, 102-56 Editorial Policy Since 2017, Kao has issued the Kao Integrated International Financial Reporting Standards • SDG Compass Report, with the aim of presenting a comprehensive (IFRS) • TCFD Recommendations picture of the value that Kao provides. The Kao International Financial Reporting Standards (IFRS) Sustainability Data Book and Kirei Lifestyle Plan have applied since fiscal 2016. Per unit of sales in this

Progress Report 2020 complements the Kao data book is calculated based on Japanese standards CEO Message Introduction of various informative tools Making my everyday

Integrated Report. It introduces various activities up to fiscal 2015, and on IFRS in fiscal 2016 thereafter. more beautiful aligned with our ESG Strategy, the Kirei Lifestyle Plan, [Reports] that contribute to the sustainability of the world, along Independent assurance ➡ Kao Integrated Report 2020 www.kao.com/content/dam/sites/kao/www-kao- with detailed performance data. We have had our reports independently assured since com/global/en/investor-relations/pdf/reports- 2003. KPMG AZSA Sustainability Co., Ltd. provides fy2020e-all-002.pdf Kirei Lifestyle Plan KPI definitions Scope and boundary of reporting independent assurance for this data book. Indicators In general, we report the activities of the Kao Group for which assurance is provided are marked with a ➡ Kao Sustainability Data Book Kirei Lifestyle Plan Progress Report 2020 (Kao Corporation, its subsidiaries and affiliates). check . A list of those indicators is shown in the □✓ choices for society

(This report) Making thoughtful Environmental and social performance data covers independent assurance report and the GRI Standards Kao Corporation and its subsidiaries. table. ➡ Kao Sustainability Data Book 2020 www.kao.com/global/en/sustainability/pdf/ Exceptions to this data scope have been clearly stated in the text. Issuance period ➡ Corporate Governance In this data book, “Kao” means the Kao Group. Issued on: June 23, 2020 www.kao.com/global/en/about/policies/corporate- governance/

We have stated the names of individual organizations Next report scheduled for issue in: June 2021 Independent assurance report covered if it is necessary to identify the boundary. (Previous issue: June 24, 2019) ➡ Financial Report www.kao.com/global/en/investor-relations/library/ healthier financial-report/ Making the world Organizations covered Guidelines referenced • GRI Sustainability Reporting Standards in 2016 [Websites] ➡ List of Kao Group companies ➡ Corporate information * The numbers of referenced GRI disclosures are noted next to the & www.kao.com/global/en/about/outline/group- www.kao.com/global/en/ cleaner title of each page. companies.html • Environmental Reporting Guidelines (2018), ➡ Investor relations Environmental Reporting Guidelines (2012) and www.kao.com/global/en/investor-relations/ Environmental Accounting Guidelines (2005) by the ➡ Sustainability

Period covered Walking the right path Ministry of the Environment of Japan www.kao.com/global/en/sustainability/ Fiscal 2019 (January 1, 2019–December 31, 2019) • Environmental Accounting Guidelines for Chemical Some qualitative information includes performance of Companies (November 2003) by the Japan ➡ R&D www.kao.com/global/en/research-development/ fiscal 2020. Chemical Industry Association • ISO 26000 (guidance on social responsibility) • SASB Standards

Kao Kirei Lifestyle Plan Progress Report 2020 3 Contents Kirei Lifestyle Plan CEO Message 102-14 Editorial Policy Transforming ourselves to drive change, we will generate significant growth through our distinctive ESG activities “Kirei*1 Action.” CEO Message Making my everyday more beautiful

I would like to thank you, our shareholders, for your way to realize a more sustainable society focused on the exceptional understanding and support of the Kao Group’s future and management efforts to do this. business and corporate activities. In addition, we announced our ESG Strategy, the Kirei Lifestyle Plan KPI definitions While passing down our Yoki-Monozukuri*2 spirit, we “Kirei Lifestyle Plan,” which further integrates ESG into our have been conducting corporate activities aimed at business strategy, in FY2019, the third year of the Kao achieving the wholehearted satisfaction and enrichment of Group Mid-term Plan 2020 (K20). choices for society the lives of people globally and contributing to the The “Kirei Lifestyle Plan (KLP)” was established based Making thoughtful sustainability of the world. It has been 130 years since we on the Kao Group’s Yoki-Monozukuri spirit to serve launched the first high-quality bar soap produced in Japan. people’s needs and desire to live a more sustainable During this time, the society and economic environment lifestyle. The Kao Group defines this desired life as the have seen dramatic changes, and people’s lifestyles have “Kirei Lifestyle,” and aims to advance innovations in all also changed accordingly. Along with this, we have been aspects of business to contribute even more to society. transforming ourselves and achieved significant growth. Kao continued to grow in FY2019, achieving 10th Independent assurance report Yoki-Monozukuri implemented by the Kao Group to consecutive year of increases in operating income, 7th healthier date has also pursued environmental consciousness and consecutive year of record-high operating income and Making the world user friendliness while staying close to society and people 30th consecutive year of increases in cash dividends. and quickly understanding their needs. However, the While staying close to consumers and customers, we &

recent changes taking place in the business environment at the Kao Group will boldly take on challenges so that we cleaner and society, increase in the amount of information can contribute to the lives of people globally and the available caused by the digital revolution and the resulting sustainability of the world. changes in consumer awareness, are unprecedented in I would appreciate your continued understanding and terms of their speed and scale. Along with this, social support of the Kao Group’s business and corporate Walking the right path issues beginning with the worsening global environment activities. are rapidly increasing in severity, and the responsibility of global corporations has become even heavier. Therefore, in FY2019 we declared our commitment to Michitaka Sawada shifting to ESG-driven management. This is not an Representative Director President and Chief Executive Officer extension of our existing value of Yoki-Monozukuri, but a

*1 The Japanese word “kirei” describes something that is clean, well-ordered and beautiful, all at the same time. For Kao, this concept of Kirei not only describes appearance, but also attitude—to seek to create beauty for oneself, and also for other people and for the natural world around us. *2 The Kao Group defines Yoki-Monozukuri as a strong commitment by all members to provide products and brands of excellent value for consumer satisfaction. In Japanese, Yoki literally means “good/excellent,” and Monozukuri means “development/manufacturing of products.” Kao Kirei Lifestyle Plan Progress Report 2020 4 Contents The origins of the Kao Way can be traced back to the company’s founder, Tomiro Nagase. In Kirei Lifestyle Plan Kao’s Corporate Philosophy 102-16 1887, Tomiro Nagase founded Nagase Shoten, a Western sundry goods store. He launched Kao Sekken (Kao Soap) three years later in 1890. His goal was to create a high-quality facial soap and

offer it at an affordable price to contribute to cleaner and more comfortable lives for people at Editorial Policy the time, when the only choices available were poor-quality domestic soap and high-priced imported soap. This is the origin of our mission “to strive for the wholehearted satisfaction and Fundamentals That Support Kao’s Value Creation enrichment of the lives of people.” CEO Message Making my everyday more beautiful The Kao Way ValuesYoki-Monozukuri Unique to Kao

The three Values express what we believe in. We do not conduct business or take actions that Kirei Lifestyle Plan KPI definitions do not conform with these Values. Above all, we believe in achieving Innovation and Yoki-Monozukuri built upon Integrity, and this has become our distinctive foundation. choices for society Making thoughtful Yoki-Monozukuri Yoki-Monozukuri refers to developing innovative products and brands by determining the needs of consumers and fusing them with seeds of our original technologies. We create dynamic synergy by uniting the creativity and energy of every employee and division. The driving force of Yoki-Monozukuri is the passion of individual members as the source of our

corporate strength. We reinvest the profits earned through Yoki-Monozukuri toward the Independent assurance report Yoki-Monozukuri continuous creation of products and brands of excellent value. This cycle of Yoki-Monozukuri

earns us the respect and trust of all of our stakeholders, thereby achieving profitable growth. healthier Making the world

Innovation

We improve and innovate our products, brands and business processes in order to stay one & cleaner step ahead of changes in consumer lifestyles and the business environment. We proactively seek new opportunities and challenges to always continue moving forward while maintaining a healthy sense of dissatisfaction with the status quo. We regard difficulties as opportunities for self-improvement and continue to grow individually and as a corporation by overcoming them. Mission Walking the right path Integrity Our mission is to strive for the wholehearted satisfaction and We treat others with respect and fairness, and pursue our work with sincerity and diligence in enrichment of the lives of people globally and to contribute to the an effort to optimize the performance of individuals and the corporation as a whole. We sustainability of the world, through Yoki-Monozukuri, meaning our Yoki-Monozukuri behave lawfully and ethically, and earn the respect and trust of all stakeholders through sound strong commitment to provide products and brands of excellent value and honest business activities. As a responsible corporate citizen, we seek to ensure the safety created from the consumer and customer’s perspective. of our products and operations, and proactively engage in solving social issues including environmental issues.

Kao Kirei Lifestyle Plan Progress Report 2020 5 Contents Kirei Lifestyle Plan Message by Dave Muenz 102-14 September 26 with the strong resolution of our CEO. We are on an ESG journey Themes proposed to the ESG

that we cannot complete alone—we will Committee by the ESG External Editorial Policy continue to explore collaborative Advisory Board in FY2019 opportunities that help amplify the - Implementation and promotion of the strengths we have at Kao, to achieve the Kirei Lifestyle Plan within the company Kirei Lifestyle, for all. - Methods adopted by Kao to support the CEO Message realization of ethical consumption by Making my everyday Role and activities of the consumers more beautiful ESG Committee Kao’s support for the The ESG Committee discusses and recommendations of the TCFD decides on the overall direction of activities related to our ESG strategy. The In FY2018, Kao expressed its support for Kirei Lifestyle Plan KPI definitions committee is chaired by the President and the recommendations of the Task Force Chief Executive Officer, and its members on Climate-related Financial Disclosures choices for society

include Senior Managing Executive and (TCFD). In FY2019, Kao implemented a Making thoughtful Managing Executive Officers. The quantitative assessment of the potential 2019 was a year of action inside and leveraging the ESG Promotion Meeting, committee formulates policies and impact of climate change on its business, outside the Kao Group. The Kirei Lifestyle which includes leaders of many of our strategies that are related to ESG using several different climate change Plan was launched in April as the new key businesses and functions, we worked activities, identifies ESG issues, risks, and scenarios. The results obtained in this ESG (Environmental, Social and to build management workstreams within opportunities, and examines the current assessment showed that there was a Governance) Strategy for Kao, capturing each division so that each would have its state of ESG activities. The ESG External significant potential impact in relation to Independent assurance report our ambitions to serve the needs and own goals, targets and ways to track its Advisory Board consists of outside crude oil price data, carbon pricing, etc. desires of people to live more sustainably progress, and to empower employees to experts, and gives advice and Kao has already begun taking action to healthier through our creativity and innovations. own those actions. Our people are the recommendations to the ESG Committee minimize resource usage and realize Making the world We believe that by adopting an ESG lens key to making the transformation to bring external perspectives to the decarbonization through Reduce

in our Yoki-Monozukuri, which is our necessary to achieve the ambitions set management of the company. Innovation and Recycle Innovation, in line & unique way to develop and offer high- out in the Kirei Lifestyle Plan, which led with the Kirei Lifestyle Plan, which cleaner quality products to the consumers, we us to launch the Kirei Lifestyle Caravan, Main items deliberated on and embodies Kao’s ESG strategy. Kao has can drive purposeful business that makes where I personally visit each division for approved by the ESG Committee in utilized TCFD scenario analysis to life more beautiful. Amidst growing direct dialogue about our ESG aspirations. FY2019 evaluate the company’s ability to respond

concern about our world from both Moreover, specific target setting, - Establishment of ESG strategies and and adapt to climate change, and the Walking the right path environmental and social perspectives, including official approval of our Science mid-to long-term goals evaluation results will be reflected in

the world is demanding change, as we Based Target initiative (SBTi) CO2 - Setting up of the ESG External Kao’s future business strategy. have seen in youths’ cry for action across emission reduction targets, are helping us Advisory Board the globe. further our efforts in tackling climate - Selection and approval of priority At Kao, based on our ESG change. actions governance structure founded last year, Key ESG actions continue to be - Internal communication plans David J. Muenz we focused on identifying actions where identified and discussed as we speak, a - Creation of new systems to promote Executive Officer Kao can make the most impact. By portion of which was announced on ESG Senior Vice President, ESG, Global

Kao Kirei Lifestyle Plan Progress Report 2020 6 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-16 Editorial Policy To achieve our 2030 vision of becoming a company with a global presence, we are building a foundation for sustainable growth with a core focus on ESG-driven management. Our ESG Strategy, the Kirei Lifestyle Plan released in April 2019, aims to enrich the lives of consumers, and as such is an ESG Strategy shaped from the consumer’s point of view and unique to Kao. CEO Message Through ESG-driven Yoki-Monozukuri based on the Kirei Lifestyle Plan, our ESG Strategy will lead to realizing sustainability for society and increased corporate value. Making my everyday more beautiful

Philosophy supporting Kao’s ESG activities Kirei Lifestyle Plan KPI definitions The Kao Way Aiming to realize our vision for 2030, we will “Good fortune is only given to those who work Since our founding, we have made it our mission to transform our corporate stance, how we conduct diligently and behave with integrity.” contribute to sustainability through our business manufacturing, and our perspective to put ESG in choices for society Making thoughtful activities. The Kao Way, our corporate philosophy, practice and through this, increase our corporate Kao’s ESG Commitments and Actions states, “Our mission is to strive for the wholehearted value. We will integrate an ESG perspective, starting The Kirei Lifestyle Plan includes three main pillars satisfaction and enrichment of the lives of people with the initial stages of product design, into the connected to enriching the lives of people, namely globally and to contribute to the sustainability of the Yoki-Monozukuri manufacturing that we have “Making my everyday more beautiful,” “Making world, with products and brands of excellent value conducted up to now to elevate it to ESG-driven thoughtful choices for society,” and “Making the

that are created from the consumer’s and customer’s Yoki-Monozukuri. world healthier & cleaner.” “Walking the right path” is Independent assurance report perspective.” We released our ESG Strategy, the Kirei Lifestyle the foundation that supports these pillars. Plan, in April 2019 and declared our commitment to Kao Actions, our priority action themes, are set for healthier Making the world conducting specific ESG activities that give each pillar as well as our 2030 Commitments, our ➡ p. 5 Kao’s Corporate Philosophy consumers a leading role as well as our ambitions for ambitious goals to achieve by 2030.

the future. We believe that achieving Kao’s ESG Vision for & cleaner The Kirei Lifestyle Plan consists of Kao’s ESG society and the environment, where global-scale Long-term management vision and the Vision and Kao’s ESG Commitments and Actions to upheavals are anticipated, will require our resolve to Kirei Lifestyle Plan achieve this vision. transform ourselves to help bring positive In 2016, we established our long-term vision to transformation to society. As the importance of achieve by 2030, and placed ESG at the core of Kao’s ESG Vision governance is growing, we will further strengthen the Walking the right path management to build the necessary foundation to Kao’s ESG Vision is based on the concept that our effectiveness of our governance in line with our core achieve our vision. We took this step in the belief that ESG activities are designed to help people around the value of “walking the right path.” we need to transform our group using the ESG pillars world live more sustainably and benefit the wider Individual mid- to long-term targets have also to achieve our everlasting mission set forth in the Kao society and the Earth. been set for each of the 19 Kao Actions to facilitate Way, our corporate philosophy, while adapting to the Our value of “walking the right path” is presented effective and reliable activities. large changes anticipated to take place in society in as the foundation of our ESG activities and embodies the coming years. one of the core tenets of our founder Tomiro Nagase,

Kao Kirei Lifestyle Plan Progress Report 2020 7 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-16 Editorial Policy

Kao’s ESG Vision A Kirei Lifestyle is enjoying today, with the peace of this lifestyle. A Kirei Lifestyle means living a beautiful life inside and out. mind that those joys will be there tomorrow. It’s why we do what is right, not what is easy. CEO Message A Kirei Lifestyle is full of compassion. It’s the chance to express who you truly are, with the We put our innovation and imagination to the task Making my everyday

Where making your own life clean and beautiful never confidence that you are walking the right path. Even in of enriching lives by finding ways for people the more beautiful compromises the beauty and cleanliness of the world around the smallest, everyday moments. world over to live the Kirei Lifestyle. you. That’s why, at Kao, everything we do is in service of Kirei Lifestyle Plan KPI definitions choices for society MakingMakingMaking MakingMakingMaking MakingMakingMaking Making thoughtful my everydaymy everydaymy everyday thoughtfulthoughtfulthoughtful the worldthe worldthe world more more more choiceschoiceschoices healthierhealthierhealthier beautifulbeautifulbeautiful for societyfor societyfor society & cleaner& cleaner& cleaner Independent assurance report healthier Making the world & cleaner Walking the right path

BY 2030 BY 2030 BY 2030 We will aim to empower all people, 100% of Kao brands will make it easy for 100% of our products will leave a full lifecycle at least 1 billion by 2030, to enjoy more beautiful people to make small but meaningful choices environmental footprint that science says our lives — greater cleanliness, easier aging, better that, together, will shape a more resilient and natural world can safely absorb health and confidence in self expression compassionate society

Kao Kirei Lifestyle Plan Progress Report 2020 8 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-16, 102-47 Editorial Policy Kao’s ESG Commitments and Actions

Kao’s Commitments by 2030 Kao Actions CEO Message Making my everyday more beautiful BY 2030

Making We will aim to empower all people, IMPROVED HABITS FOR UNIVERSAL SAFER my everyday at least 1 billion by 2030, to enjoy QUALITY CLEANLINESS, PRODUCT HEALTHIER BEAUTY more beautiful lives — greater OF LIFE DESIGN PRODUCTS Kirei Lifestyle Plan KPI definitions more cleanliness, easier aging, better health & HEALTH beautiful and confidence in self expression choices for society Making thoughtful

BY 2030 My Making 100% of Kao brands will make it SUSTAINABLE PURPOSE TRANSFORMATIVE RESPONSIBLY thoughtful easy for people to make small but LIFESTYLE DRIVEN PRODUCT SOURCED RAW Kirei meaningful choices that, together, PROMOTION BRANDS INNOVATION MATERIALS choices for will shape a more resilient and Lifestyle society compassionate society Independent assurance report healthier Making the world

BY 2030 & Making AIR &WATER cleaner 100% of our products will leave ZERO WATER DECARBONIZATION POLLUTION the world a full life cycle environmental WASTE CONSERVATION healthier footprint that science says our PREVENTION & cleaner natural world can safely absorb Walking the right path

E FFECTIVE RE SPECTING I NCLU S I V E EMPLOYEE HUMA N R ESP ONSIBL E F U L L C ORP O R AT E HUMAN & D IVER S E WE LLBEIN G CA PITA L CHEMIC ALS TRANSPARENCY GOVE RNANCE RIG HTS W ORKPLA CES & SAFETY DEVELO PMENT M ANAG EMENT

Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 9 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16 Editorial Policy Business growth through the realization of the Kirei Lifestyle

The objective of our ESG actions and achieving the to society and environmental sustainability will allow Kirei Lifestyle through them is creating sustainable us to gain the trust of consumers and a wide range of CEO Message and profitable business growth. We believe that our stakeholders, earn a strong reputation, and contribute Making my everyday more beautiful ESG actions taken with the goal of enriching the lives to increasing our corporate brand value. of consumers and realizing a sustainable world will One of Kao Actions, “Purpose driven brands,” result in business growth and creation of a cycle strengthens brands’ reason for existing as well as where generated profit is returned to stakeholders, contributes to product brand value. We revised our Kirei Lifestyle Plan KPI definitions consumers and the wider society. This is why we have brand design process in 2019 and defined "purpose" made the Kirei Lifestyle Plan the driver to achieve our from the perspective of the Kirei Lifestyle Plan. We management vision. anticipate that this will increase the opportunities for choices for society It is said that technological innovations are consumers to become more aware of the purpose of Making thoughtful needed to address the severe social issues we are Kao product brands in the future. facing in the modern era and realize a sustainable world. We have strengths in Yoki-Monozukuri that form the framework for the innovative solutions we offer, and we believe that ESG-driven Yoki- Monozukuri, which combines innovative technologies Independent assurance report ➡ Kao Integrated Report 2020 grounded in our essential research, will support our Kao’s Yoki-Monozukuri (Kao’s value creation model) healthier sustainable growth and can have transformative www.kao.com/content/dam/sites/kao/ Making the world impacts on people, the wider society and the Earth. www-kao-com/global/en/investor-relations/pdf/ reports-fy2020e-all.pdf#page=16 Beauty and Health, expand their boundaries and &

further enlarge our business fields based on the Kirei cleaner Lifestyle Plan, thereby amplifying our transformative impacts on society, and at the same time, achieving business growth. Walking the right path The Kirei Lifestyle Plan will also contribute to increasing our corporate brand value and product brand value. The spirit of the Kirei Lifestyle Plan is also integrated into our products, campaigns, programs, communications and other activities. We believe that contributing to enriching the lives of consumers and

Kao Kirei Lifestyle Plan Progress Report 2020 10 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16 Editorial Policy Kao’s vision for society and what Kao aims to be by 2030 What Kao Aims to Be by 2030* * For the period between 2020 and 2030, Kao may develop a separate action plan to tie these two plans together. CEO Message Making my everyday

FY2017 to FY2020 Make Kao a more beautiful Mid-term Plan K20* Company with a Mid-term plan focused on the following three points Kirei Lifestyle Plan KPI definitions Commitment to fostering a distinctive corporate image Global Presence FY2013 to FY2015 • Become a company that is always by the consumer’s side choices for society Making thoughtful Commitment to profitable growth A distinctive corporate image

Mid-term Plan K15 • Continue to set new record highs for profits • Aim for like-for-like net sales CAGR of +5% A high-profit global consumer goods company • Operating margin of 15% • Three 100 billion yen brands Kao’s first publicly announced mid-term plan, (Merries baby diapers, Attack laundry detergents, Bioré skin care products) A high level of returns to stakeholders

Commitment to returns to stakeholders Independent assurance report sought to enhance Kao’s ability to formulate

• Shareholders: Continuous cash dividend increases (40% payout ratio target) healthier and execute detailed strategies • Employees: Continuous improvement in compensation, ESG Strategy Making the world benefits and health support • Customers: Maximization of win-win relationships Making my everyday more beautiful • Society: Advanced measures to address social issues

Making thoughtful choices for society & cleaner Making the world healthier & cleaner Formulated detailed strategies and steadily achieved results An important milestone toward achieving our vision by 2030

ESG activities to achieve the Kao Group Mid-term Plan 2020 (K20) ESG activities to achieve what we aim to be by 2030 • Contribute to the sustainability of society in ways unique to Kao, and communicate to and get On September 26, 2019, we announced the following as the first set of actions for achieving Walking the right path feedback from stakeholders as part of these activities. ESG-driven Yoki-Monozukuri and to put the Kirei Lifestyle Plan into practice. • Build a profitable growth model by integrating ESG into business activities. 1. Priority actions in ESG-driven Yoki-Monozukuri • Provide returns to stakeholders by increasing corporate value and addressing social issues. • Actions toward a society with circularity of plastics: Innovation in Reduction: Innovation in Recycling • Actions contributing to improved QOL, etc.: Social innovations • Offer new brands that epitomize the Kirei Lifestyle 2. Based on the Kirei Lifestyle, deepening our three existing business fields of cleanliness, beauty and health, and expanding the boundaries of these three fields to lead to business field expansion

Kao Kirei Lifestyle Plan Progress Report 2020 11 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 103-2, 103-3 Editorial Policy Selection process for the Kao Actions as material themes

Kao selected the 19 Kao Actions in the Kao ESG Commitments and Actions through the following four steps. CEO Message Making my everyday

Selection process Objectives of selecting the Kao Actions more beautiful 1. Targeted action in view of changing social circumstances and issues, and the 1. Identification of 2. Prioritization 3. Validation 4. Review candidate themes changing expectations for Kao. 2. Strategic implementation of ESG activities based on Kao policy and changes in business environment and strategy. Kirei Lifestyle Plan KPI definitions 3. Efficient investment and effective use of management resources. choices for society Selection of Kao Actions implemented in 2018 Making thoughtful 1. Identification of candidate themes 1.2 Top management interviews 2. Prioritization 1.1 Making a list of candidate themes We held interviews with eight members of top Of the 78 candidate themes identified in 1.1, we We used the following to help identify candidate themes: management including representative directors, asked some external stakeholders and employees to • ISO26000 directors and managing executive officers, and rate their priority in growing our business and • GRI Standards compiled their thoughts and requests regarding Kao’s increasing our corporate value.

• SDGs Independent assurance report • Evaluation items used by ESG assessment bodies ESG Strategy. • Global mega-trends Evaluator attributes healthier • In-house workshops 1.3 Region-based workshops • External stakeholders: 32 (21 Japanese, 11 non-Japanese) Making the world • Materiality at other companies Using a workshop format in the regions of Asia, the • Employees: 71 (39 Japanese, 32 non-Japanese) • Third-party opinions Americas and Europe, we identified activities that As a result of this process, 78 candidate themes (17 External stakeholders who provided evaluations fall under the & would simultaneously satisfy business needs, following groups: cleaner environmental, 37 social and 24 governance) were sustainability needs and customer and consumer • Consumers/customers selected. needs from the viewpoint of our operational sites. We • Suppliers • Local community members then identified elements in those activities that serve • NGO/NPO representatives

becoming a company with a global presence. • Academics Walking the right path • Industry body/same industry representatives • Shareholders/investors

Kao Kirei Lifestyle Plan Progress Report 2020 12 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 103-2, 103-3 Editorial Policy We then organized the results of their evaluations in the Matrix of Materiality, which maps materiality along two The ESG Promotion Meeting, attended by division axes: priority for stakeholders and priority for Kao. leaders, reviewed materiality based on the results of the evaluations and third-party opinions, and then selected the 19 Kao Actions. Matrix of Materiality Themes that were not included in the Kao Actions CEO Message Making my everyday

despite being relatively highly rated in the evaluations more beautiful Sustainable raw material procurement will be managed and implemented under a separate Recycle system development organization. For instance, “Disaster preparation and Product innovation reconstruction assistance” was highly rated externally.

Life cycle CO2 emissions reduction These themes have been and will continue to be Kirei Lifestyle Plan KPI definitions Water resource Robust management conservation implemented under the Responsible Care Promotion Raising awareness of consumers’ of product safety Human capital sustainable consumption Ensuring transparency development Committee. of information Waste reduction choices for society Making thoughtful Improvement of workplace environment and occupational health and safety, and disaster prevention Strict compliance 3. Validation The ESG Committee reviewed the 19 Kao Actions Establishment of habits for cleanliness and hygiene selected in the ESG Promotion Meeting, and the Pollution prevention Respect for employee diversity Board of Directors approved them. Based on this, divisions set their own targets and

action plans to conduct ESG activities. Independent assurance report Considerations for universal design

Marketing innovation 4. Review healthier Making the world The 19 Kao Actions will be periodically reviewed and revised using the selection steps 1 to 3. Priority for stakeholders Priority for Quality of life improvement & cleaner

➡ For details concerning the structure, see p. 14, ESG promotion structure. Walking the right path

Making my everyday more beautiful Making the world healthier & cleaner Making thoughtful choices for society Walking the right path

Priority for Kao

Kao Kirei Lifestyle Plan Progress Report 2020 13 Contents 102-18, 102-19, 102-20, 102-21, Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-26, 102-29, 102-31 Editorial Policy ESG promotion structure

The ESG promotion structure was updated in 2018 to The ESG Committee consists of members of the outside viewpoints that are input into management. achieve greater flexibility and resilience in management team, and the ESG Promotion Meeting While the actions taken across the ESG promotion CEO Message implementation. Under the Board of Directors, the is attended by the heads of business divisions, structure basically relate to all aspects of ESG, placing Making my everyday more beautiful ESG Committee is the body that discusses and regions, functional divisions and corporate divisions. a primary focus on KLP actions drives strategic ESG decides the direction of activities related to the ESG These bodies are able to make swift management implementation. Strategy. Comprising outside experts, the ESG decisions on ESG matters, and the structure enables Through this ESG promotion structure, we gain an External Advisory Board provides external viewpoints divisions with global operations to advance ESG understanding of our global ESG activities and make Kirei Lifestyle Plan KPI definitions that are input into our ESG activities. The ESG activities. management decisions on strategy, investments and Promotion Meeting works to achieve the ESG The ESG External Advisory Board is made up of other matters based on their impact on our business Strategy, and ESG Task Force proposes activities for external experts who provide advice and suggestions and society. choices for society focus themes, while divisions implement activities. to issues raised by the ESG Committee and offer Making thoughtful

ESG promotion structure Structure implementing the Kao Actions in the Kirei Board of Directors Lifestyle Plan • The responsible divisions design the details of the Internal Control ESG Committee Committee ESG External respective actions, devise the mid- to long-term targets, Independent assurance report Management Committee Advisory Board regularly consolidate data on division progress and manage ESG Promotion Meeting

company-wide progress. healthier Making the world • The target divisions devise and implement their division targets and activity plan for each action. ESG Task Force &

Division promotion structure cleaner Each division and Group company • Each division creates its promotion structure. They devise their division targets and activity plan, and implement the * As of December 2019. PDCA cycle. • The progress of division activities is reported to the ESG Promotion Meeting, which then gives the divisions Walking the right path feedback including requests to revise plans. • Global implementation by divisions is the general rule, with support for implementation by individual Kao Group companies provided as needed.

Kao Kirei Lifestyle Plan Progress Report 2020 14 Contents 102-18, 102-19, 102-20, 102-21, Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-26, 102-29, 102-31, 102-44 Editorial Policy Roles, structure and frequency of meeting of each organization Frequency of Organization Roles Structure Main deliberated items (2019) meeting • Develop policy and strategy for Kao’s ESG activities. • Establish the ESG Strategy and mid- to • Gain an understanding of the issues, risks and opportunities for sustainability long-term targets. Committee chairperson: President & CEO; ESG of Kao and society and ESG. Four times/ • Establish the External Advisory Board.

Members: Senior managing executive officers, managing CEO Message Committee • Deliberate and decide on matters raised in the ESG Promotion Meeting. year • Select and approve focused actions. Making my everyday executive officers, other executives

• Confirm the status of company-wide ESG activity implementation and take • Internal communication plan. more beautiful action accordingly. • Create new systems to drive ESG. • Give advice and recommendations to the ESG Committee from outside Members: External influential experts viewpoints. • Lisa MacCallum: Founder of Inspired Companies, • Implement the Kirei Lifestyle Plan internally. ESG External • Provide information to the ESG Committee to enable development and specialist in business reforms Once/year • Ways Kao can support ethical consumption by Advisory Board implementation of world-class plans. • Rika Sueyoshi: CEO, Ethical Association, specialist in consumers. • Provide opportunities for collaboration and cooperation with external parties. ethical consumption Kirei Lifestyle Plan KPI definitions • Establish mid- to long-term targets for the Kirei • Promote implementation of the ESG Strategy based on the direction decided Lifestyle Plan. by the ESG Committee and its directives and suggestions. Chair: Person responsible for the ESG Division; ESG Promotion 8–12 times/ • Select focused action candidates. • Confirm the status of ESG activity implementation by divisions and take Members: Responsible persons at business divisions, Meeting year • ESG-driven Yoki-Monozukuri system design.

action accordingly. regions, functional divisions and corporate divisions choices for society • Confirm the progress of Kao Actions and future Making thoughtful • Establish task forces as necessary to implement focus themes. plans. • Establish for individual focus themes when a cross-functional structure is Set the agenda of issues and create plans to ESG Task Force needed. Propose activities based on the detailed plan developed by the ESG Members: Staff of the division relevant to the focus themes As necessary address them. Promotion Meeting. Independent assurance report healthier Making the world & cleaner Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 15 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-44 Editorial Policy

Message from the ESG External Advisory Board (Lisa MacCallum)

More recently, I’ve visited Kao’s largest factory location speed of organizing power have made sure of it. More

in Wakayama. A factory that has a beautiful forest people than ever can dramatically and abruptly CEO Message Making my everyday

running through it, an innovation lab dedicated to influence the success or failure of major companies more beautiful restoring the planet and a floor so clean you could eat today. Customers, employees and a whole range of off it. I’ve spent time with engineers, scientists, other business stakeholders have raised expectations, employees and leaders—people at Kao that I have they demand transparency and they can influence

experienced as genuinely committed to doing the right major decisions inside our companies overnight now. Kirei Lifestyle Plan KPI definitions thing and eagerly looking for ways to “enrich people’s lives”. As consumers, we trust the opinions of our friends, friends of friends and friends of friends of friends more choices for society Clarity of an inspired purpose is a powerful foundation than we do the marketing and PR of a company. In Making thoughtful to build from and not one enjoyed by many other other words we trust strangers more than business companies. Together with a fierce commitment to today. The opinions of real people inside and outside humanity and the planet, Kao’s clarity of purpose will our companies matter the most and our logos and only become more important, as we enter a paradigm advertisements are now only window dressing. The shift in business around the world. statistics undeniably show that even trusted companies are not trusted today. Independent assurance report Lisa MacCallum An era of business where old ways of working, won’t

Founder, Inspired Companies healthier work anymore. What does this rise in power of ordinary people and Making the world lack of trust in institutions mean for the future of The situation for business today leadership and business? In short, it means that the &

For a long time now the corporate sector has been most competitive position you can hold today is to be a cleaner My Kao experience defined by the worst of business. Profit maximization company with the world onside. Proactively advocating My first experience with Kao was as a consumer. I was and the behaviors that come with it regrettably became for your success on good days, and defending you on a young Australian exchange student living in Kyushu. normal. Behavior and leadership decisions that for a your worst days. It was 1990 and Bioré was a regular brand of choice for long time we could mostly get away with. Walking the right path a young school girl like me. I also recognized Attack as Possibilities for KAO the laundry powder in every host family’s home that I But the world has changed. There will always be things in business that we cannot was part of. So I suppose unconsciously, I’ve had a control. As we accelerate into the 21st Century, there relationship with Kao for a very long time. The rise of the digital revolution, social media platforms, will only be more. On the short list of things a company global connectivity, human consciousness and the can and will always be able to control is who they are

Kao Kirei Lifestyle Plan Progress Report 2020 16 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-44 Editorial Policy

Message from the ESG External Advisory Board (Lisa MacCallum)

and how they show up. A company’s culture. Its “way” in ways that leave their peer groups behind. They and protection of the planet in a very powerful way.

of being. achieve that position because they have the world CEO Message Making my everyday

onside fueling their success. A regular day at an In Kao’s first 100 years, Kao became a trusted, reliable, more beautiful A relentless commitment to humanity and the Inspired Company looks and feels like this: ethical and respected company. protection of the planet in the way we run our The legacy for the next 100 years is to build off that businesses today is crucial to success. It’s what the You have a mission with many winners. foundation and become an Inspired Company. The

world expects and anything less is no longer tolerated. You execute it with passion. fullest expression of Kirei Lifestyle, with the Kao Way, Kirei Lifestyle Plan KPI definitions This commitment is no longer the job of a single You’re unapologetic in your refusal to be railroaded will combine to lead you powerfully toward that legacy. department or reduced to investment in a single by existing systems or corporate norms. project. The commitment must be part of who you are You’re committed to doing the right thing. I enthusiastically believe this. choices for society all day, every day. You take direction from your customers, employees But the only thing that matters is if you do. Making thoughtful and traditional corporate outsiders. No company is perfect. Issues and problems will They give you their trust and support in return. always exist. Competing priorities and limits on All of your profits are derived from your mission, investment will be ever present. A long career at one of not from penalizing your customers or other the most distinctive sports brands in the world taught stakeholders. me that. The best days at Nike made me feel like Independent assurance report anything was possible. The worst days (athletes That’s a company with the world onside. healthier behaving poorly, major supply chain issues, internal A company we’d all be willing to get behind. Making the world politics) were devastating. From all of that experience and everything else since, this is what I know for sure The opportunity to deliver is available to any company &

to be true: The best companies stand for inspired ideas, paying attention and willing to do the work. cleaner not just products. They lead with a strong set of values, heart and fearless bias for action, not just words. These What does this mean for Kao? Well, from where I sit— companies have the conviction and courage to stand Kao is perfectly positioned to emerge with even more up for what they believe in, especially when others shy distinction. Kirei Lifestyle, in its fullest expression, is an Walking the right path away. idea the world can be inspired by. The best version of it has benefits for everyone—many winners. Your culture They are the Inspired Companies of the 21st Century. and promise to the world is articulated in the Kao Way. The ones that will outcompete all others because they Similarly, the best version of it encompasses a shared build trust, brand distinction and competitive advantage and company-wide commitment to integrity, humanity

Kao Kirei Lifestyle Plan Progress Report 2020 17 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-44 Editorial Policy

Message from the ESG External Advisory Board (Rika Sueyoshi)

comprehensive action and not just actions for specific slogans do not just end at being ideals put forth by the

targets sets an example for other companies in realizing management team but become real-life targets and CEO Message Making my everyday

a sustainable society, and Kao has contributed to strategies put into practice by a united Kao, then we more beautiful putting “Transform Our World. No one will be left think Kao’s sustainable future and profitable growth will behind,” the slogan of the SDGs, into practice. Because come into view. Kao is this kind of company, we hope to see it truly

embody the slogan of the Kao Group Mid-term Plan Kirei Lifestyle Plan KPI definitions 2020 (K20), “Transforming Ourselves to Drive Change.” To achieve this, it will need to go beyond its own perspective of “profitable growth” and take strategies choices for society and actions that are impactful on society, keeping in Making thoughtful mind the 17 Sustainable Development Goals. Put another way, Kao will need to continue striving to minimize the negative impacts of its business on the environment and society while taking an honest look at them. At the same time, Kao will need to maximize the positive impacts it can have and serve a leadership role Independent assurance report Rika Sueyoshi in leaving the world a better place for the next

CEO, Ethical Association healthier generation. By doing what it has done so far and taking Making the world this stance in the future, Kao can earn the trust of the next generation—Generation Z, who will help build the &

society of the next several decades, who are Kao’s cleaner Since its founding more than 130 years ago to today, future customers, and who are also potential Kao has consistently demonstrated a presence as a employees. leading company amid the constant transformation of To gain the support of the next generation, who social values. While maintaining this tradition, the takes a critical look at how companies act and who Walking the right path commitments of the Kirei Lifestyle Plan to drive change believes in ethical thinking without question, focused on the future should inspire other companies responsible improvements will be needed while in important ways. disclosing information to customers with transparency Taking the SDGs as an example, where the upstream and downstream throughout the entire international community is most focused, taking supply chain. When the Kirei Lifestyle Plan and recited

Kao Kirei Lifestyle Plan Progress Report 2020 18 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-43, 404-2 Editorial Policy Employee engagement

Our people are the key to making the transformation of the company necessary to achieve the ambitions set out in the Kirei Lifestyle Plan. With the objective to motivate and empower Kao employees to find purposeful meaning in their work with the lens of ESG, our approach to employee engagement is to inform, inspire and empower our people CEO Message to take action. Making my everyday more beautiful

Onboarding To create opportunities for taking action Enhancing sensitivity to ESG With the launch of the Kirei Lifestyle Plan as our ESG Ensuring that our employees can be kept up to speed To pursue ESG-driven Yoki-Monozukuri, we need to Strategy in April 2019, an employee engagement with the rapid changes both externally and internally nurture the sensitivity of Kao employees to the Kirei Lifestyle Plan KPI definitions deck outlining why and how we created the strategy, is key for Kao to make long-lasting sustainable impact evolving values of the society and people. Launched and presenting how it is founded on our corporate on society. The Kirei Lifestyle Plan Caravan was in August 2019, we now have a global ESG newsletter philosophy the Kao Way, was shared on our internal launched to create opportunities in each division to published on our internal portal accessible to every choices for society portal. This was followed by key message on video by have direct dialogue with the head of the ESG employee. The content is updated on a monthly basis Making thoughtful Dave Muenz, Senior Vice President, ESG, Global, Division. In an average two-hour session, employees with global ESG trends in and beyond the industry distributed globally across the Kao Group. acquired knowledge on global trends surrounding with visuals and crisp headings that are designed to ESG, the impact and value to the business and what inspire and help employees to explore topics that are opportunities we can explore to make a difference to relevant to their individual and business setting. The society. The initiative is planned to continue into 2020. facts and science behind sustainability are not easy to Three aspects of employee engagement understand, and to help our early adopters to be Independent assurance report engaged in this topic at a deeper level, we have healthier Inform conducted four-part KLP study sessions focused on Making the world Decarbonization, Zero Waste, Water Conservation, and Responsibly Sourced Materials. With participation &

on a voluntary-basis, each session had over 30 cleaner Engagement participants from different functions such as Corporate Communications, R&D, Sales and Empower Inspire Corporate Strategy. The sessions helped participants gain a deeper understanding of the science, Walking the right path regulatory and social context to these four important themes that are part of the Kirei Lifestyle Plan. Kirei Lifestyle Plan Caravan (Kao Corporation Tochigi Plant, August 30, 2019)

Kao Kirei Lifestyle Plan Progress Report 2020 19 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 103-1, 103-2, 103-3 Editorial Policy Mid- to long-term targets

Individual mid- to long-term targets are set for each of the 19 Kao Actions. Based on the mid- to long-term targets, divisions set their own targets according to their business activities and in ➡ For more information, please see p. 202, CEO Message 2019 started activities based on their plans. Explanation of Kirei Lifestyle Plan Mid- to Making my everyday

Long-term Targets more beautiful We were not able to present some of the 2019 results due to the time needed to revise or reconsider the evaluation methods used, or to build the framework for collecting results. For these targets, our anticipated timing for releasing the information is noted in the table. Kirei Lifestyle Plan KPI definitions

Mid- to long-term targets for the 19 Kao Actions

Mid- to long-term targets Kao Actions Indicator 2019 Results SDGs choices for society Value Year Base year Making thoughtful

Making my everyday more beautiful

The number of people empowered to enjoy more beautiful lives—greater cleanliness, easier aging, 1 billion 3,5,6,10, Commitment Plan to disclose in 2021*1 2030 ― better health and confidence in self-expression people 12,14,17, % of new or improved products which contribute to a comfortable, beautiful, healthy life and touch Improved quality of life Plan to disclose in 2021*1 100% 2030 ― 3,5,12,17 the heart of people Coverage of enlightening activities that stimulate habits for cleanliness, beauty & health using Kao Habits for cleanliness, beauty & health products and services Plan to disclose in 2021*1 100% 2030 ― 3,6,17 Independent assurance report (Scope: targeted brands/categories)

Universal product design % of new or improved products that meet Kao’s Universal Design Guidelines 44％ 100% 2030 ― 10,12,17 healthier Making the world

Safer healthier products % of targeted ingredients of concern on which views are disclosed Plan to disclose in 2021*1 100% 2030 ― 3,12,14,17

Making thoughtful choices for society & cleaner % of Kao brands that make it easy for people to make small but meaningful choices that, together, 4,8,9,10,11, Commitment Plan to disclose in 2021*1 100% 2030 ― shape a more resilient and compassionate society 12,13,15,17 Coverage of distribution of information, information tools, and enlightening or communication Sustainable lifestyle promotion activities for sustainable lifestyle Plan to disclose in 2021*1 100% 2030 ― 4,11,12,17 (Scope: targeted brands/categories)

% of Kao brands that make a contribution to solving social issues and that make people feel and Walking the right path Purpose driven brands Plan to disclose in 2021*1 100% 2030 ― 12,17 sympathize with the brand’s social usefulness Cumulative number of transformative sustainable product innovations launched 2 innovations 10 or more 2030 ― Transformative product innovation 9,12,13,17 % of new or improved products which meet Kao sustainability guidelines Plan to disclose in 2021*1 100% 2030 ― % of certified paper products and pulp for consumer products 91% 100% 2025 ― 8,10,12, Responsibly sourced raw materials Confirm traceability to small oil palm farm Completed for large plantations Finish 2030 ― 15,17 *1 Conducted the review of detailed requirements in 2019 *2 Built a data collection system in 2019 *3 Conducted review of detailed requirements in 2019 and plan to build a data collection system in 2020

Kao Kirei Lifestyle Plan Progress Report 2020 20 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 103-1, 103-2, 103-3 Editorial Policy Mid- to long-term targets Kao Actions Indicator 2019 Results SDGs Value Year Base year

Making the world healthier & cleaner

% of Kao products that leave a full lifecycle environmental footprint that science says our natural 3,6,7,12, Commitment Plan to disclose in 2021*1 100% 2030 ― CEO Message world can safely absorb 13,14,15,17 Making my everyday

CDP Climate Change A, Water A, Highest Every 3,6,7,12, more beautiful Kao recognition or achievement level by external ratings firms ― Forest (Timber) A-, Forest (Palm Oil) A- evaluation level year 13,14,15,17

% reduction in absolute full lifecycle CO2 emissions 4％ 22% 2030 2017 Decarbonization 7,12,13,17 % reduction in absolute scope 1 + 2 CO2 emissions 9％ 22% 2030 2017

2

Quantity of innovative film-based packaging penetration for Kao and others per annum Plan to disclose in 2021* 300 million 2030 ― Kirei Lifestyle Plan KPI definitions Zero waste 12,14,15,17 Quantity of waste not for recycling from factories and offices Plan to disclose in 2021*2 Zero 2030 ― % reduction in full lifecycle water use per unit of sales 6％ 10% 2030 2017 Water conservation 6,12,15,17 % reduction in full lifecycle water use per unit of sales in regions with water scarcity Plan to disclose in 2021*1 40% 2030 2017 choices for society Making thoughtful Air & water pollution prevention % of factories which disclose VOC and COD emissions VOC 0％, COD 100％ 100% 2025 ― 3,6,12,14,17

Walking the right path Highest evaluation level Highest Every Kao recognition or achievement level by external ratings firms (World’s Most Ethical ― evaluation level year Effective corporate governance Companies® selection) 8,16 Number of serious compliance violations* per annum Every Zero Zero ―

* Compliance violations that have a significant impact on management and significantly damage corporate value year Independent assurance report

Full transparency % of consumer product brands for which people can easily access complete ingredients information Plan to disclose in 2021*1 100% 2030 ― 8,12,16,17 healthier % response rate to human rights due diligence (risk assessment across internal, suppliers, and Internal: 100%, suppliers: 20%, Making the world Respecting human rights 100% 2030 ― 5,8,10,17 contractors respectively) contractors: 0% Affirmative answer rate to a question on “Inclusion and Diversity” onFind , our employee survey Did not conduct Find 75% 2030 ― with voice of employees 5,8,10 & Inclusive & diverse workplaces Same % as cleaner % of female managers 29.4％ female 2030 ― employees Lost time accident frequency rate (per million hours worked) 0.78 0.1 2030 ― Employee wellbeing & safety Average number of lost long-term work days (days/people) * Starting from Japan 129 105 2030 ― 3,8 Ratio of employees who have lost long-term work days per one thousand employees * Starting from Japan 0.198 0.12 2030 ― Walking the right path Affirmative answer rate to a question on “Development Opportunities& Climate” on Find, our Did not conduct Find 75% 2030 ― employee survey with voice of employees Human capital development 3,4,5,8,10 Affirmative answer rate to a question on “Engagement/Employer of Choice” onFind , our employee Did not conduct Find 75% 2030 ― survey with voice of employees % of chemical products and raw materials with disclosed information of benefit and safety to Plan to disclose in 2022*3 100％ 2030 ― ensure safe usage for our customers Responsible chemicals management 3,6,12,14,17 % of areas where impacts on health, environment and safety from chemicals are managed Plan to disclose in 2022*3 100％ 2030 ― responsibly and sustainably considering their stages from raw materials procurements to disposal *1 Conducted the review of detailed requirements in 2019 *2 Built a data collection system in 2019 *3 Conducted review of detailed requirements in 2019 and plan to build a data collection system in 2020

Kao Kirei Lifestyle Plan Progress Report 2020 21 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15 Editorial Policy Performance in 2019

Our 2019 performance and returns to business and society are as follows. CEO Message Making my everyday

Beneficial effects on business more beautiful 1. Business growth think-tank Ethisphere Institute. We have been named Effects from eco-conscious products ➡ p. 71 Making thoughtful choices for society > to the list for 14 straight years since the award’s The consumer business in Japan increased sales 1.8% Transformative product innovation: recent major inception in 2007. We are the only Japanese product and technology developments to 899.6 billion yen, up from 883.9 billion yen. As the company, and the only manufacturer of fast-moving Kirei Lifestyle Plan KPI definitions ratio of eco-conscious products was the same as the consumer goods and chemicals in the world, to be previous year, eco-conscious products are considered 2. Cost reductions honored for 14 consecutive years. choices for society to have contributed to a certain extent to business Economic effects as a result of environmental This recognition reflects the fact that the spirit of Making thoughtful growth. In 2019, the sales ratio of products displaying conservation measures integrity passed down from our founder continues to the “eco together” logo (consumer products in Japan) We received an economic benefit of 4.3 billion yen in be implemented by all Kao Group members in day-to- was 27%, lower than the 29% of the previous year. This 2019. The largest factor was reduced expenses from day operations through practice of the Kao Way and is attributed to some refill products not displaying the resource savings, which contributed 2.6 billion yen. the Kao Business Conduct Guidelines (BCG). “eco together” logo even though they met the “eco

together” standards. Even without displaying the logo, Effects on society Independent assurance report refill products themselves communicate environmental To realize sustainability in society, it is increasingly

considerations to consumers, and therefore the ratio of ➡ p. 132 Making the world healthier & cleaner ＞ necessary to quantify corporate value and non- healthier Making the world eco-conscious products is considered to substantively Environmental accounting financial aspects, and these areas are being examined be at the same level as the previous year. by companies and related organizations. In 2018, we

conducted a trial evaluation and converted our social & cleaner Effects from products contributing to resolving 3. Risk reductions impacts into monetary equivalents. We will continue social problems Adverse weather events in Japan and other risk examining the various methods under development In December 2019, we launched products applying factors affecting business performance arose in 2019, and review around the world while collecting Fine Fiber Technology able to create layered, ultra-thin but we did not experience significant business losses information and performing trial calculations. Walking the right path membranes. Starting with products to deliver a higher due to the manifestation of risks arising from social dimension of beauty, we are examining issues. commercialization of products using this innovation in ➡ Study on returns to Kao's stakeholders 2017 a wide range of fields such as health care and medical 4. Increased credibility www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/databook-2017- therapies to help resolve various social issues, which In February 2020, Kao was selected for the list of the study.pdf will contribute to business growth. World’s Most Ethical Companies 2020® by the U.S.

Kao Kirei Lifestyle Plan Progress Report 2020 22 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15 Editorial Policy Focus on global mega-trends

Kao is taking measures regarding the 19 Kao Actions set in the Kao ESG Commitments and Actions with a focus on the conditions in international society in which we operate. CEO Message Making my everyday

Global mega-trends that we monitor (excerpts) more beautiful Digital society Climate change self-expression, and this is a major element making The advance of the digital society influences the Climate change has been one of the world’s highest up the Kirei Lifestyle. shaping of virtual communities and people’s actions priority issues for some time and is receiving more The experience value that many consumers have and values. Consumers are predicted to demand attention with each passing year, including from the come to demand is in fact realized through “Improved Kirei Lifestyle Plan KPI definitions greater amounts of information when selecting frequent occurrence of extreme weather events, quality of life.” Going beyond material satisfaction, we products due to this trend. Part of “Making thoughtful stalled international cooperation and progressive aim to deliver emotional enrichment as well. choices for society choices for society” in the Kirei Lifestyle Plan is moves by companies and the financial industry. The trend of ethical consumption epitomizes how Making thoughtful strengthening communication and marketing by Suspended operations from extreme weather events consumers are increasingly seeking out products they increasing the amount of product information and increased costs from strengthened regulations can identify with. The Millennial generation and available pertaining to sustainability. are risks, but the Kao Action of “Decarbonization” will Generation Z, who will become the main consumer

help reduce CO2 emissions not only in our own groups in the coming years, show a strong inclination Aging society operations but also in the activities of consumers and for ethical consumption. “Purpose driven brands” will

Developed countries are already experiencing aging our business partners. As such, by connecting strengthen our brands’ reason for existing even more, Independent assurance report

populations, and developing countries are also lifecycle CO2 reductions with “Sustainable lifestyle with the aim of having consumers identify with the

expected to have aging populations in the future. healthier

promotion” and “Purpose driven brands,” we believe story behind the brand and its products. Making the world Universal design is a key solution to help people live that more customers and consumers will choose Kao more comfortably as they get older. products and that we can increase our business

opportunities. & cleaner Ocean plastic pollution The attention focused on the problem of ocean plastic Consumer awareness and consumption behavior pollution has grown sharply. This situation can be In the context of the advance of the digital society considered a risk for us, since we use plastics in our and other social changes, consumer awareness and Walking the right path packaging, but by implementing the Kao Actions of consumption behavior are undergoing major change. “Zero waste” and “Transformative product There is a greater degree of personalization and an innovation,” we can contribute to society by reducing ongoing shift in values from owning goods to having packaging and building a recycling system, leading to experiences, with consumers seeking out products increased corporate value. and services that they can identify with. Personalization is connected to the pursuit of

Kao Kirei Lifestyle Plan Progress Report 2020 23 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-12 Editorial Policy Contributions to the SDGs

Looking ahead to 2030, Kao is focused on the Sustainable Development Goals (SDGs) that have been agreed upon and adopted by the international community. As indicators for realizing a sustainable society, the SDGs set forth an integrated approach for improving the economy, society and the environment. Contributions by companies are CEO Message considered extremely important to achieving the SDGs. Making my everyday more beautiful As indicated below, we are working to address the Kao Action topics set in the Kao ESG Commitments and Actions with the aim of achieving the SDGs.

The SDGs that the 19 Kao Action topics contribute to Kirei Lifestyle Plan KPI definitions Prioritized actions

Making my everyday more beautiful choices for society Improved quality of life ● ● ● ● Making thoughtful Habits for cleanliness, beauty & health ● ● ● Universal product design ● ● ● Safer healthier products ● ● ● ● Making thoughtful choices for society Sustainable lifestyle promotion ● ● ● ●

Purpose driven brands ● ● Independent assurance report Transformative product innovation ● ● ● ● healthier

Responsibly sourced raw materials ● ● ● ● ● Making the world Making the world healthier & cleaner Decarbonization ● ● ● ● &

Zero waste ● ● ● ● cleaner Water conservation ● ● ● ● Air & water pollution prevention ● ● ● ● ● Walking the right path Effective corporate governance ● ● Walking the right path Full transparency ● ● ● ● Respecting human rights ● ● ● ● Inclusive & diverse workplaces ● ● ● Employee wellbeing & safety ● ● Human capital development ● ● ● ● ● Responsible chemicals management ● ● ● ● ● Note: Partially revised as a result of revisions to the selection criteria.

Kao Kirei Lifestyle Plan Progress Report 2020 24 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 103-1 Editorial Policy Impacts on society through the value chain

Our business activities have various impacts on society through the value chain. The table below shows the 19 Kao Actions set in the Kao ESG Commitments and Actions, our ESG strategy and their relationship to the value chain. CEO Message The items indicate areas where our impact on society is particularly large and where the expectations on us are similarly greater. These are high-priority areas for our business Making my everyday more beautiful growth and increasing our corporate value.

Relationship between the 19 Kao Actions and the Value Chain

Development / Kirei Lifestyle Plan KPI definitions Prioritized actions Material procurement Distribution Sales Use Disposal / Recycling Manufacturing Making my everyday more beautiful Improved quality of life ● ● choices for society Habits for cleanliness, beauty & health ● ● Making thoughtful Universal product design ● ● ● Safer healthier products ● ● Making thoughtful choices for society Sustainable lifestyle promotion ● ● ● Purpose driven brands ● ● ● ●

Transformative product innovation ● ● ● ● Independent assurance report Responsibly sourced raw materials ● healthier Making the world healthier & cleaner Making the world Decarbonization ● ● ● ● ● ● Zero waste ● ● ● ● ● ● &

Water conservation ● ● ● ● ● ● cleaner Air & water pollution prevention ● ● ● Walking the right path Effective corporate governance ● ● ● ● ● ●

Full transparency ● ● ● ● ● ● Walking the right path Respecting human rights ● ● ● ● ● ● Inclusive & diverse workplaces ● ● ● Employee wellbeing & safety ● ● ● Human capital development ● ● ● Responsible chemicals management ● ● ● ● ● ●

Kao Kirei Lifestyle Plan Progress Report 2020 25 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

Kao’s ESG Commitments Pillar 1: Making my everyday more beautiful

Kao Actions Social issues and mega-trends we are aware of

Cleanliness and hygiene serve as the foundation of CEO Message Mid- to long-term targets Making my everyday

BY 2030 daily life, but not everyone around the world can access more beautiful We will aim to empower all people, at least 1 their benefits. For example, an estimated 3 billion HABITS FOR billion by 2030, to enjoy more beautiful lives— IMPROVED UNIVERSApeople*L are not SAFableER to properly wash their hands at QUALITY CLEANLINESS, PRODUCT HEALTHIER greater cleanliness, easier aging, better health home (2017). Improving the quality of life remains a OF LIFE BEAUTY DESIGN PRODUCTS

and confidence in self expression. & HEALTH challenge even if material goods are abundant. In Kirei Lifestyle Plan KPI definitions developed countries in particular, interest is rising in addressing needs associated with an increasingly aging population and the effects of chemical substances on choices for society Making thoughtful IMPROVED HABITS FOR UNIVERSAL SAFER health. When the younger generations, who will CLEANLINESS, QUALITY PRODUCT HEALTHIER become the main consumers in the coming years, OF LIFE BEAUTY DESIGN PRODUCTS Kao’s approach & HEALTH SUSTAINABLE PURPOSE TRANSFORMchooseATIVE productsRESPONS and IBservices,LY they have a stronger “Making my everyday more beautiful” is one of LIFESTYLE DRIVEN PRODUCinclinationT toSO focusURCED on R AWwhether the products and PROMOTION BRANDS* INNOVATION MATERIALS the core concepts supporting the Kirei Lifestyle. services fit with their own values and allow them to It is a concept that has driven our business authentically express themselves. Independent assurance report since our founding and one that we believe can * The Sustainable Development Goals Report 2019, UN be achieved by demonstrating our strengths. healthier We will elevate the Yoki-Monozukuri Making the world SUSTAINABLE PURPOSE TRANSFORMATIVE RESPONSIBLY Specific approach methods manufacturing that we have LIFESconductedTYLE up to DRIVEN PRODUCT SOURCED RAW • Product design and product development with new now with a consumer focusPROM to ESG-drivenOTION BRANDS* INNOVATION MATERIALS AIR & WATER ZERO WATER concepts. &

DECARBONIZATION POLLUTION cleaner Yoki-Monozukuri. WASTE CONSERVATION • Consumer PReducationEVENTION and marketing activities. • Collaboration with stakeholders. Walking the right path

AIR & WATER ZERO WATER DECARBONIZATION POLLUTION WASTE CONSERVATION PREVENTION

Kao Kirei Lifestyle Plan Progress Report 2020 26 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

Returns to society and business Returns to Kao Returns to society Efforts based on providing returns to society also lead Through our products, we directly offer individuals who CEO Message to growth for Kao at the same time. make up society the following three stages of returns. Making my everyday

Products that allow consumers to feel greater more beautiful comfort, that contribute to safety and health, and that 1. Pleasant, safer and healthier product use experience offer authentic self expression give consumers a sense Using products made with universal design of reassurance and trust, which increases customer considerations allows not just older consumers but all

loyalty. Consumers that then continue to choose Kao people to live each day with greater comfort. Using Kirei Lifestyle Plan KPI definitions products as a result will lead to our business growth. safer and healthier products leads to a sense of Not only offering products, but also educating reassurance and well-being.

consumers is key to getting habits for better choices for society Making thoughtful cleanliness, beauty and health adopted. Educational 2. Adopting everyday habits for cleanliness, beauty & activities provide an opportunity to increase product health awareness and allow products to be selected more For example, when washing hands with a hand soap effectively. Communication also builds trust and product becomes a habit that is performed at the right enhances our reputation. As such, we believe that places and times, individuals can maintain cleanliness communication contributes to business growth. and hygiene, communicable diseases can be prevented Independent assurance report Trust is placed in us when our products and and a building block for a healthy life is created. activities reach people on an emotional level and make healthier people feel that their everyday is more beautiful. This 3. Improved quality of life Making the world positive reputation then extends from our current Quality of life encompasses more than just everyday consumers to the people in their lives. A larger number habits. It is a measure of living life with dignity and & of people using Kao products contributes to our being authentic to oneself. QOL creates beauty not just cleaner business growth, and solid trust placed in us allows us on the outside but also on the inside, and helps people to better withstand reputational risks, which also have confidence in expressing their authentic self. contributes to business risk reduction.

Through our efforts to create quality products and Walking the right path services, we will make everyday life more beautiful for people around the world. The trust and value people place in us will help further grow our business and increase our corporate value.

Kao Kirei Lifestyle Plan Progress Report 2020 27 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

Kao’s ESG Commitments Pillar 2: Making thoughtful choices for society

Kao Actions Social issues and mega-trends we are aware of

We have established brands’ purpose as resolving Ethical consumption, where goods and services created CEO Message Mid- to long-term targets Making my everyday

BY 2030 social problems through innovation, and by globally with considerations for the environment and society are more beautiful IMPROVED HABITS FOR UNIVERSAL SAFER implementing a range of related activities, we will chosen and consumed, is growing. According to survey 100% of Kao brands will make it easy for QUALITY CLEANLINESS, PRODUCT HEALTHIER people to make small but meaningful choices support consumersOF LIF Eto lead a sustainableBEAUTY lifestyle. We DESIGfindings,N 70%PRO of DUCso-calledTS Generation Z, who will be the & HEALTH that, together, will shape a more resilient and have established the following Kao Actions concerning main consumers from the 2030s onward, purchase

compassionate society. society, and are implementing them with a products with ethical consumption in mind, and 65% Kirei Lifestyle Plan KPI definitions comprehensive approach. want to know from what, where and how products are made. In the digital society, this future generation will IMPROVED HABITS FOR UNIVERSAL SAFER CLEANLINESS, display a stronger tendency to use information in choices for society QUALITY PRODUCT HEALTHIER Making thoughtful OF LIFE BEAUTY DESIGN PRODUCTS choosing products and brands. & HEALTH SUSTAINABLE PURPOSE TRANSFORM ATIV InE the areaRESPONS of environmentalIBLY considerations, Kao’s approach LIFESTYLE DRIVEN PRODUCT SOURCED RAW increasing the use of refill and replacement products for ”My Kirei Lifestyle” is achieved when your PROMOTION BRANDS* INNOVATION MATERIALS example can make a large contribution to resolving the community and the wider society encircling the recently highlighted problem of ocean plastic pollution. people who make your everyday more beautiful It is essential that we develop refill and replacement

are sustainable. We at Kao recognize that the Independent assurance report products that consumers and corporate customers will choices made by not only ourselves but also SUSTAINABLE PURPOSE TRANSFORMATIVE RESPONSIBLY choose, expand their range of use, and educate people

our stakeholders including consumers, healthier LIFESTYLE DRIVEN PRODUCT SOURCED RAW on the utility of refill and replacement products. Making the world corporate customers, and ourPROM suppliersOTION make a BRANDS* INNOVATION MATERIALS AIR & WATER ZERO WATER We must also make responsible choices in all types big impact. We make responsible choices DECARBONIZATION POLLUTION WASTE CONSERVATIONof raw materials procurement. For example, selecting

throughout the product lifecycle from PREVENTION &

palm oil that does not cause deforestation when cleaner procurement to transportation. At the same procuring this ingredient for detergents. time, by ensuring that Kao brands are * At Kao, Purpose driven brands are brands that not only deliver on the promise of the brand to the consumer and bring profit to the meaningful choices for consumers, we will company, but also brands that contribute to a higher cause, Specific approach methods contribute to the sustainability of society. creating positive impact on a broader society and people. AIR & WATER • Efforts through product design and product

ZERO WATER Walking the right path DECARBONIZATION POLLUTION WASTE CONSERVATION development with new concepts. PREVENTION • Awareness-raising, marketing activities and communication on the sustainability value of products and brands to consumers. • Collaboration with stakeholders.

Kao Kirei Lifestyle Plan Progress Report 2020 28 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

Returns to society and business Returns to Kao Returns to society Efforts based on providing returns to society also lead to Returns are provided to society through four actions in product performance that is chosen by consumers and CEO Message growth for Kao at the same time. the following three areas. customers. The Kao Action of “Purpose driven brands” Making my everyday

Giving brands and products specific purpose that is serves as a milestone for providing returns to society. more beautiful reflected in their sustainable performance and brand 1. Support for consumers and customers to choose We will create excellent products with “Transformative policy will gain the understanding and support of sustainable brands and products product innovation” based on the brand’s purpose. By consumers and customers, thereby increasing trust and Daily necessities are used every day by consumers the offering “Purpose driven brands,” we will encourage

customer loyalty. Consumers that then continue to choose world over, and have a large impact on society. With our customers and consumers to make small but Kirei Lifestyle Plan KPI definitions Kao products as a result will lead to our business growth. this in mind, creating sustainable products that are meaningful choices that, together, make a big impact. In the information age, we believe that communicating chosen by consumers provides returns to every aspect We have been making large investments in creating of the environment and society. We will strengthen our innovation unique to Kao for some time. We will

information on brand and product sustainability to choices for society Making thoughtful consumers and customers in a variety of forms will lead to communication with consumers relating to our brands’ continue to drive innovation that contributes to further expansion of business opportunities. Incorporating purpose and products’ sustainability value to facilitate meaningful changes throughout society as a whole. consumer and customer wishes and expectations from consumers choosing Kao products and brands. Creating society into product development and manufacturing will sustainable consumption patterns is key to building a 3. Responsibly sourced raw materials further enhance the trust placed in us and our reputation, sustainable society. Through responsible raw material procurement in the which connects to business growth. “Transformative As standards of living rise in Asia and elsewhere global supply chain that extends around the world, we Independent assurance report product innovation” will lead to differentiated Kao around the globe, rising mass consumption is a will contribute to building a sustainable society. products and brands, which will build value propositions concern. We engage directly with consumers and can healthier unique to Kao. We will drive business growth by offering therefore make contributions to transforming product Making the world Kao products with tangible innovation globally. choices, how products are used and disposal and “Responsibly sourced raw materials” reduces risks in recycling efforts. Responsible consumption is also an & the procurement process. Procurement of non-sustainable important element of the SDGs. cleaner materials is more than just a problem for society; it also Business customers that use products offered by invites the risks of receiving corrective instructions from our Chemical Business also impact society, albeit to a authorities or industry groups, suspension of production varying degree depending on their scale, as the

or product supply, and loss of business opportunities. chemical products become part of their final products. Walking the right path Our efforts will contribute to a sustainable society and at the same time contribute to the SDGs. We are confident 2. Building brand and product performance that is that this will grow our business and increase our corporate chosen by consumers and customers value, which in turn will enhance our global presence. The foundation of 1. requires building brand and

Kao Kirei Lifestyle Plan Progress Report 2020 29 IMPROVED HABITS FOR UNIVERSAL SAFER QUALITY CLEANLINESS, PRODUCT HEALTHIER

OF LIFE BEAUTY DESIGN PRODUCTS Contents & HEALTH Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

IMPROVED HABITS FOR UNIVERSAL SAFER CLEANLINESS, Kao’s ESG CommitmentsQUAL PillarITY 3: Making the worldPRO healthierDUCT & cleanerHEALTHIER OF LIFE BEAUTY DESIGN PRODUCTS & HEALTH SUSTAINABLE PURPOSE TRANSFORMATIVE RESPONSIBLY Kao ActionsLIFESTYLE DRIVEN PRODUCSocialT issuesSOURC andED mega-trends RAW we are aware of PROMOTION BRANDS* INNOVATION MATERIALS We have set the following Kao Actions concerning Adopted in 2015, the Paris Agreement creates a global CEO Message Mid- to long-term targets Making my everyday

BY 2030 social issues related to the global environment, and are framework for reducing greenhouse gas emissions. more beautiful 100% of our products will leave a full lifecycle implementing them with a comprehensive approach. Nevertheless, average temperatures are continuing to rise, environmental footprint that science says our and the damage from frequent extreme weather events is natural world can safely absorb. only getting worse. As various research findings have SUSTAINABLE PURPOSE TRANSFORMATIVE RESPONSIBLY

become known, the problem of ocean plastic pollution has Kirei Lifestyle Plan KPI definitions LIFESTYLE DRIVEN PRODUCT SOURCED RAW taken on urgency. Reducing waste and building a recycling PROMOTION BRANDS* INNOVATION MATERIALS AIR & WATER ZERO WATER DECARBONIZATION system in thePO widerLLU societyTION will require cooperation from WASTE CONSERVATION actors in variousPREVE fields.NTION We are now at the stage where choices for society limited efforts are beginning to ramp up, and it is expected Making thoughtful Kao’s approach to take time before we achieve an ideal situation. Water “Making my everyday more beautiful” is resource conservation is imperative not only to sustain life supported by sustainable communities and the for human beings but for all living creatures. Water scarcity AIR & WATER ZERO WATER is predicted due to future population increases and climate wider society. To completeDEC theAR BONKireiIZ Lifestyle,ATION POLLUTION WASTE CONSERVATION the natural world that encompasses and PREVENTION change, and is a grave issue that can lead to conflict. We Independent assurance report supports communities and the wider society need high-quality water to manufacture our products, and must also be healthier and cleaner. consumers and customers also need high-quality water healthier when using our products. Water is inseparable from our Making the world business activities. Some success with preventing air and water pollution has been achieved in developed countries, &

but pollution remains a serious issue in developing cleaner countries. Preventing pollution in living spaces is also attracting attention.

Specific approach methods Walking the right path • Product design and product development with new concepts. • Consumer education and marketing activities. • Collaboration with stakeholders. • Approaches to governments and international organizations.

Kao Kirei Lifestyle Plan Progress Report 2020 30 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

Returns to society and business Returns to Kao Returns to society Efforts based on providing returns to society also lead 1. Decarbonization 3. Water conservation CEO Message to growth for Kao at the same time. We are working to reduce CO2 emissions in terms of the The perspective of the product lifecycle is important for Making my everyday

Environmental problems have a large negative product lifecycle. The stages of use and raw material reducing water consumption. Kao supplies many more beautiful impact on society. Therefore, our various actions to procurement account for approximately 80% of all Kao cleaning products that require water during use, and reduce environmental impact reduce our risks and lead lifecycle CO2 emissions. Therefore, by selecting raw consequently, producing water-saving products can to business growth. materials with lower CO2 emissions and offering lead to reduced water consumption throughout the

It is also important that we identify region-based products that require less water and less electricity world. Kirei Lifestyle Plan KPI definitions risks that may create serious environmental impact in during use, for example when using a washing In addition, the use of water during production in local areas. Controlling these risks and enhancing our machine, we can contribute to reducing CO2 emissions plants also has a certain impact on the vicinity of the credibility and reputation through robust internal in society. plant, so we are taking action to reduce water choices for society Making thoughtful controls will provide expanded opportunities for While CO2 emissions from production activities at consumption during production as well. consumers and customers to choose Kao products and our plants and from our offices do not account for a brands. According to survey findings as well, many large proportion of our total emissions, we are still 4. Air & water pollution prevention members of Generation Z, who will be the main proactively working to reduce these emissions. We Kao products use chemical substances including natural consumers from the 2030s onward, especially prioritize believe that actively working to reduce emissions as a compounds. We are reducing air and water pollution sustainability and environmental considerations when leading consumer products company is not only from chemical substances produced from Independent assurance report choosing which daily necessities to purchase. beneficial for our own CO2 reductions, but also manufacturing processes and product use, and Environmental impacts are a result of fuel, water, increases the momentum to reduce emissions in minimizing the impacts on human health and the healthier chemical substance or other input. Efforts to reduce society as a whole. natural world. Some of the specific initiatives we are Making the world these inputs also lead to reduced costs. implementing are reducing gas emissions and Through these actions, we are contributing to 2. Zero waste improving water treatment technologies during &

maintaining a healthier and cleaner world. At the same We are reducing the amount of plastic we use in our manufacturing processes, and ensuring the cleaner time, we are gaining an understanding of how natural packaging, replacing the materials we use, and building biodegradability of cleaning ingredients. capital leads to business growth and improves our collection and recycling systems. These are some of the corporate value, and using this understanding in ways we are contributing to resolving the problems of waste, its illegal dumping and landfill use, and ocean management decisions. Using scenario analyses based Walking the right path on the recommendations of the Task Force on Climate- plastic pollution. The problem of ocean plastic pollution Related Financial Disclosures (TCFD), which Kao is a global-scale problem that requires the cooperation supports, we are quantitatively evaluating impacts on and collaboration of society as a whole. This is no easy our business to facilitate making management decisions task, but the returns will be great if we can collectively resilient to climate change and other risks. solve this problem.

Kao Kirei Lifestyle Plan Progress Report 2020 31 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

Foundations of Kao’s ESG commitment: Walking the right path

Kao Actions Social issues and mega-trends we are aware of

We have established and are implementing the The importance of compliance is growing amid an CEO Message Kao’s approach Making my everyday

“Walking the right path” is the supporting following Kao Actions for governance and our corporate unending stream of corporate misconduct coming to more beautiful foundation for “My Kirei Lifestyle.” We will culture. light. Survey findings indicate that approximately 80% create corporate governance systems and a of Generation Z avoid purchasing products from corporate culture so that all Kao employees can companies involved in misconduct.

walk the right path at all times. By ensuring that The importance of information disclosure based on Kirei Lifestyle Plan KPI definitions EFFECTIVE FULL transparency is increasingly expected in both financial our business activities are conducted with CORPORATE TRANSPARENCY sincerity and integrity, we will help people GOVERNANCE and non-financial areas. For example, the publication of around the world lead beautiful lives. the recommendations from the FSB Task Force on choices for society Making thoughtful Our activities to achieve “Effective corporate Climate-related Financial Disclosures illustrates that governance” consist primarily of compliance specific, detailed non-financial information has become activities given priority for the implementation meaningful input for decisions related to investing and of effective governance. RESPECTING INCLUSIVE corporate ratings. HUMAN & DIVERSE Human rights involve contributing factors that are RIGHTS WORKPLACES not readily solvable, such as poverty, political instability and migration of the labor force. Many of these issues Independent assurance report must still be addressed. Risks are rising due to the healthier increasingly global nature of company activities and the Making the world

EMPLOYEE HUMAN growth of the supply chain. WELLBEING CAPITAL

& SAFETY DEVELOPMENT & cleaner

RESPONSIBLE Walking the right path CHEMICALS MANAGEMENT

Kao Kirei Lifestyle Plan Progress Report 2020 32 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan̶Kao’s ESG Strategy 102-15, 102-16, 103-1, 103-2 Editorial Policy

Returns to society and business Returns to Kao Returns to society Reliable implementation of “Effective corporate In addition, by appropriately disclosing our company “Walking the right path” is the foundation that supports CEO Message governance” and “Full transparency” provide returns to activities based on “Walking the right path,” the three pillars of “Making my everyday more Making my everyday

Kao, namely reduced risk, increased trust, and an stakeholders can gain a deeper understanding of our beautiful,” “Making thoughtful choices for society,” and more beautiful enhanced reputation. ESG activities. This encourages cooperation on efforts “Making the world healthier & cleaner.” By “Walking Communicating accurate information to consumers for a sustainable society based on relationships of the right path,” we will earnestly carry out the Kao about our brands and products leads to greater mutual trust. Actions set for each of these three pillars and further

reassurance and trust, and expands opportunities for Proper assessments of our ESG activities from build on them, which will create strong returns for the Kirei Lifestyle Plan KPI definitions consumers and customers to choose Kao brands and stakeholders raise the level of our activities and drive wider society. products. business growth. “Effective corporate governance” helps us achieve Yoki-Monozukuri We implement thorough and efficient, sound, fair and highly transparent choices for society Making thoughtful ensure that workplaces comply with laws and ethics management, while “Full transparency” encourages us based on “Effective corporate governance.” Through to communicate our situation and philosophy to society “Full transparency,” we accurately communicate the and to embrace expectations from society in what we results of these efforts to consumers and society, which do. then builds increased reassurance and trust, and creates The actions involving employees and workplaces are greater opportunity for consumers and customers to essential to ensuring we carry out our basic activities as Independent assurance report choose Kao brands and products. well as actions that will bring about social Human capital is indispensable to elevating who we transformation. Innovative activities require the healthier are and what we do. Through the Kao Actions involving capacities of highly skilled and motivated employees. Making the world employees and workplaces, we will develop highly Furthermore, “Responsible chemicals management” skilled and motivated employees, develop our global ensures that we can supply safe and reassuring & operations necessary to achieve our vision by 2030, and products to society by reliably managing chemical cleaner promote innovation, which will lead to business growth. substances responsibly as an enterprise that provides Based on “Responsible chemicals management,” value through chemicals. offering consumers and customers products containing Each of the Kao Actions for “Walking the right path”

chemical substances as a company with extensive is a foundation of the three pillars of the Kirei Lifestyle Walking the right path knowledge of the efficacy and risks of chemical Plan will contribute to improving individuals’ lives, substances, and managing chemical substances across further building on our actions for society, and positively the lifecycle based on risk, builds greater trust in us and impacting the environment to realize a sustainable leads to higher corporate value and business growth. world.

Kao Kirei Lifestyle Plan Progress Report 2020 33 Contents Kirei Lifestyle Plan Stakeholder Engagement 102-40, 102-43 Editorial Policy Kao’s important stakeholders include consumers and customers as well as “We aim to be the global group of companies that is closest to the consumers and suppliers, employees, local communities, national and local governments, non- customers in each market, earning the respect and trust of all stakeholders.” governmental and non-profit organizations (NGOs/NPOs), academia, industry Through two-way communication with stakeholders, we deepen mutual groups and peer companies, and shareholders and investors. understanding and provide information useful to society and daily life, and use

In the Kao Way, our corporate philosophy, we define our vision as this: feedback we receive to improve our corporate activities and services. CEO Message Making my everyday more beautiful

Consumers / Customers Kao aims to utilize feedback in developing new products and services and improving products by listening to the concerns and opinions of consumers and Employees customers and engaging in close communication. Suppliers Kirei Lifestyle Plan KPI definitions Recognizing that the vitality born from diversity supports our business We consider suppliers as our business partners vital to Yoki-Monozukuri and growth, we create the conditions and culture that allow diverse Communication methods and frequency undertake procurement activities according to the Guidelines for Supplier’s employees to demonstrate their capacities and individuality to the Assessment, including compliance with laws, regulations and social norms, Consumers Chemical and Professional-use Consumer Product Retailers maximum extent as well as enable both personal and company growth. • Consumer consultations: As needed Product Customers (Suppliers) (Suppliers) protection of human rights, assurance of health and safety and fair trade. choices for society • Environmental events: As needed • Opinion exchange meetings with • Business planning meetings with Making thoughtful Communication methods and frequency • Communication events: As needed distributors: As needed retailers: Twice a year Communication methods and frequency • Communication center for Relief • Workshop and plant tours for new • New product presentations: • Kao Forum: Twice a year • Standardization of systems: As needed adult diaper users: As needed employees at distributors: As needed • Quality Improvement Meetings: As needed • Welfare committees: Monthly • Equal Partnership promotion activities: • Home visits to consumer monitors: Every other year • Product study meetings: As needed • Monitoring of compliance status with Guidelines for • Find (employee survey): Every other year As needed As needed • Lectures on sanitation: As needed Supplier’s Assessment: As needed • Health and Safety Committee/Committee • Support for employee health: As needed • Supplier satisfaction surveys: Yearly on Health and Welfare: Monthly • Vendor Summits: Yearly

Shareholders / Investors National and local governments Independent assurance report We earn the trust and meet the expectations of shareholders and investors by striving to raise our Maintaining healthy and equal relationships with national governments is defined in the corporate value, proactively disclosing information and engaging in communication activities. Kao Business Conduct Guidelines. Based upon this, we participate in and exchange healthier

opinions with government organizations that are closely related to our business. We also Making the world Communication methods and frequency cooperate with local governments in efforts to resolve social issues in communities. • General Meeting of Shareholders: Once a year • One-on-one meetings: As needed Kao • Financial results briefings: Four times a year • Reports to shareholders: Issued twice Communication methods and frequency

• IR roadshow: As needed a year & • Committees, councils: • Environmental events:

• Small meetings with the President: As needed • Integrated Report: Issued once a year cleaner As needed As needed • Business briefings and facility tours: • Facility tours for shareholders: As • Opinion exchanges: • Communication events: As needed needed As needed As needed

Local communities Industry groups / Peer companies

We strive to co-exist with local communities by understand- NGOs / NPOs Academia We contribute to the development of various Walking the right path ing the impacts of our business activities on local communi- Through dialogue and collaboration, we gain a deeper understanding of We not only share knowledge and broadly industries by working to address common ties, conducting business activities to meet the demands of society’s demands, and we work together to resolve global environmen- engage in opinion exchanges for mutual benefit, demands from society on a shared industry local communities and engaging in communication activities. tal issues and issues faced by society through our business activities. we also aim to make joint contributions to basis. Communication methods and frequency society and create innovative returns. Communication methods and frequency Communication methods and frequency • Corporate citizenship • Activity (plant tour): As needed • Committees, councils: As needed • Opinion exchanges: As needed Communication methods and frequency activities: As needed • Meetings and collaborations • Opinion exchanges: As needed • Education in the classroom: with local residents: • Environmental events: As needed • Information exchanges: As needed As needed As needed • Communication events: As needed • Joint research: As needed

Kao Kirei Lifestyle Plan Progress Report 2020 34 Contents Kirei Lifestyle Plan Editorial Policy 2019 Our initiatives CEO Message Making my everyday more beautiful Kirei Lifestyle Plan KPI definitions Realization of the Kao Corporate Philosophy ...... 36 choices for society Making thoughtful Making my everyday more beautiful ...... 41 Making thoughtful choices for society ...... 59 Making the world healthier & cleaner ...... 82 Independent assurance report Walking the right path ...... 133 healthier Making the world

Kirei Lifestyle Plan KPI definitions ...... 202 & cleaner External recognition ...... 207

Independent assurance report ...... 209

GRI Standards table ...... 210 Walking the right path

ISO 26000 table ...... 222

TCFD Index ...... 224

Kao Kirei Lifestyle Plan Progress Report 2020 35 Contents Kirei Lifestyle Plan Realization of the Kao Corporate Philosophy 102-12, 102-15, 103-1 Editorial Policy The Kao Way embodies our corporate philosophy and is the foundation for our corporate culture and business activities. It is the source of our unique corporate identity and forms the essence of our corporate brand. As our cornerstone, the Kao Way provides consistency to Group activities, aligning our mission, purpose, culture, growth strategy and day-to-day decisions. Kao Group companies and members share the Kao Way not as a manual or set of rules but as a foundation from which we are able to determine both the meaning of our work and the concerns we share. CEO Message Making my everyday more beautiful

Kao’s creating value to address social issues Kirei Lifestyle Plan KPI definitions

Social issues we are aware of only be able to grow our group business by meeting the Kao Way as a “common language” across the Since our foundation, our reason for existing has the needs of consumers and customers, but also Kao Group. choices for society always been to enrich the lives of consumers and support economic growth in the regions in which we Making thoughtful contribute to society through our core value of Yoki- operate. In addition, we believe that our commitment Opportunities associated with achieving our Monozukuri. Yoki-Monozukuri is the word we use to to Yoki-Monozukuri promotes technological innovation goals for 2030 communicate our strong commitment to providing in the consumer goods and chemicals industries and The Kao Way is based on the values of our founder, products and brands of excellent value for consumer enables us to contribute to the sustainability of the Tomiro Nagase, who established Kao in 1887. The satisfaction. The “Yoki” in Yoki-Monozukuri literally natural world. Kao Way was translated into various languages in

means “good” or “excellent.” 2004 and established as a framework for developing Independent assurance report Although our purpose and corporate identity have Risks associated with achieving our goals for 2030 our global corporate culture the same year. These healthier

not changed, over the years our understanding of By 2030, we aim to create a corporate image of a early efforts created a strong foundation for global Making the world what constitutes a “yoki” product, brand or business company with a global presence. We understand that communication of the Kao Way. We believe that this has evolved. As explained in the Kirei Lifestyle Plan, to achieve this goal we must develop a unique foundation will enable us to further strengthen our &

we believe that to live our value of Yoki-Monozukuri corporate identity and earn the respect and trust of all corporate identity and the values-based corporate cleaner we must not only develop high-quality products at our stakeholders. We consider employees to be an culture required to achieve our 2030 goals. reasonable prices that meet the needs of consumers especially important stakeholder in achieving this Contributions to the SDGs around the world, but also manage our business so goal. Without the trust, creativity and passion of that we are “yoki” for the environment and a positive employees who embrace our corporate philosophy Walking the right path presence in the societies we serve. and align their actions with our core values, we will not be able to earn the trust of external stakeholders Kao’s creating value or achieve our goal of becoming a positive presence We believe that by strengthening our corporate in the global society by 2030. Therefore, we believe identity as a values-driven company committed to that it is critical to invest in communicating our enriching lives through Yoki-Monozukuri, we will not corporate identity to employees to further establish

Kao Kirei Lifestyle Plan Progress Report 2020 36 Contents Kirei Lifestyle Plan Realization of the Kao Corporate Philosophy 103-2, 404-2 Editorial Policy Policies Education and Promotion

We believe that the best way to strengthen our The Kao Way was published in 2004, and Kao Way encourage employees to communicate globally unique corporate identity is not to enforce a uniform communication activities have been conducted on an across functions to share their ideas about how we CEO Message set of behaviors on employees but rather to create the ongoing basis since then. Kao Way communication can continue to exist as a purpose-driven Making my everyday more beautiful opportunity for each member of Kao to reflect on his activities have three goals, with programs designed to organization. or her own values and how they connect to the Kao address each goal. Way. It is critical to our internal branding strategy that employees are empowered to make their own Objective No. 1: Fostering understanding of the Kirei Lifestyle Plan KPI definitions connections between the abstract language of the Kao Way Kao Way and their day-to-day business decisions. The first goal is to achieve a basic understanding To support this, we conduct workshops at across the Kao Group of the content of the Kao Way choices for society workplaces across the Kao Group where participants and the importance of the corporate philosophy in our Making thoughtful can freely discuss what the Kao Way means to them management. and how they can practice it in their daily work. These workshops strengthen each team’s sense of Objective No. 2: Leadership development ownership of the Kao Way and facilitate employee The second goal is leadership development, which we resonance with our corporate identity. define as helping managers find a leadership style We provide a standardized level of basic that is both based on the Kao Way and authentic to Independent assurance report information and training on the Kao Way. However, them. Managers drive our business forward, and as healthier leaders across Kao Group divisions and companies such they must have a strong sense of ownership of Making the world are also encouraged to customize Kao Way sessions the Kao Way and be able to explain their decisions to align with their particular business and using language from the Kao Way. They must also &

organizational challenges. The Kao Way Coordinating acquire the habit of referring back to the Kao Way cleaner Office at our Head Office provides program materials when faced with business challenges and difficult and advice to leaders who wish to design customized choices. workshops.

Objective No. 3: Cultivating organizational Walking the right path culture The third goal is cultivation of our organizational culture. We communicate the Kao Way and our heritage to impress upon employees that we have always been a values-driven company committed to enriching lives through Yoki-Monozukuri. We also

Kao Kirei Lifestyle Plan Progress Report 2020 37 Contents Kirei Lifestyle Plan Realization of the Kao Corporate Philosophy 103-2 Editorial Policy Framework

We believe that managers play a key role in Framework for promoting Kao Way activities developing talent and cultivating a corporate culture Shares advice and program materials CEO Message Making my everyday based on the shared values of the Kao Way. In Kao Head Office Kao Way Contacts at divisions

Develop Kao Way more beautiful accordance with this belief, divisions and group Kao Way Coordinating Office sessions together and Group companies companies are positioned as the owners of Kao Way Shares organizational and business needs communication activities. The Kao Way Coordinating Office supports Kirei Lifestyle Plan KPI definitions managers within and outside Japan by maintaining a network of Kao Way contact persons at divisions and group companies. These “Kao Way contacts” share choices for society organizational and business needs with the Genba managers and staff Making thoughtful Coordinating Office and work with it to develop Participate in the Kao Way session programs customized for their division and company. The Coordinating Office communicates its priorities and strategy with the members of this network at an annual global meeting, and remains in frequent contact with them throughout the year. Independent assurance report The Kao Way Coordinating Office reports to the healthier Senior Vice President of Corporate Communications. Making the world It presents an annual report on its activities to the Corporate Committee, and the content of this report &

is shared with the Board of Directors. cleaner Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 38 Contents Kirei Lifestyle Plan Realization of the Kao Corporate Philosophy 103-2, 103-3 Editorial Policy Mid- to long-term targets and performance

Mid- to long-term targets Expectations from achieving our mid- to long-term targets We intend to continue communicating the Kao Way Business impact Social impact CEO Message globally in order to strengthen our unique corporate Realizing our goals will result in more efficient use of Strengthening values-based leadership and Making my everyday more beautiful identity and develop values-based leadership across employee time and more thorough, creative and employees’ resonance with our unique corporate the Kao Group. By more firmly establishing our brand-consistent use of our group assets. Although it identity heightens our ability to practice our core corporate philosophy as a “common language” is difficult to directly measure the return on value of Yoki-Monozukuri on a global scale, creating across the Kao Group globally, we expect to investment of corporate culture and values innovative value for consumers and at the same time Kirei Lifestyle Plan KPI definitions strengthen employee resonance with our corporate communication, research findings show that investing contributing to the environment and becoming a identity and, as a result, earn the respect and trust of in a corporate brand in this way is correlated with positive presence in the societies we serve. all stakeholders. stronger financial performance. choices for society Making thoughtful

Performance in 2019

Performance 1 Strengthen the ability of Kao Group leaders to understanding of the Kao Way and re-visit the

We have focused on activities to communicate the Kao communicate mid-term business goals and financial importance of linking financial targets to our corporate Independent assurance report Way globally for 15 years. As a result of these efforts, targets in a way that links them to our corporate purpose. we have achieved a strong level of shared, group-wide philosophy. For 2: We communicated the spirit of our founding and healthier understanding of the Kao Way, with manager 2 Make further efforts to ensure that companies newly unique qualities at post-merger integration sessions for Making the world recognition for the importance of values-based joining our group incorporate the Kao Way while also two companies joining our group (Oribe Haircare and leadership. preserving their original and distinct organizational Washing Systems International). &

In 2019, we continued to focus on the three goals cultures. For 3: We implemented a collaborative identity and cleaner of establishing understanding for the Kao Way, 3 Collaborate with internal and external partners to strategy communications audit in one region of our developing leadership and fostering an organizational establish methods of assessing corporate culture overseas Consumer Products Business with an outside culture to practice Yoki-Monozukuri globally. Regionally, across our group and measuring the success of our researcher who specializes in global corporate priority focus areas in 2019 were the Consumer communication efforts. communications and qualitative data analysis. Based

Products Business in the Americas and EMEA, the on the results of this project, we intend to continue Walking the right path Consumer Products Business in Southeast Asia and the Observation of progress made collaboration with outside researchers on assessing the Chemical Business in the Americas. For 1: At annual global meetings, executive training success of our values and philosophy communication In 2019, The Kao Way Coordinating Office identified sessions and venues where mid-term business plans activities. the following three priority issues to address. are discussed, we used corporate storytelling methods Going forward, we will continue to focus on these to help Kao Group leaders to deepen their priority issues.

Kao Kirei Lifestyle Plan Progress Report 2020 39 Contents Kirei Lifestyle Plan Realization of the Kao Corporate Philosophy 404-2 Editorial Policy

Our initiatives CEO Message Making my everyday Toward achieving our objectives Events for employees In 2019, we also strengthened collaboration with more beautiful Guided open-participation museum visits: Held 6 the Human Capital Development Department and times for 71 people implemented a customized program to develop Objective No. 1: Establishing understanding for Guided visits and trainings for individual values-based leadership for future global leaders. A the Kao Way departments: Held 27 times for 525 people total of 19 people participated in this program. Kirei Lifestyle Plan KPI definitions We implement the following programs to promote a • Intranet views of the Kao Way: 12,168 views consistent level of understanding of the Kao Way • Global new employee trainings: 783 participants Objective No. 3: Corporate Culture Development choices for society group-wide: an orientation for new members of the (global excluding Japan) To strengthen our corporate identity as a consumer- Making thoughtful Kao Group in global regions; an induction workshop • Mid-career new employee trainings (Japan): centric values-driven company committed to our for mid-career hires to Kao in Japan; employee visits 125 participants mission to enrich lives, we provide opportunities for to the Kao Eco-Lab Museum (Group Wakayama • New employee trainings (Japan): 540 participants those in leadership roles to discuss the Kao Way at Complex in Western Japan) to provide information on annual global meetings, strategy conferences and ecology-conscious technologies; and employee tours Objective No. 2: Leadership Development other events. For those in non-leadership positions,

of the Kao Museum (Group Sumida Complex in To develop leadership based on the Kao Way, we we provide opportunities to discuss the Kao Way in Independent assurance report Tokyo) to communicate our history. implement the Kao Way Dialogue, a program to their workplace.

The Kao Way Coordinating Office also maintains promote dialogue between managers and members healthier Making the world an intranet website that provides employees within focused on the three values in the Kao Way. From Performance in 2019 and outside Japan with basic information on our 2018, we combined this program with Compliance Managers: A total of 548 managers from the

history and corporate philosophy. training. Americas Consumer Products Business participated & cleaner in these sessions held in Germany, the USA and Performance in 2019 Performance in 2019 Canada. • Kao Museum: 2,555 employee visitors A total of 140 participants in the Consumer Products Non-managers: A total of 124 employees in non- Events for employees and Chemical businesses in the USA (54), Malaysia managerial positions from the Asia Consumer Guided visits for employees: Held 4 times for 38 (39) and Vietnam (47) joined this program in 2019. Products Business participated in these sessions held Walking the right path employees In 2019, we also implemented a similar one-day in Vietnam and Malaysia. Guided visits for employees’ families: Held 5 times workshop for future leaders in the Supply Chain for 87 people Management function who were visiting Japan for • Kao Eco-Lab Museum: 952 employee visitors training. A total of 21 people participated in this (excluding employees accompanying business program. partners on work-related visits)

Kao Kirei Lifestyle Plan Progress Report 2020 40 Contents Kirei Lifestyle Plan

2019 Our initiatives Editorial Policy CEO Message Making my everyday

Making my everyday more more beautiful beautiful Kirei Lifestyle Plan KPI definitions choices for society Making thoughtful

Improved quality of life ...... 42

Habits for cleanliness, beauty & health ..... 47

Universal product design ...... 50 Independent assurance report

Safer healthier products ...... 57 healthier Making the world & cleaner Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 41 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 42 Simple, Fulfilling life convenient life convenient Family-oriented life Family-oriented and cultivating life and cultivating Beauty preserving Beauty preserving Stable, peaceful life Free life where you you where life Free can do what you want can do what you Socially-integrated life life Socially-integrated Life that benefits from from that benefits Life new innovations and trends innovations new with extensive human contact with extensive free time free Comfortable life Comfortable Healthy life Healthy Life with plenty of Life Natural life Natural Invigorating life Invigorating Hygienic life Simple, Humanistic, thrifty life Economical, socially beneficial life nonmaterialistic life Safe life with life Safe Life that is unconstrained that is unconstrained Life peace of mind Ecofriendly life Clean life by stereotypical gender roles stereotypical by Independent life where you you where Independent life are not dependent on others are Contributions to the SDGs The 22 life values we seek to realize we values 22 life The seek to established 22 life values we have We our activities support our goal of realize to ensure that comfortable and fulfilling daily realizing authentic, activities. Going through QOL improvement lives the degree to which these will confirm we forward, and been realized each year, lifestyle values have cycle. our activities using the PDCA improve groups other socially disadvantaged disadvantaged disabilities and of society for people with people for insufficient concern Racial discrimination, Diversification Aging society Increased Increased burden on burden caregivers, caregivers, and loss of for caregivers caregivers for purpose in life social isolation Women’s child care and child care has an adverse has an adverse Increased stress stress Increased impact on health balance work and balance work due to the need to housework, which housework, empowerment viruses Reduced immunity Increase in Increase Changes in bacteria and environment the hygiene the hygiene 102-12, 102-15, 103-1 102-15, 102-12, Global radiation ultraviolet ultraviolet warming Excessively Excessively to increased to increased dry skin due increased burden on caregivers. The current situation current The caregivers. increased burden on citizens, but also members of is that not only senior groups such as foreign residents other disadvantaged as people in as well and people with disabilities, receiving the services and general, are not necessarily happily. in order to live need products they of their such as these, many As a result of social issues lowering consumers are at risk of a significant quality of life in their daily lives. in which Kao the environment key issues affecting five The consumers for quality of life and the risk of reduced operates, value Kao’s creating will contribute to consumers’ being able to realize We We lives. authentic, comfortable and fulfilling daily but also by will do this not only by offering products, to educate capabilities using our comprehensive in Additionally, consumers across society. to also strive we collaboration with stakeholders, sustainable quality of life (QOL) achieve improvements.

Social issues we are aware of aware are Social issues we in issues that are leading to a deterioration The of life include not only problems consumers’ quality environment, such as increased related to the global but also radiation due to climate change, ultraviolet identified have environment. We changes in the social society that are closely issues affecting key five changes in related to quality of life; global warming, empowerment, the hygiene environment, women’s of society. the aging society and the diversification past few the in over a steady improvement Although there has been consumers’ hygiene awareness hygienic living with the widespread adoption of years, because of the impact of habits, nevertheless, with continued globalization, the risk associated be transmitted between infectious diseases that may the global different countries and regions, affecting community as a whole, has grown. come to have in society and the number of At the same time, as women participate more actively has households where both partners are working both emotional there has been an increase in grown, to balance and physical stress relating to the need in many and household responsibilities, and work health. people’s cases this has a detrimental effect on to become a world As one of the first countries in the problems Japan is experiencing society, hyper-aging such as the social isolation of senior citizens and an Kao’s creating value to address social issues to address value Kao’s creating Help people to enjoy more beautiful lives through our products, services and communications. communications. services and our products, through lives more beautiful to enjoy Help people Improved quality of life life of quality Improved Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 43 Do Check Corporate image evaluation evaluation image Corporate based on consumer surveys Promoting products that make use of new use of new that make products Promoting and of brands and promotion technology, well as awareness-raising, cross-category to enhance as implementing systems awareness quality of life employees’ participation and implementing employee activities. type awareness-raising activities Proactive improvement Establishing the specific life value value life Establishing the specific through aim to realize that we the activities in brand specification. design brand new design specification brand *Starting with new management and utilization from 2019 onwards. Maintenance and enhancement through motivation of employee the establishment of an internal system evaluation performance etc.) (ESG awards, 103-2, 404-2 103-2, Plan Action PDCA cycle aimed at enhancing quality of life cycle aimed at PDCA Education and promotion Education that use proposal of products that includes the check, action) cycle (plan, do, PDCA of a the implementation With the wide-ranging other stakeholders, consumers and employees, collaboration between technology, new from third-party obtaining evaluations company, both within and outside the dissemination of information them. to expand themes and working our activity are constantly reviewing we organizations, etc.,

3. Individual brand-specific themes 3. Individual brand-specific of the level Activities that enhance quality of life at individual brands. 2. Cross-category themes 2. Cross-category across categories of life enhance quality Activities that brands. in relation to multiple existing way, in a new 1. Company-wide ESG themes ESG 1. Company-wide technology/activities products that utilize new New fields. that enhance quality of life in new Having identified five quality of life impingement risks of life impingement quality five identified Having with social issues or with be associated that may decided on have change, we social or environmental are taking these risks, and we themes to address key action accordingly. formulated action plans for the themes types of are three have There are addressing. We that we plans that are being implemented action plan: action plans and cross-category action company-wide, plans. brand-specific action Policies Improved quality of life life of quality Improved Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 44 Educational curriculum proposals for schools and other Educational curriculum proposals for schools Curriculum educational institutions that are line with the Ministry of Education, Guidelines formulated by Japan’s (MEXT). Culture, Sports, Science and Technology which sell preventive healthcare products, and which sell preventive counseling by gynecologists. at raising, etc. for public health nurses working schools and private enterprises. Measures in collaboration with local government Measures in collaboration with local government accessible authorities, which often constitute the most opportunity for consultation for senior citizens. Next-generation awareness raising awareness Next-generation ・ Collaboration and engagement and engagement Collaboration with stakeholders of life can lead to physical and Deterioration in quality can be harmful to the health. In mental distress, and of life deterioration, besides quality order to prevent services, in the future it will also be utilizing products and use of prevention to make increasingly important raising. early mitigation awareness raising and awareness age, gender, on the consumer’s will vary depending raising and location of the awareness As the content to promote quality are working we lifestyle and life stage, by collaborating with stakeholders of life enhancement contact with consumers. extensive who have Raising awareness in relation to the aging of the population to the aging of the in relation Raising awareness ・ health support Women’s drugstores (pharmacists), involving Initiatives ・ Menstrual pain mitigation method awareness ・ Sales Division * As of December 2019. Division Corporate Corporate 102-43, 103-2, 103-3 103-2, 102-43, Division ESG Committee By increasing the number of new products that help to products By increasing the number of new to be able expect enhance quality of life in the future, we rates. Our brand recognition and brand usage to expand to improve corporate image as a company that is working people’s to boost quality of life can also be expected of Kao. awareness Anticipated benefits from achieving mid- to achieving Anticipated benefits from long-term targets Social impacts Management Product Quality Product ESG Promotion Meeting ESG Promotion Board of Directors Board Management Committee R&D Division SCM Division Division Products Products Business Consumer

Of the 19 actions included in our Kirei Lifestyle Plan, improved quality of life, habits for cleanliness, beauty & cleanliness, beauty of life, habits for quality Plan, improved our Kirei Lifestyle actions included in Of the 19 being promoted brands are and purpose driven design, sustainable lifestyle promotion product health, universal as a common framework. Framework Framework We will increase the number of new products that help to will increase the number of new We enhance quality of life. Mid- to long-term targets and performance Mid- to long-term targets 2030 long-term targets Improved quality of life life of quality Improved Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 45 next generation through Pink Ribbon Advisors Pink Ribbon through generation next Special lectures given by a Pink Ribbon Advisor. Special lectures given * Pink Ribbon Advisors: is a certification program run by the Japan Society of Breast Health, This cancer screening and an NPO, participants in which learn about cancer, Approximately a test to check their knowledge. treatment etc., and take activities 7,000 Pink Ribbon Advisors are undertaking awareness-raising breast that takes throughout Japan, with the aim of creating a society from by encouraging people to safeguard themselves cancer seriously, talk to their family and friends about breast cancer, breast cancer, to undergo breast cancer screening, etc. colleagues encourage work 2. Providing support for activities to educate the support for Providing 2. been supporting the “Project of have Since FY2018, we Pink Ribbon Advisors*” (Organizer: Cancer Education by Health, certified specified non-profit Japan Society of Breast organization). special lectures. high schools to give junior high schools and visit cancer experienced Advisors who have Pink Ribbon to experience aim is for the advisors to use their own The understanding an accurate and deeper help children develop rates in thereby helping to boost cancer screening of cancer, awareness the future, and also cultivate greater health a whole. among the students’ families and society as Laurier limited-edition mini-packs with a special Pink Ribbon design Laurier sanitary products brand has launched 102-43 Preventive awareness-raising and donation awareness-raising Preventive of Kao’s resources use effective activities that make Kanebo Skin Gloss Oil Water health. our support for women’s as the main pillars of three activities taking the following are currently We 1. been implementing activities to have Since 2007, we of early diagnosis of breast communicate the importance through in-store Sofina, est cancer directly to customers mainly on and Kanebo Cosmetics counters, focusing Japan and the Asia region. at method that utilizes Kanebo Skin Gloss Oil Water a self-checking began introducing In 2019, we Kanebo outlets. Our special Pink special limited-edition mini-packs with a these from of the sales revenue Ribbon design. Part of Cancer products and brands is donated to the Project Education by Pink Ribbon Advisors. Pink Ribbon Campaign 2019 ➡ (Japanese) www.kao.com/jp/pinkribbon/ Our initiatives

With increased female participation in society, higher higher increased female participation in society, With rates, an increase in the number of female employment offers more society now female managers, etc., advancement. At the same opportunities for women’s later because of the trend toward time, however, with women marriage and the fall in the percentage of there has been of pregnancy and childbirth, experience cancers, an increase in the incidence of female-only We problem. which has become a significant social initiative a global support the Pink Ribbon movement, importance of about the that seeks to educate women and since 2007 we early diagnosis for breast cancer, Campaign. been implementing the Kao Pink Ribbon have of related are also undertaking development We of life. products that contribute to enhanced quality Support for women’s empowerment empowerment women’s Support for the Pink Ribbon Campaign through Improved quality of life life of quality Improved Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 46 Wrapping round the back toward (breast) Usage example cancer education through the Pink Ribbon cancer education through Campaign Corporate citizenship activities: Support for Corporate citizenship activities: Support for ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=73 102-43 Healia Deodorant Pad Healia Deodorant

3. Product proposals to enhance quality of life to enhance proposals 3. Product living cancer patients to comments from Responding associated with find that the odors at home who them from of the body prevent parts cancer-affected wish to maintain their former going out, and who 2019 Kao possible, in August lifestyle as much as Co., Ltd. (KPS) launched Healia Professional Services these odors. , which help to mitigate Pads Deodorant and their soft job of deodorizing do an excellent pads strong odor, a that have The wounds are easy on the skin when they cushioning effect is also designed are area. They attached to the wound Besides sales to hospitals, Healia not to slip off easily. are also sold to ordinary consumers Pads Deodorant service. via Kao-direct, our official online shopping in Cancer, Care Annual Meeting of the In September 2019, at the Japanese Association of Supportive a gave our Sensory Science Research Laboratory product. This poster presentation introducing this new Metropolitan a joint presentation with Tokyo was Komagome Cancer and Infectious Diseases Center Nerima Hospital. Hospital and Juntendo University made the event Doctors and nurses attending patients comments along the lines of: “Many cancer is an excellent a problem with the odors, so this have hope that as many people as possible product. We will be future, we In the of this.” will be made aware to help with hospital doctors and nurses working of life of cancer patients who the quality improve serious distress. experience Improved quality of life life of quality Improved Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 47 Collaboration and engagement and engagement Collaboration with stakeholders activities for the next Our awareness-raising educational as an been developed generation have aim to We program that can be utilized in schools. agencies, local together with government work to further authorities, schools, etc. government the content of these programs. expand participated in a visiting have and impressions are After employees views class, the participants’ which is then presented. compiled in a report, 102-12, 102-15, 102-43, 103-1, 103-2, 404-2 103-2, 103-1, 102-43, 102-15, 102-12, Policies a wide support activities that help to establish We habits, thereby enabling range of cleanliness seek. the Kirei Lifestyle they consumers to realize promotion Education and Kao employees As part of our efforts to encourage all provide we to participate in economic, ESG activities, classes at support for the implementation of visiting lessons. schools, including hand-washing group of employees recruit Rather than selecting a fixed we to act as instructors for the visiting classes, using the as widely as possible within the company who wish to participate company intranet. Employees training in in visiting classes as instructors undergo least twice advance, and then act as instructors at period. a two-year over its company that enables Co., Ltd. has also Kao Group Customer Marketing put in place a framework of individual employees and the employees, within production plants, to participate in activities fostering a means of area, to provide their own employees New contact with the local community. their initial are informed about this system during is training, and Kao Group Customer Marketing where a leading role in creating workplaces playing participation is facilitated. employee

Contributions to the SDGs Kao’s creating value Kao’s creating products develop our business activities, we Through and that support clean, beautiful, healthy lifestyles, these products to society. provide believe products, we Rather than just supplying that it is important to implement awareness-raising beauty & activities so that habits for cleanliness, health can permeate widely through society. Social issues we are aware of aware are Social issues we has led to rapid ongoing process of globalization The of because However, lives. in people’s improvements it is far as disparities in wealth, various factors such is able in the world that everyone from being the case lifestyle and spend every a clean, hygienic to enjoy in good health. day Kao’s creating value to address to address value Kao’s creating social issues Inspire and enable people to develop better habits for cleanliness, beauty and health through our products, services and communications. services our products, health through beauty and cleanliness, better habits for to develop enable people Inspire and health & health beauty cleanliness, for Habits Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 48 Performance in 2019 Performance of schools that have As of 2019, the number under the provided hosted visiting classes for cultivating habits for educational program launched in health that we cleanliness, beauty & these visiting 900. While 2009 had risen to over been implemented with Kao classes have acting as instructors and support employees put in place a new now have team members, we a dramatic increase in the system that can realize and number of schools assisted by the program, activities are promoting awareness-raising we more children who represent that will target even the future. 103-2 Mid- to long-term targets and performance and targets long-term Mid- to 2020 for Targets for the number of educational Increasing the target programs to be implemented to either hold aim lessons, we our hand-washing With related educational kits provide visiting classes at, or to, a total of 420 schools. 2030 long-term target for a implemented this program aim to have We 4,980 schools by 2025. total of cumulative mid- to achieving Anticipated benefits from long-term targets Business impacts implementation It can be anticipated that, through the Kao products, activities utilizing of awareness-raising among the can cultivate trust in Kao products we thereby generation, children who represent the next future. customers for the helping to create loyal Social impacts of habits for It can be anticipated that the adoption cleanliness, beauty & health will help to improve and public hygiene, quality of life, improve people’s reduce the risk of infectious diseases. Improved quality of life/Framework Improved p. 44 Making my everyday more beautiful > everyday p. 44 Making my ➡

Of the 19 actions included in our Kirei Lifestyle Plan, our Kirei Lifestyle actions included in Of the 19 beauty quality of life, habits for cleanliness, improved design, sustainable product & health, universal brands are and purpose driven lifestyle promotion a common framework. being promoted as through promoting related initiatives are related divisions and group We collaboration between outside Japan, with the companies within and a Business Division playing Consumer Products central role. Framework health & health beauty cleanliness, for Habits Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 49 and menstrual hygiene conditions and menstrual hygiene Corporate citizenship activities ➡ providing through the next-generation Education for and educational education in the classroom materials www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=77 cleanliness and hygiene habits for Promoting overseas in Vietnam Program Kao Hygiene Development ・ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=74 menstrual education Contributions to improving ・ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=75 extract foam that comes out in a cute flower shape out in a cute flower foam that comes extract soap in the palm of the hand. The that can be carried dense foam in just the right comes out easily as way product a fun and enjoyable amount, making this hands. your to wash 102-43 manufacturing manufacturing Yoki-Monozukuri the habit of acquiring to make hands fun your washing Handwash Whip Stamp u Bioré it up healthily, to be able to grow In order for children to acquire hygienic habits from is important for them your the habit of washing age. In particular, a young hygienic, a hands is vitally important for having healthy life. we technique, who represent the So as to help children— future—to learn proper hand-washing classes that lesson visiting implement hand-washing regularly. their hands aim to get children washing about be proactive In order that children will hand- putting into practice at home the correct in the learned have technique that they washing launched Bioré u lessons, in 2019 we hand-washing product Stamp Handwash, a fun-to-use new Whip at available (Pre-sale via our online store, currently require the hand soap products store). Conventional but with our hands to get the foam out, use of two one hand to product the user can easily use just new Our initiatives

into the habit of washing their hands. into the habit of washing lives. happy healthy, as the think about environmental constraints, such etc. water, need to save 2. Housecleaning lessons aimed at helping people to live Housecleaning lessons aimed at helping people to live 2. Environmental lessons aimed at getting children to 3. implement region of Japan, we reach children in every programs ensure that our various educational To Group Customer these programs in collaboration with Kao activities that are Co., Ltd., which undertakes Marketing deeply rooted in the local community. aim to we support team members for the various classes, to act as instructors and By getting our employees and society, our employees create contact points between and cultivate a broader outlook among our employees. The main educational programs that we implement are as main educational programs that we The follows: lessons aimed at helping children get Hand-washing 1. up need in order to grow hygiene habits that they the is to help children develop Our primary objective implement awareness-raising and to this end we healthily, roles in important activities for the children who will play generation. society as the next In order to help people acquire habits for cleanliness, beauty In order to help people a wide range of educational developed have & health, we visiting classes and teaching kits. provide programs, and we Educational program to cultivate to cultivate Educational program & health cleanliness, beauty habits for health & health beauty cleanliness, for Habits Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 50 By giving due consideration to relationships diverse and diversity as we influence lifestyles,we aim to contribute to the promotion of social inclusion. Social inclusion We striveWe to create products that bring joy to people in their daily lives. Creating joy through products User-friendly products User-friendly striveWe to deliver “user-friendly products” by focusing on “accessibility,” “safety” “usability.” and Kao Universal Design Guidelines Kao Universal Policies to promote the fundamental worked at Kao have We Product Design: user-friendly guidelines of Universal through products and social joy products, creating inclusion. and by delivering promote Yoki-Monozukuri will we Going forward, throughout the company, to all consumers in their satisfaction and inspiration will we through the use of Kao products, daily lives a household product industry leader to become strive Design (UD). in the use of Universal 102-12, 102-15, 103-1, 103-2 103-1, 102-15, 102-12, conceivably even to a loss of trust in the company to conceivably even itself. of our vision to realization Opportunities related 2030 by the world of people all over lives Helping to enrich the will reinforce trust in our company. with Kao products Contributions to the SDGs

Risks related to realization of our vision by 2030 of our vision by to realization Risks related can use easily products that anyone to provide Failure usage and could lead to a heightened risk of improper products other safety issues. Furthermore, even used be with safety in mind may developed understood improperly if not accompanied by easily in this regard guidance to promote safe usage. Failure could lead to a loss of trust in our products, and We have promoted development and provision of and provision promoted development have We the basic can use easily under products that anyone Yoki-Monozukuri. concept of our consumer-focused SDG contribute to the universal to Going forward, deliver will no one behind, we target of leaving we satisfaction and inspiration to all the consumers this To of people. to enrich the lives and strive serve, vulnerable that concern for the socially believe end, we theme. is and will continue to be an important Kao’s creating value Kao’s creating Social issues we are aware of aware are Social issues we both older and more Modern society is becoming and lifestyles are diversifying. globalized, while values products that are accessible want In addition, people is particularly true of the socially and easy to use. This the elderly and those with vulnerable, including as members of minorities, whether disabilities, as well religious, ethnic or otherwise. Kao’s creating value to address social issues to address value Kao’s creating Develop products and services based on our Universal Design Guidelines that are easier for everyone to use. everyone easier for that are Design Guidelines based on our Universal and services products Develop Universal product design design product Universal Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 51 Improved quality of life/Framework Improved p. 44 Making my everyday more beautiful > everyday p. 44 Making my ➡ Collaboration and engagement and engagement Collaboration with stakeholders to —with the retail industry Collaboration is essential at the point of sale, and with disseminate information disposal. with respect to product local governments stage from product practice UD at every To promote will actively we to disposal, awareness throughout the company. further collaboration Framework Lifestyle Plan, Of the 19 actions included in our Kirei of life, habits for cleanliness, beauty quality improved product design, sustainable & health, universal brands are lifestyle promotion and purpose driven being promoted as a common framework. 102-43, 103-2, 404-2 103-2, 102-43, customer consultation window that deals directly with deals directly that window consultation customer the as with as well requests and feedback, customer promote UD-centered Divisions, to R&D and Creative manufacturing. also planning to create an internal ESG are recognizes new program, which formally We Awards our lineup will expand impact. We products with ESG products through reinforced and of UD-centered new UD. of awareness internalized employee system Internal education with for Promoting Empathy hold Workshops We with the aim of helping our employees Elderly People, and a sense greater empathy for the elderly develop face. they of direct connection with the problems communicate with need to citizens, we groups of people, including senior As our employees diverse to study for the been encouraging employees have Japan by the overseen Manners Test Universal we forward, Manners Association. Going Universal our internal education will continue to develop system. system to Asia Expanding the UD evaluation Center our Consumer Communication Each year, Kao products sold in or improved new evaluates and announces Japan from a UD perspective, will we rates. Going forward, improvement effective move as we this system to Asia as a whole expand global UD promotion. toward

PR from a UD-centered perspective. a UD-centered PR from promotion of UD, from product awareness to awareness product of UD, from promotion final disposal in the home. consumption and

Deploying a structure for UD-centered UD-centered for a structure Deploying the company throughout manufacturing for UD A cross-business approach is vitally important appoint a new promotion. Each business division will our UD promotion leader to collaborate with which features a Consumer Communication Center, We believe that for the socially vulnerable, UD is not that for the socially vulnerable, believe We the product merely value added, but is the value of will launch Monozukuri we Going forward, itself. and Promotion Projects in each business division, an UD products from our offering of new expand perspective. will also strengthen our information and We and service offerings that utilize information collaborate with communication technology (ICT), and and including distribution companies stakeholders the customer convey and actively local governments, perspective. 2. Monozukuri Project promotion and strategic and strategic promotion Project Monozukuri 2. 1. Adoption of the customer’s viewpoint in the in the customer’s viewpoint Adoption of 1. on accessibility and usability as Along with focusing will disseminate easily we as safety and security, well at each stage from product understood information to purchase and disposal. and selection awareness Specific initiatives to achieve this are set forth below. this are set forth to achieve Specific initiatives Education and promotion Universal product design design product Universal Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 52 103-2, 103-3, 416-1, 417-1 416-1, 103-3, 103-2, Anticipated benefits from achieving mid- to achieving benefits from Anticipated long-term targets Business impacts are diversity aging society and increasing social The utilizing our attention to detail to global challenges. By are easy to use for diverse products that develop can we the world, groups of people throughout revenue and also achieve enhance our presence growth. Social impacts the goal of contribute to realizing Our UD initiatives the SDGs, no one behind” that underpins “Leaving concept embody a diversity-focused because they products for easy-to-use that seeks to provide race, disability, of age, gender, regardless everyone, status, etc. birthplace, religion, economic ethnicity,

stakeholders. information. continuous basis.

We aim to enrich the lives of people globally and to aim to enrich the lives We by contribute to the sustainability of the world as widely as of UD initiatives spreading awareness of these possible and fostering understanding measures among stakeholders. 3. Promote understanding on the part of understanding Promote 3. We adopt a UD perspective in information adopt a UD perspective We In particular, dissemination and retail shop design. enables information for all products that provide need what they to easily access and confirm anyone products. when selecting and using those to know 2. Adopt a UD perspective when disseminating when a UD perspective Adopt 2. 2030 long-term targets 2030 long-term on a manufacturing UD-centered Practice 1. from a UD perspective Yoki-Monozukuri expand We also promote We also globally. not only in Japan, but Project, which aims the UD-centered Yoki-Monozukuri and accelerate the release of social issues, to solve products. UD-centered new Mid- to long-term targets and performance and targets long-term Mid- to Universal product design design product Universal Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 53 ailable for viewing ailable for Commercials with closed captioning are av Kao’s Official YouTube channel Kao’s Official YouTube ➡ www.youtube.com/user/KaoJapan/ 103-2, 103-3, 416-1, 417-1 416-1, 103-3, 103-2, commercials within Japan commercials Initiatives to provide support for cancer support for to provide Initiatives patients 2019 event in the Gankurashi Fair participated We Ribbonz, introducing Kao organized by NPO Cancer people who are undergoing, or products that can help (September completed, treatment for cancer have 2019). closed captioning TV to spread Activities 3. the airing of closed been promoting have We captioning TV commercials in regular broadcasts around 1,700 commercials since 2011. So far, featuring (including commercials on the Kao website) been produced. Commercials closed captioning have been made on TV have not been broadcast that have on the website. available

in 2019 incorporated UD considerations p. 54 Our initiatives: Our products launched Our products p. 54 Our initiatives: ➡

perspective Initiatives targeting diverse groups of people groups diverse targeting Initiatives Initiatives to aid people with visual Initiatives impairments

lifestyle information for Home Life, a voice-based lifestyle information for Home Life, a voice-based Library for magazine published by the Japan Braille its members. Center, we introduced people with visual introduced people with we Center, impairments to our one-hand push type Attack ZERO (March 2019). seminar for people with visual impairments seminar for people with visual impairments School organized by the Special Needs Education of Tsukuba (July Impaired, University for the Visually 2019). leverage for ease of use. leverage of our versions released enhanced In 2019, we Attack ZERO laundry detergent one-hand push type products utilize the lever These and Cape hairspray. touch. principle for easy dispensing with a light enhancement from a UD perspective UD perspective enhancement from a Japan: 77%, 856 items. 12%, 113 items. Europe and the Americas: • Our employee volunteers narrated and provided provided narrated and volunteers Our employee • • At the request of the Setagaya Municipal Welfare Welfare Municipal At the request of the Setagaya • • We gave a presentation on doing the laundry at a gave We • 2. • Expanding our range of products that utilize our range of products that utilize Expanding • • Implementation rate of new and improved product and improved rate of new Implementation • Performance a UD from development Product 1. Performance in 2019 Performance Universal product design design product Universal Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 54 The depression on the button The fingertip orientation easy. makes Cape design of the modified the we our Cape hairspray, For the product, using button and enhanced spray with a even it easy to dispense, to make leverage button features a depression so gentle touch. The users can immediately orient their fingertips. below an indentation around the container Moreover, of the hand to the top enables those with disabilities firmly grasp it without slippage. Dispensing with a gentle touch. Package Design Package The Face of Kao: Innovation Stories #04, of Kao: Innovation Face The ➡ www.kao.com/jp/kaonokao/media/n20190730/ (Japanese) 417-1 Showing people with visual impairments how to use the product. people with visual impairments how Showing One-hand push type Attack ZERO

Our initiatives

We are continuing to develop products that make it possible for diverse groups of people to use our products in a stress-free manner in different circumstances. In this in different circumstances. In this use our products in a stress-free manner groups of people to it possible for diverse that make products are continuing to develop We 2019 took UD into account. products that Kao launched in of how present some examples section, we Attack ZERO One-hand push type Attack ZERO laundry detergent, One-hand push type for easy principle the lever launched in 2019, uses container enables dispensing with a light touch. The amount of consumers to dispense an appropriate push, and is detergent using a one-handed, gentle or easily used by people with visual impairments the hands. disabilities involving been daughter has from consumers, such as, “My the product have Many comments praising received is able to do vision loss, but with this container she and a terrific product,” I think it’s laundry on her own. to dispense soap and being able “I do laundry daily, useful and convenient.” with one hand is very introduced people with visual impairments we Municipal Welfare At the request of the Setagaya Center, comments, positive to this product and received a uniform useful to be able to dispense including, “It’s without getting milliliters with a single push, and five container has a wide and “The any on my hand,” refill the it easy to mouth, which should make container.” Our products launched in 2019 incorporated UD considerations 2019 incorporated launched in Our products Universal product design design product Universal Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 55 Back side of sticker (with Back side of sticker explanation) products How to avoid accidental ingestion of household to avoid How ➡ www.kao.com/jp/soudan/anshin/anshin_005.html (Japanese) Sticker highlighting the risk of accidental ingestion by the risk of accidental ingestion by highlighting Sticker the elderly side of sticker Front detecting taste or smell, or may have vision loss, vision loss, have taste or smell, or may detecting and requiring likely accidents more making such In and caregivers. from family members vigilance by is followed accidental ingestion addition, where develop. pneumonia may aspiration vomiting, the risk of accidental ingestion labels, but to reduce risk involving Products are equipped with warning a booklet for the elderly prepared have we further, of to raise awareness and their family members booklet is also available risk. The accidental ingestion for created a sticker we In addition, on our website. to highlight the risk of accidental product containers started publicizing and have ingestion by the elderly, consumer centers and to local the sticker for the regional support centers comprehensive and elsewhere. elderly near our worksites access to information Corporate citizenship activities > Barrier-free Corporate citizenship activities > Barrier-free ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=76 102-43, 404-2, 417-1 404-2, 102-43, Universal Fukuoka City Festival: Universal Design Trade Fair Fair Design Trade Universal Festival: Fukuoka City Universal In 2019, we participated in and supported the participated In 2019, we events. government-sponsored following Lifestyles Exhibition • Sumida Consumer Fair • Sumida Care Welfare Day City Alzheimer’s • Kashiwa • information Barrier-free ingestion to prevent Initiatives accidents among the elderly in be involved Not only children, but also adults can accidental ingestion of potentially hazardous or cosmetics. substances, such as detergents, bleach reported to the 19% of such accidents Approximately adults, Information Center involved Japan Poison 2018 report. according to the Center’s but if large the ingestion of small Most accidents involved amounts due to misapprehension or error, the result can be serious amounts are involved, the elderly and poisoning symptoms. In particular, difficulty have those suffering from dementia may Principal collaboration with collaboration Principal in 2019 government accessibility, usability and accessibility, were events In July, safety. held at the Sumida and offices, where Kayabacho these direct consumer comments were events introduced. The participants a valuable gave opportunity to hear direct consumer comments and of internalize the awareness the importance of Universal Design in our products.

Consumer Communication Center 85th Consumer Communication Center event Anniversary Consumer Communication Center gathers Kao The from comments directly consumer product-related to Kao’s consumers. Many of these comments relate Design, including fundamental stance on Universal Our employees participate in workshops that include in workshops participate Our employees of being to simulate the experience special gear wearing 1 nursing care. qualifies for Level an elderly person who to thus acquired can be applied perspective The a types of workshop: are two There work. employees’ and other daily where housework house studio workshop, that involves out, and a workshop activities can be carried for trips on foot. Workshops making round-trip shopping held in 2019, with Elderly People, Promoting Empathy 47 participants with included 4 house studio workshops with 25 participants. and 2 shopping workshops Workshops for Promoting Empathy with Elderly People with Empathy Promoting for Workshops Consumer Communication event Center 85th Anniversary Promoting employee UD employee Promoting understanding Universal product design design product Universal Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 56 design to go even further, making it possible for anyone making it possible for anyone further, design to go even that are with movements to use products intuitively, and maximally efficient in terms of smooth and natural, the purpose. , their product Kao Sekken Beginning with initial body care, as well related to facial and products have and laundering—all activities as to cooking, cleaning home and its environment the connected with keeping to is working the company Now clean and attractive. as the Just themselves. this true of the products make as a tatami mat is itself beautiful, broom used to sweep person doing the sweeping, of the are the movements are and ladle used to gather water or just as the bucket from beautiful materials into fashioned themselves and beautiful forms that are easy to use, the tools more containers of the future surely can be made before. beautiful and easier to use than ever Kirei Lifestyle Plan aims at cultivating Kao’s I believe and lifestyles in an lives desire for attractive people’s in close Kao stays global environment. While attractive the contact with the users of its products, I hope of our planet, company will not forget those inhabitants in slums live said to number nearly a billion, who today I further hope Kao and struggle to obtain clean water. its responsibility to address hard to fulfill will work it sources environmental challenges, including the way waste materials for its products, deals with plastic raw will help and responds to climate change. Such efforts where it a place restore this beautiful planet and make with peace of mind. children can live 102-44 Design carried out with “typical” individuals in mind Design carried out with challenges for present difficult or insurmountable may abled. If such problems are those who are differently modification for so-called addressed after the fact, cost and effort, additional involves barrier free use often achieve. be impossible to then may and even and anticipating identifying approach involves UD The use for the entire potential barriers to convenient users, and minimizing those population of potential practicable from the extent barriers to the maximum Simply put, design (planning and basic design) stage. of UD is design for the broadest possible spectrum users. of UD. Kao has long been mindful of the importance of responsible for the widespread adoption Kao was ensure that embossed shampoo and rinse bottles, to touch. This users can identify the correct product by also normally- helps not only users with vision loss, but closed their eyes to keep want sighted users who may their hair. while washing between UD thoroughly considers the relationships and persons and objects under different times users must be able to example, conditions of use. For handles, or manipulate dispensing nozzles, buttons, other liquids switches on containers for detergents or finger size, with ease, regardless of age or hand and Safe, easy to use design or strength. shape, movement considered, in Japan. Well as a given taken is now as for effortless use. In the future, simple forms make expect people will UD becomes increasingly pervasive,

The term Universal Design first emerged in the United term Universal The incorporating States and referred to a methodology for from the outset features in public and residential and so forth environments, tools and systems, services would to ensure that persons with physical disabilities in not face unfair discrimination or disadvantage society. Fumikazu Masuda Industrial Designer President, open house Inc. of Arts and Sciences University Nagoya Professor, Visiting Message from External Expert External from Message Kirei and UD Kirei Universal product design design product Universal Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 57 Performance in 2019 Performance section, we As described under the Framework a system in place to regulate information have disclosure. Mid- to long-term targets and targets Mid- to long-term performance 2020 for Targets collect of concern, we Regarding ingredients causes concern in society exactly information on what examine and on ingredient safety, and scientific data and validity of this information. the appropriateness specific then establish individual policies for We release the ingredients based on this process and are ready to be shared policies in turn when they publicly. mid- to achieving Anticipated benefits from long-term targets Social impacts and Disclosing information helps consumers peace of customers to choose our products with mind. 102-12, 102-15, 102-43, 103-1, 103-2, 103-3 103-2, 103-1, 102-43, 102-15, 102-12, Under our ESG Committee and ESG Promotion Under our ESG Committee and ESG Promotion working organized a cross-divisional Meeting, we on social opinions based group that exchanges from their conditions and scientific information and considers what specialized viewpoints respective needs to be shared with the public. Policies cause regards to ingredients that may With disclose our approach and we consumers concern, to develop continuously work We usage policy. and customers can feel products that consumers provide as we as well peace of mind in using, adequate information. and engagement Collaboration with stakeholders collect the latest information regarding human We raw health and environmental safety to utilize Additionally, materials and products safety evaluation. with participation and cooperation through active industry association each country and region’s information contribute to sharing correct activities, we and customers. consumers governments, to industry, Framework

Contributions to the SDGs Kao’s creating value Kao’s creating in order for so much information available, With Kao products, consumers to feel peace of mind using our that it is necessary to disclose believe we use along with correct approach to the ingredients we evidence. information based on scientific Social issues we are aware of aware are Social issues we of different with the development In recent years, SNS (social networking like kinds of social media a wide range of information is systems) and blogs, In light of this, more consumers easily available. now interest in the an increasing are expressing as their ingredients used in daily products as well world. effects on human health and the natural Kao’s creating value to address to address value Kao’s creating social issues Create products made with carefully selected ingredients that people everywhere can use with peace of mind. can use with peace that people everywhere ingredients with carefully selected made Create products Safer healthier products products healthier Safer Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 58 Industry association activities/ Industry association communication of microplastics, including In response to the issue whose use in products has raised plastic microbeads, the Japan Cosmetic Industry environmental concerns, scientific information, gains an Association collects in Japan and provides understanding of usage association also The information to the government. around the cooperates with industry associations a central role in these activities and play We world. lead cosmetics industry activities in Japan. participate in industry actively Furthermore, we as those of the activities related to our business, such and the Japan Japan Soap and Detergent Association also participate in Chemical Industry Association. We major the industry association activities in other and in collect local information, regions of the world, regions, particular in the ASEAN and other Asian to the contribute to the information exchanges governments. for adequate communication strive we when example, Moreover, with consumers and customers. For our use of questions regarding about receive we to quickly provide work we ingredients or their safety, adequate information. 102-13, 102-43, 416-1, 417-1 416-1, 102-43, 102-13, Triclosan until Soap contained triclosan Hand Bioré u Foaming but it is no longer used in our current 2015, August product line. no problems in terms of safety are There older products containing regarding use of our triclosan. w). were included among these, but in were *

Our initiatives

Any solid plastic particle that is less than five millimeters in size and millimeters Any solid plastic particle that is less than five or cleanse the human body or any is intended to be used to exfoliate part thereof (as defined by U.S. federal la * Plastic microbeads Plastic Microbeads cosmetics Some of our products, such as rinse-off such and toothpastes, contain scrubbing ingredients and cleansing agents. Plastic as exfoliants microbeads We activity share our approach and response toward toward activity share our approach and response We raised social concerns. So far, ingredients that have and policy regarding disclosed our approach we’ve ingredients. two the following

Safe and reliable ingredient use and information disclosure use and information ingredient and reliable Safe Safer healthier products products healthier Safer recent years environmental concerns have been concerns have environmental recent years raised about them. completed the we In light of these concerns, other replacement of plastic microbeads with all rinse-off ingredients by the end of 2016. Currently, and ship use produce cosmetics and toothpastes we and corn ingredients (cellulose naturally derived fall under starch), and do not use ingredients which the definition of plastic microbeads. we our products to improve for ways looking to sustainability, As part of our commitment are always to protect the environment. Kao Kirei Lifestyle Plan Progress Report 2020 Contents Kirei Lifestyle Plan

2019 Our initiatives Editorial Policy CEO Message Making my everyday

Making thoughtful choices more beautiful for society Kirei Lifestyle Plan KPI definitions choices for society Making thoughtful

Sustainable lifestyle promotion ...... 60

Purpose driven brands ...... 65

Transformative product innovation ...... 68 Independent assurance report

Responsibly sourced raw materials ...... 72 healthier Making the world & cleaner Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 59 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 60 Policies has become a part of many Our product lineup more their lives to make helping daily lives, people’s it is our responsibility to take believe comfortable. We for society by building example the lead in setting an sustainable lifestyles. technical promote will actively we as characteristic of Kao as well that are In particular, innovations human life lifestyle solutions, to realize sustainable is an important with respect to climate change, which societal challenge, starting with the SDGs. will offer environmentally friendly, we of Specifically, sustainable products through the Yoki-Monozukuri Our goal is to generate products themselves. daily-life and aspect of the environment returns to every our products. consumers choose society whenever range of marketing, In addition, through our wide and awareness- information dissemination, education understanding to foster will strive raising activities, we of of the importance by consumers themselves with them to sustainable lifestyles, and collaborate in order to promote contributions to sustainability, on society. a major impact achieve 102-12, 102-15, 103-1, 103-2 103-1, 102-15, 102-12, Contributions to the SDGs Risks related to realization of our vision by 2030 by of our vision to realization Risks related sustainable fail to practice the that if we believe We demands, or to offer lifestyle- manufacturing society could not only and services, we transforming products our brand, but also negatively damage the value of social values and hinder the global and impact new society. realization of a sustainable of our vision to realization Opportunities related 2030 by influenced lifestyles have Since our founding, we through our business activities in continuous also contributed have collaboration with consumers. We with 130 years to the realization of a sustainable society and by never of accumulated original technology, in our and comfort compromising on convenience this is what believe lifestyle solutions. We product driven In addition, by a global profile. has enabled us to achieve educational ideas for living reinforced by offering new the can maximize efforts, we and awareness-raising consumers global effect of a significant number of choices. adopting the habit of making more sustainable will contribute to addressing the we In this way, challenges facing the global environment.

Responsible consumption is also an important theme of Responsible consumption is also an important the SDGs. Our mission is to support consumer through our cleanliness, beauty and health in daily life positions us to cosmetics and daily use products. This products of living through ways offer consumers new around and services, and collaborate with consumers of people to realize enrichment of the lives the world of the world. globally and contribute to the sustainability life to selection on the part of consumers in daily Our aim is for a little adaptability and product of a sustainable contribute effortlessly to the realization this through Yoki-Monozukuri will achieve We society. responsibility to and daily life solutions, which reflect our that will contribute to overall a way in innovation drive will become an we In this way, social evolution. enterprise chosen by consumers and customers. Kao’s creating value Kao’s creating Our rich lifestyles are supported by consuming the Our rich lifestyles are in science and technology resources. Progress planet’s but at the standard of living, has enhanced humanity’s economic activity is exhausting same time, inappropriate the environment. resources and destroying private it behooves offer products enterprise not only to use its strengths to society, build a sustainable To sustainable lifestyles, and services, but to offer new, learn about along with information to help more people those lifestyles. Social issues we are aware of aware are Social issues we Kao’s creating value to address to address value Kao’s creating social issues Enable people to live more sustainable lifestyles through information, services and products that save precious resources such as energy and water. resources such precious that save services and products information, through lifestyles more sustainable to live Enable people Sustainable lifestyle promotion promotion lifestyle Sustainable Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 61 Improved quality of life/Framework Improved p. 44 Making my everyday more beautiful > everyday p. 44 Making my ➡ accordance with the 19 actions of our Kirei Lifestyle of our Kirei Lifestyle with the 19 actions accordance at reports are issued progress status Plan. Activity by Meetings hosted ESG Promotion company-wide and progress for Department, the ESG Promotion divisions is monitored at monthly individual company ESG Promotion Meetings. and targets Mid- to long-term performance Mid- to long-term targets for society,” Based on “Making thoughtful choices all one of the three Kirei Lifestyle Plan commitments, choices Kao brands will facilitate small but meaningful a more resilient on the part of the consumer to realize and compassionate society. mid- to achieving Anticipated benefits from long-term targets related to activities By engaging in awareness-raising can further we believe sustainable lifestyles, we reinforce consumer preference for ethical solving social contribute to consumption, and even heightened challenges. In addition, if consumers with will we choose our products, actively awareness comfortable contribute to the realization of abundant, challenges, as the solution of social lifestyles as well to our and reinforce long-term consumer loyalty brands. 102-43, 103-2, 103-3 103-2, 102-43, Decarbonization/Education and promotion: “eco Decarbonization/Education and promotion: together” with consumers/customers Collaboration with stakeholders waste: Zero based on “eco together” and promotion: conservation/Education Water “eco together” with consumers/customers Implementing education conservation: Water and activities based on “eco together” p. 85 Making the world healthier & cleaner > p. 85 Making the world ➡ healthier & cleaner > p. 114 Making the world ➡ healthier & cleaner > p. 119 Making the world ➡ healthier & cleaner > p. 124 Making the world ➡ sustainable life solutions and ethical consumption ethical consumption life solutions and sustainable selection and the point of brand options at purchase. as our products as well basic functionality of promote reductions in guidance for their use, when the product is used environmental impact consumers/customers). (“eco together” with disposal after the waste to ensure appropriate product is consumed. Framework a major shift to ESG announced In FY2019, we Lifestyle Plan, management, and formulated the Kirei ESG The which is the vision of that management. Business, Division will lead collaboration with our & Manufacturing, Supply Chain Management ESG-based Logistics and Sales divisions to promote promotion of the Kirei Lifestyle manufacturing, toward Plan. Each individual activity will be performed in • By offering information to consumers about the to consumers By offering information • local government Collaboration with distributors and •

manufacturing and products themselves. and products manufacturing lifestyle solutions. and public institutions. companies, organizations efficiency and reduce environmental impact, and efficiency and reduce environmental realize “white logistics.” • Collaboration with retailers and distributors to offer Collaboration with retailers • Collaboration with our diverse stakeholders is stakeholders Collaboration with our diverse and spark essential to enhance consumer awareness and lifestyles. lives to change people’s a movement collaboration with are promoting with respect to the following. As such, we stakeholders Collaboration with distributors to boost transport • Collaboration and engagement Collaboration with stakeholders Through the foregoing activities, we will educate will the foregoing activities, we Through of product selection, so that consumers at the point choices contributes to making each of their daily life In addition, more achievable. sustainable lifestyles points and with respect to our consumer contact engage actively will outlets of our retail customers, we and in communication relating to the environment and energy conservation, and as water hygiene as well we particular, activities. In promote awareness-raising for the next activities will engage in awareness-raising importance generation, to learn about and realize the of responsible choice. Four actions Four solutions through Propose sustainable 1. to sustainable related Disseminate information 2. opportunities for hands-on learning. Offer 3. with educational activities in collaboration Conduct 4. Sustainable lifestyle promotion promotion lifestyle Sustainable Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 62 Addressing the environmental challenges the environmental Addressing containers by presented to technology effectively new Our aim is to deploy by example reduce the environmental impact, for bottles to transitioning almost completely from plastic shampoo like refillable film containers for products set a have and conditioner by 2030. In addition, we goal of boosting production of environmentally by 2030. friendly containers to 300 million units from plastic bottles is being acceleration away our activities to date, but also our not only by The driven of our proprietary the deployment efforts to expand , which dramatically Refill Eco Pack Raku-raku as a primary simplifies the product refilling process, package. has already been Refill use of our Smart Holder in conjunction with Eco Pack The our Raku-raku considering a are we commercialized. Going forward, Eco solution for the bath area in which Raku-raku , be suspended from a Smart Holder Refill would Pack with appropriate amounts of product dispensable with a single push. 416-1 Hydrophilic group Hydrophilic Lipophilic group Lipophilic group (hydrophobic chain) (hydrophobic Bio IOS molecular structure model. water. Hydrophilic group: part with high affinity to affinity to fats. Its Lipophilic group (hydrophobic chain): part with high a hydrophilic group at special structure has a long lipophilic group with its midsection. used for limited purposes. The ability to utilize this The used for limited purposes. and the fat source effectively, heretofore hardly-used from algae, future prospect of using fats extracted base for Bio IOS a highly sustainable detergent make the future. use as a sustainable practical Bio IOS first saw detergent base in Attack ZERO, a concentrated liquid laundry detergent launched in 2019.

Our initiatives

Bio IOS is a unique surfactant, highly soluble in water soluble in water Bio IOS is a unique surfactant, highly affinity to while at the same time retaining its high stable through to globalized, a view oils. With our are reviewing production and procurement, we research results and manufacturing existing to of that review and using the fruits technology, molecules. new design and develop 12 to 14 carbon chains of fatty materials have made from naturally Most cleaning surfactants derived are less atoms, because agents with longer chains materials with 12 fat raw However, soluble in water. 5% of to 14 carbon atoms account for only about must total oil-based ingredients, and manufacturers material. compete for supplies of this scarce raw residue remaining from the of oil palm. from the fruit Bio IOS is extracted when palm oil is extracted oil ingredients Out of all the natural vegetable in FY 2017), (190 million tons in the world marketed oil. The palm oil is the most widely used multipurpose solid fats obtained from the residue of the oil have only been conventionally long carbon chains and have Solutions from materials: Solutions from base Bio IOS detergent of sustainable Development exemplified by our sustainable detergent base, single-rinse laundry detergents and sustainable detergent base, single-rinse by our —exemplified products and product packaging innovations will create environmentally friendly We and products themselves. lifestyle solutions based on manufacturing —and promote sustainable rapid-rinse shampoos Solving problems through manufacturing and products themselves and products manufacturing through Solving problems Sustainable lifestyle promotion promotion lifestyle Sustainable Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 63 Disseminating information information Disseminating living to sustainable related consumers from questions Responding to active to offer active praise for our efforts are drawing We media, such as Yahoo! support through social and with housekeeping- Chiebukuro, to consumers concerns. beauty-related information related to housekeeping, offer to a answers provided We and have beauty and health, 4,000 queries since 2015. Our over total of cumulative are posted specialist knowledge responses based on enables other consumers with to social media, which We similar concerns to benefit from the responses. of the Activity Prize the Consumer-Oriented received in Activity Awards Consumer-Oriented 3rd ACAP 2018. eco together website Environmental disseminate we our eco together website, Through information that contributes to environmental students. In learning, principally for elementary school for promote awareness-raising addition, we related to as children, consumers of all ages as well lifestyles. environmentally friendly activities and products from living Ideas for advocating social impact by to achieve strive We our product environmentally friendly living through awareness communication, and by raising consumer of sustainable lifestyles. hope that our product standards In addition, we will be adopted by competing companies, enabling us greater impact. to demonstrate an even 102-43, 416-1 102-43, s. Speeding up the shift away from plastic bottles plastic from Speeding up the shift away film containers the adoption of new through Future attention, we will do so using attention, we in an environmentally paper, conscious way. stickers. methods to eye-catching the total elimination of eye-catching the total elimination of eye-catching plastic sticker Total elimination of Total plastic eye-catching stickers • to call consumers’ necessary Where • communication Seeking alternative • will promote we Going forward, down thousand tons reduction

Hanging package solution with dispensing hooks and downward Plastic 74% 93.1 Efforts to shift away from plastic bottles plastic from to shift away Efforts Raku-raku Eco Pack Refill + Eco Pack Raku-raku Smart Holder solution Evolution Speeding up the shift away from plastic bottles from the shift away Speeding up Product design that adds value after, and not just up to, purchase by the consumer the by and not just up to, purchase after, design that adds value Product

Plastic bottle reuse

To the To present Reduction of plastic waste through through Reduction of plastic waste and concentration product refills, packages larger Manufacture The challenge of eliminating eye-catching plastic stickers challenge of eliminating eye-catching The Promoting the shift away from plastic bottles through the adoption of new film containers adoption of new the through plastic bottles from away the shift Promoting air the insertion of of film alone, consisting type. While container new Bottle is a revolutionary Film Air-in The package this to develop will continue We as primary packaging. and function own bottle stand on its the allows recyclable. will be completely type, which Eye-catching plastic stickers provide consumers with consumers provide plastic stickers Eye-catching correct information on product advantages and they is over, usage. At the same time, after their role become waste. to completely eliminate the use of are working printing the by by 2021, for example We these stickers on the package itself. convey information they Sustainable lifestyle promotion promotion lifestyle Sustainable Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 64 International Environment Painting Contest for Contest for Painting International Environment Children raising activities at EcoPro 2019 raising activities at EcoPro Corporate citizenship activities: The Kao Corporate citizenship activities: The ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=78 Corporate citizenship activities: Awareness- ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=79 The Kao International Environment Painting Painting Kao International Environment The Children Contest for for Contest Our International Environment Painting Children aims to raise environmental awareness with paintings expressing generation, among the next our critical global should preserve we how environment for the future. a total of 2019, drew Our tenth contest, held in 16,552 entries from around the world. Awareness-raising activities carried carried activities Awareness-raising and organizations society, out with institutions public opportunities at Utilizing awareness-raising and other exhibitions EcoPro engage in direct we exhibition, At our annual EcoPro designed generation the next communication with with higher- awareness, environmental specifically to foster students as the main target. grade elementary school 102-43 next-generation through providing education in providing through next-generation and educational materials the classroom Corporate citizenship activities: Support for school Corporate citizenship activities: Support for plant and museum tours education through www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=78 Corporate citizenship activities: Education for the Corporate citizenship activities: Education for ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=77 ➡ Education programs with hands-on with Education programs and at worksites experiences environmental plants offer we plants and museum, At our worksites, about environmental opportunities to learn through hands-on awareness technologies and raise for elementary and junior high primarily experience, 32,000 elementary school students. Approximately students from around 870 and junior high school participated in plant tours. schools have lessons and hand-washing Promoting housecleaning classes on participating nationwide educational frontlines been offering visiting classes to have Since 2009, we students correct hand-washing teach young date, To as classes in cleaning. technique, as well students 81,000 kindergarten and elementary school these classes. experienced have Offering opportunities for for opportunities Offering hands-on learning Lifestyle Research introduces Kirei Living Research introduces Lifestyle ➡ (Japanese) www.kao.co.jp/lifei/support/

Offering environmentally conscious ideas for living. Sustainable lifestyle promotion promotion lifestyle Sustainable Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 65 Habits for cleanliness, beauty & health/ Habits for habits for to cultivate Educational program cleanliness, beauty & health p. 49 Making my everyday more beautiful > everyday p. 49 Making my ➡ activity, starting by clarifying the purpose of each by clarifying the purpose of each starting activity, brand. promotion Education and consumers is essential for Communication with on daily life, society and the impact making a positive attitude and participating in brand earth. Conveying create social activities in order to awareness-raising change together with consumers is important. develop able to were instance, with Bioré, we easier, hand washing For a foam hand soap that makes Song children can Hand Washing along with a Foamy their hands with it. We wash singing as they enjoy and also distributed it to educational institutions, have conduct visiting classes, including hand-washing lessons led by our employees. emissions and contribute toward the toward emissions and contribute 2 102-12, 102-15, 103-1, 103-2, 404-2 103-2, 103-1, 102-15, 102-12, reduction of environmental impact. purpose based Each of our brands has a different on various social issues, and by responsibly them to manufacturing products and providing is able to that their usage believe consumers, we 12. of Goal contribute to the achievement refer to brand purpose, we it comes to Kao’s When on daily life, can make impacts we what positive society and the earth. brand include activities of our purpose driven of why the efforts: 1. an explanation The the following 3. where 2. specific brand actions brand exists year of communication is concerned, in 2019, the first Contributions to the SDGs Contributions to the to depend social issues each brand contributes The example, For the value it provides. on its category and containers that are easy providing and by developing with disabilities can use those to use for anyone, which contributes to the them without difficulty, no one behind. of leaving fundamental SDG target can less rinsing during washes Products that require reduce CO Policies

Kao’s creating value Kao’s creating and practice Each brand should clarify its purpose including communication with initiatives, diverse better encourage consumers. In doing so, we for them to and choices while advocating behavior to a of people and to contribute enrich the lives sustainable society and the earth. Social issues we are aware of aware are Social issues we — in is changing dramatically live situation we The are environmental issues such as there globally, marine plastics, and within Japan, climate change and society along with an approaching super-aging in values and in race. diversity while all of it comes to conducting business When convey this is going on, it is important to correctly with connect branding, through which we impact it will consumers, and what kind of positive It is on daily life, society and the earth. have all stages— necessary to clarify brand purpose from end of use—as from basic design to processing at the and other as communicate with consumers well create a better can and through this we stakeholders, society. Kao’s creating value to address to address value Kao’s creating social issues Every Kao brand will have a purpose that offers solutions to social issues within the communities or societies it touches. or societies the communities to social issues within solutions offers a purpose that will have Kao brand Every Purpose driven brands brands driven Purpose Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 66 Performance in 2019 Performance of to clarify the significance decided In 2019, we Lifestyle the Kirei purpose. From each brand’s brand is reviewing each brand Plan perspective, what good impact it will have design and defining planet. society and the on our lives, globally in 2020. expanded start in Japan and will be effort will This which has been further our “Brand-Purpose,” that consumers can feel sure will make We and the purpose enhanced with purpose, incorporated in its products. 102-43, 103-2 102-43, Targets for 2020 for Targets the significance of all Kao explain As a first step, brands. 2030 long-term targets a make it so that 100% of our brands will make We social issues and promote contribution to solving and society with our lives people’s empathy toward brands’ social missions. mid- to achieving Anticipated benefits from long-term targets Business impacts support of meaningful brands leads to the growth The it as a result, makes and of brands and the company, social issues. in new possible to invest Social impacts empathy and support from consumers, we Through daily life, impact on a positive are able to make society and the earth. Mid- to long-term targets and and targets long-term Mid- to performance Improved quality of life/Framework Improved p. 44 Making my everyday more beautiful > everyday p. 44 Making my ➡

Framework Of the 19 actions included in our Kirei Lifestyle Plan, Of the 19 actions included in our Kirei of life, habits for cleanliness, beauty quality improved product design, sustainable & health, universal brands are lifestyle promotion, and purpose driven being promoted as a common framework. Initiatives for an aging society for Initiatives and offices, local governments In cooperation with expectancy healthy life to extend are working we have fat they much visceral through visualizing how citizens to at measurement sessions, encouraging and offering them healthy meal menus. walk Next-generation awareness raising awareness Next-generation to each conduct educational activities tailored We and environmental programs, in brand. Our hygiene been adopted by many educational have particular, institutions. Collaboration and engagement and engagement Collaboration with stakeholders Purpose driven brands brands driven Purpose Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 67 416-1

Our initiatives

Attack ZERO Attack Attack ZERO laundry detergent, launched In 2019, we changes in society including it to fit redeveloping at one time and room drying increased laundry loads water- advancements in society, due to women’s and the machines, drum-style washing saving synthetic increase of clothing made of functional stains, zero zero difficulty to remove fibers. It leaves and musty odors, and zero detergent residue, clothing after each wash. to revive yellowing removes is the product of base of these developments fruit is the surfactant called Bio IOS. Oil palm The a new by taking main ingredient used for surfactants, and collecting after squeezing when residue leftover been discarded, edible palm oil, which had previously that meets able to create a detergent base were we the needs of society but is also sustainable. the design resources become limited. From to increase, the As the population continues earth’s developing Bio IOS, through stage of products like technology that is conscious of the global the Attack brand not only believe environment, we continues to an impact on daily life, but also makes contribute to society and the earth. Recently developed products products Recently developed and technology Purpose driven brands brands driven Purpose Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 68 Contributions to the SDGs build a safe society. strived have we the human perspective, From to enhance consumer quality of since our founding can lead comfortable, life (QOL). So that everyone our efforts to will continue we beautiful, healthy lives, of beauty and value, and senses satisfy diverse human big data to improve research the use of for innovate motion and cognition, to enable us to richer lifestyles. of to realization Risks and opportunities related 2030 our vision by range of risks, a wide involves Promoting innovation as to product development such as number of years and as the business environment changes well opportunity involve uncertainties. Schedule delays also for but loss, not only in terms of investment publicize them we important innovations, For society. wisdom to society at an early stage, and by gathering to convert through co-creation and dialogue, seek products. ideas into businesses and imaginative 102-12, 102-15, 103-1 102-15, 102-12, Kao’s creating value Kao’s creating that gather innovations address social problems, To to enable people everywhere To wisdom are essential. R&D activities are promoting we enriched lives, enjoy environmental, social and from three perspectives: human. 4R principle to our packaging forms while applying the are evolving we environmental perspective, the From with the goal reduce the amount of plastic in packaging, to are working We of realizing a recycle-based society. lighter resins, recycle used refill stronger, develop material quality the uses, and achieve packaging for new of recycled the use and functionality needed to allow We are also materials for the same packaging and film. due to products to reduce environmental impact working promoting research in an effort to and are themselves, during their use. water and energy to conserve ways find more hygienic society by using to are working we the social perspective, From realize a cleaner, more safer, microbial control technology to develop We reliable disinfectant and antibacterial products. prevention this technology toward are also deploying substantive of viral and disease infection through In addition, elucidation of the causes of infection. VISCO TOP, which does not cause water products like for pollution, and other highly functional chemicals construction use, contribute to the making of tough, robust roads, bridges and other structures, and help

2 oday, plastic film is typically subject to oday,

Recycling for same-product production with no reduction of Recycling for same-product production with no reduction T strength, durability or quality. cascade recycling, in which materials are recycled into material of cascade recycling, in which materials are recycled quality and functionality than the original. lower * Total recycling Social issues we are aware of aware are Social issues we and technology has benefited our Progress in science and Governments ways. lifestyles in numerous science and to deploy enterprises are working the pollution and health technology to address as a side effect of progress. But problems that arise mass consumption society is of the the expansion and CO driving a global-scale increase in waste emissions, and to address these challenges, cross- emissions, and to address these challenges, must we example, border efforts will be essential. For film to reduce the usage of plastic way find a total recycling* strategies packaging and make Goals (SDGs) possible. Sustainable Development and incorporate a call for Responsible Consumption that responsible believe Production, and we production includes reuse of waste. of people movement In addition, the expanding the risk of and products around the globe heightens be may infectious disease spread. Climate change to safe another risk factor in this respect. Access society supplies, and maintaining a hygienic water are important goals. while conserving water, Kao’s creating value to address social issues to address value Kao’s creating Pursue essential research to unleash breakthrough innovations that help realize more sustainable lifestyles by solving social issues and easing people’s and easing people’s social issues solving by lifestyles more sustainable that help realize innovations to unleash breakthrough essential research Pursue pains. Transformative product innovation innovation product Transformative Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 69 science Water science science Foam Surface science science Fiber Enzyme science science Photo Microbial Applied Essential Research on Materials Research Technology science science Plant Environmental Research Research Raw Materials Essential Analysis Industrial Research Consumer Research Product Development Fundamental Technology science science Neuron Safety Technological Design Elements Fundamental Core Technologies 103-2 Product Design science science Brain Metabolism science science Health Aroma Essential Research on Humans Hair science Skin science Essential Research Essential es through innovation, promoting research es through innovation, s liv

activities in two directions. activities in two businesses and seeds for new to create is the promotion of technology One direction innovation Essential by is driven innovation products. This of phenomena that the essence believe Research. We of science eyes and objects as discerned through the positive that has a major can lead to innovation influence on lifestyles. recasting our other direction involves The an ESG accumulated technology assets from the planning and incorporating them in perspective, out that of Kirei Lifestyle products. In carrying driven planning, business strategies for a purpose and brand, assurance of high safety and quality, with low and procurement of materials development environmental impact are essential. the accumulation of these innovation a social Through to have activities, our aim is for all Kao brands on people and influence a positive mission and exert society. We have adopted the following three basic policies three basic policies adopted the following have We for our R&D activities. businesses. the seeds for new Create 1. customers’ that creates new innovation Bring about 2. domains. business needs in existing with society. Share scientific technologies 3. seek to enrich these basic policies, we Based on people’ Policies Transformative product innovation innovation product Transformative Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 70 Performance in 2019 Performance in 2018. Technology Fiber Fine developed We technology has applied in a wide range from This to to skin care, that respond foundation makeup their consumer desire for products reflecting open accelerated In 2019, we individuality. a small, high-performance developed innovation, and launched it in conjunction with diffuser, specialized skin care products. sustainable policies from the environmental, will systematize our we forward, Going to offer impactful social and human perspectives technologies and products. impact on lifestyles by 2030. impact on guidelines to 100% which meet Kao sustainability by 2030. 2030 long-term targets 2030 long-term major positive products with a Offer 10 or more • products or improved of new Increase the ratio • to mid- achieving from Anticipated benefits long-term targets Business impacts or improved higher sales from new will achieve We business areas through R&D new products and create activities. Social impacts environmental and social issues and will solve We offering businesses and products by create new society and recycle-based for the new innovations healthy lifestyles. 102-43, 103-2, 103-3, 404-2 103-3, 103-2, 102-43, Planning Group Research Strategy Research Material science analysis) (interface, science (biology) Life technology Production development) (processing Human science (emotion) science Environmental (packaging, safety)

Chemical

Fabric and Home Care

Human Health Care

Skin Care and Hair Care Research and Development Division and Development Research

Cosmetics We will strengthen existing businesses and offer new businesses and offer new will strengthen existing We are We business boundaries. within existing innovation such domains businesses in to generate new working prevention: as hygiene, centered on infectious disease health and beauty maintenance using biological information including RNA: and domains related to preservation of the environment, including recycling. Research and Development structure and Development Research and Mid- to long-term targets performance 2020 mid-term targets D policy sharing with R&D policy sharing the R&D Division. and strategy and business divisions, management each confirmation at and progress implementation the yearly out as part of are carried research facility, and results in faster decision making plan. This growth. accelerated global

To gather knowledge across business and across business and gather knowledge To are promoting matrix technological boundaries, we management. Each research facility reports directly to Multi-faceted linkage and collaboration between between Multi-faceted linkage and collaboration are and other players universities government, industry, and social challenging environmental necessary to solve of this approach. is one example issues. Open innovation gained from R&D to present knowledge are working We research activities through academic societies and obtain To papers, and propagate science and technology. convey we broad consumer support for those activities, through the value and future of science and technology activities. dialog and awareness-raising D activities requires opportunities for all of requires opportunities R&D activities Promoting latest with the themselves staff to familiarize our research results, and occasions where technology and research this end, we to generate ideas. To can collaborate they to all report database that is available maintain a research hold presentations to facilitate discussion research staff, invite specialists to give across business boundaries, research guidance, and offer a wide lectures and provide the have similar opportunities. These range of other, and innovation. discoveries potential to lead to new Framework Collaboration and engagement Collaboration with stakeholders Education and promotion Education Transformative product innovation innovation product Transformative Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 71 Surface science: Utilizing Bio IOS and algae science: Surface ecosystems preserving Due to global population growth, materials that and ensuring a stable supply of surfactant a challenge. materials has become use natural fats as raw new Bio IOS, a sustainable developed In response, we the oil palm that detergent base produced from a part of in surfactant little application has traditionally had very detergent base is highly hydrophilic yet materials. This into and work also highly lipophilic, which enables it to used in detergent while not readily stains when remove leading to remaining as a residue in laundry items, water consumption. benefits including reduced demand is anticipated. significant future Consequently, that take manufacture surfactants made from microalgae to on a project to are also currently working We does not the place of natural fats. As algae production to compete with food production and algae are expected are focusing our we demonstrate high fat productivity, microalgae application. efforts to achieve machine learning, deep learning and other AI machine learning, deep with research and are proceeding technologies. We QOL and of improved in anticipation development skin by healthier customers to achieve empowering offering appropriate care methodologies. Health science: RNA Monitoring a proprietary announced RNA Monitoring, In 2019, we of the analysis technology enabling comprehensive 10,000 varieties of RNA expression approximately DNA is useful in information contained in sebum. While innate characteristics, RNA is assessing a person’s of day-to- especially useful for understanding the state and other changes influenced by environmental day also have we factors. Using RNA obtained from sebum, to detect demonstrated the ability of this technology of patients characteristic changes in the skin condition can lead suffering from atopic dermatitis. Skin problems have We QOL, making them a social issue. to lowered Inc. Networks, announced a collaboration with Preferred begun a project to understand the skin and have condition of individual customers by combining large data sets of RNA reflecting individual differences with

Our initiatives

color pores, products that firmly cover base makeup of will promote the development we Going forward, In the future, irregularities, spots and other imperfections. to create Technology Fiber will also aim to use this Fine we value in the medical field, such as contributing to skin new laser treatments and treatment of skin care following maladies accompanying injuries. and the Veil able to create this ultra-thin membrane at home a small, high-performance diffuser developed In 2019, we on the layers used with the diffuser to create ultra-thin Potion then launched sales skin along with a specialized essence. We skin care in a of the skin care products to offer moisture-rich diffuser was regimen. Our small, high-performance two-step Corporation’s in collaboration with Panasonic developed appliance technology. a leader in beauty Appliances Company, Skin science: Fine Fiber Technology Technology Fiber Skin science: Fine which Technology, Fiber Fine developed In 2018, we a diameter of 1 depositing ultra-fine fibers with involves create an ultra- micrometer or less directly on the skin, to membrane is light and soft, membrane. This thin, multilayer of the skin while being resistant the movement and follows It does not create a completely sealed layer peeling off. for adequate despite fitting naturally on the skin, but allows used with it moisture permeability and distributes products throughout the entire membrane. At the Kao Group Technology innovation session in November 2018, we announced our new technologies in five domains: skin, health, hair, surface chemistry and surface chemistry hair, domains: skin, health, technologies in five our new announced 2018, we session in November innovation At the Kao Group Technology products. of new and is leading to commercialization enterprises in other business domains, accelerated collaboration with presentation environment. This Recently developed products and technology products Recently developed Transformative product innovation innovation product Transformative Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 72 Contributions to the SDGs Contributions to the 102-12, 102-15, 103-1, 103-2 103-1, 102-15, 102-12, Risks related to realization of our vision by 2030 of our vision by to realization Risks related include supply risks relating to the Procurement risks materials and other goods, of raw stable procurement the potential to which have and reputational risks, of not appropriately responding manifest in the event to social issues. measures such as taken have Although we reputational drafting BCP for supply risks, addressing issues has risks in terms of social and environmental years. on greater importance in recent taken of our vision to realization Opportunities related 2030 by risks, we appropriately address the aforementioned To based on are conducting human rights due diligence and supplier risk the Kao Human Rights Policy, for Supplier’s assessments based on the Guidelines Assessment for social issues, and promoting based on the procurement of palm oil, paper and pulp of Raw Guidelines for Sustainable Procurement that believe Materials for environmental issues. We and this approach will resonate with consumers good facilitate stable procurement that preserves lead to even relations with suppliers, and as such can corporate and enhancement of corporate growth value.

Kao’s creating value Kao’s creating natural capital. Our business is greatly dependent on our ESG management requires us to conduct both the procurement with full consideration for environment, including resource conservation, and climate change, and preservation of biodiversity, At the same time, including human rights. society, and changing response to a changing market flexible digital of demand will require the deployment that technology and operational innovation these two categories. With transcends existing Division considerations as priorities, our Procurement . Yoki-Monozukuri is promoting ESG-driven Social issues we are aware of aware are Social issues we for products, materials In procuring raw due and loss of biodiversity environmental destruction producing area at the to indiscriminate development issue. has become a serious of laborers, safety Protecting the human rights relocation of and hygiene management, the forced and damage to local residents from producing areas, chain, health are also pressing issues in our supply materials and services. raw which provides Kao’s creating value to address social issues to address value Kao’s creating Source our raw materials in a way that protects natural resources, the environment and human rights through supply chain traceability and collaboration and collaboration chain traceability supply human rights through and environment resources, the natural that protects materials in a way raw Source our with suppliers. Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 73 the CDP Supply Chain Program, and developing our our and developing Chain Program, the CDP Supply activities. global procurement by such as those hosted through programs NGOs, and with continuing our dialogue are we Moreover, are carrying out meetings we Japan, Caux Round Table visiting small-scale palm farms. with local NGOs and to realize and JaSPON, which strive SUSTAIN participate in such organizations as also We in engaging and traceability, sustainable procurement and with other enterprises opinion exchange active organizations. Framework Procurement Division formulates strategy to The It has conduct sustainable and responsible procurement. Division set up the Sustainability Group in the Planning Panel, and the Sustainable and Responsible Procurement year. times a which meets five Materials Division conduct procurement the Packaging and Materials Division the Raw Under this strategy, in accordance with the Guidelines for Sustainable the Indirect Materials. Meanwhile, Procurement of Raw Materials & Services Division conducts green purchasing & of office and other supplies, and the Machinery Equipment Division is introducing environmentally friendly equipment and fixtures. via Division are reported to the Board of Directors strategy and activities of the Procurement The reports to the Management Committee. Global Procurement Meeting is held once a year. The ESG and stable organizational structure. With our revamped Furthermore, in January 2020 we pursue procurement as priorities, the division will procurement activities with a policy of acting as a advantage. competitive strategic coordinator to preserve 102-20, 102-43, 103-2, 404-2 103-2, 102-43, 102-20, Materials Guidelines for Supplier’s Assessment ➡ Guidelines for www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/procurement- supplier-guidelines.pdf of Raw Sustainable Procurement Guidelines for ➡ www.kao.com/content/dam/sites/kao/www-kao- com/jglobal/en/sustainability/pdf/procurement-raw- materials-guidelines.pdf We are promoting opinion exchanges with suppliers are promoting opinion exchanges We meetings quality improvement summits, through vendor for supplier utilize Sedex We and other initiatives. and membership monitoring, and by mandating Sedex are undertaking to assess risk for our response, we are strengthening coordination entire supply chain. We including with our suppliers through various initiatives Education and promotion of our carry out responsible procurement, each To acquire the must Procurement Division employees understand and ensure that they needed knowledge, and related for Procurement and adhere to the Policies not only conduct a wide this end, we guidelines. To activities, promotion range of seminars and awareness Meeting. but also hold an annual Global Procurement and engagement Collaboration with stakeholders non-food biomass sources such as algae, striving to as algae, striving sources such non-food biomass that procurement and responsible promote sustainable ethical issues that have consideration to the due gives process of globalization. into relief by the been thrown

We have formulated Guidelines for Supplier’s for Supplier’s Guidelines formulated have We Sustainable Procurement and Guidelines for Assessment facilitate the practical Materials to of Raw activities in accordance implementation of procurement for Procurement. with our Policies which position Assessment, Guidelines for Supplier’s activities based on our conduct procurement We . In partner in Yoki-Monozukuri suppliers as an essential priority to those give we our procurement activities, importance on social responsibilities, suppliers that place regulations and social with laws, including compliance human rights, assurance of health norms, protection of that and safety and fair trade, and to those suppliers such as the collaborate fully on environmental issues consider to we environmental management system that also prioritize eco-friendly be important. We materials and packaging. procurement of raw issues concerning the aforementioned provisions Our standard contract with suppliers clarifies and labor. including the environment, human rights Procurement of based on the Guidelines for Sustainable are also pursuing sustainable procurement We environmental into account Materials, which takes Raw the loss of and problems including global warming as resource constraints, human as well biodiversity rights and other pertinent issues. supply capital, and that a natural resource-dependent understand that our business depends on natural We commit We chain entails a risk of damage to that capital. procurement of to zero deforestation at the source in our the Over materials including palm oil and paper. raw will be taking measures to medium and long term, we materials that needs to be reduce the amount of raw to the use of used, and other measures to switch over Policies Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 74 ested at plantations certified by the RSPO that meet ested at plantations certified A roundtable group to promote the production and use of A roundtable group to promote sustainable palm oil. www.rspo.org/ SCCS (Supply Chain Certification System) SCCS (Supply Chain Certification for the purpose of producing, A supply chain system created using sustainable products to customers selling and delivering palm oil harv preservation. rigorous standards for biodiversity *1 RSPO (Roundtable on Sustainable Palm Oil) on Sustainable Palm RSPO (Roundtable *1 *2 Anticipated benefits from achieving mid- to achieving from Anticipated benefits long-term targets Business impacts criticism from NGOs Reduced costs of addressing social brand image, improved and NPOs, improved credibility. Social impacts world Contributions to the sustainability of the materials procurement. through raw 103-2, 103-3 103-2, emissions 2 factors. 2. Human rights initiatives 2. Human in 2015 Policy established the Kao Human Rights We risks associated with human rights to address various also we activities, our own issues. In addition to activities embody respect request that our suppliers’ on the Guidelines for for human rights based conduct human rights we Assessment, and Supplier’s due diligence accordingly. this risk assessment, in 2014 we conduct for sharing information on a platform To joined Sedex, been have global companies. We ethical practices by By Sedex. also encouraging our suppliers to join Sedex a 70% rate of aim to achieve 2020, we a purchasing participation (for suppliers in Japan, on value basis). also implemented have Starting from 2017, we supplier risk assessment using Sedex. procurement 3. Green regard to purchasing of indirect materials such With with the as stationery and office supplies, in line calls to implement Ministry of the Environment’s formulated Green have green procurement, we to priority Procurement Standards, which give products. purchasing environmentally conscious are also pursuing the introduction of We fixtures such environmentally friendly equipment and with electric as LED lighting, and signing contracts CO low companies that have power and promoting *1 certification and the certification and the *2

raw materials raw

procurement of certified sustainable palm oil, we are sustainable palm oil, procurement of certified zero deforestation in the also aiming to confirm of palm oil producing areas and 100% procurement oil traceable to the source by 2020. and palm kernel and pulp are paper and pulp, we Regarding procurement of aiming to ensure that, by 2020, all paper, and all packaging materials used in our products, paper or paper used in the offices, are either recycled in the paper from a sustainable source. In particular, only pulp aim to purchase case of pulp, by 2020 we the timber that has traceability back to the area where logged. was 2020 mid-term targets 2020 mid-term of sustainable procurement the Promoting 1. are we the goal of realizing zero deforestation, With procuring palm oil, paper and aiming to switch to sources by 2020. pulp from sustainable of palm oil and palm regard to procurement the RSPO oil, besides joining With kernel

Mid- to long-term targets and performance and targets long-term Mid- to Responsibly sourced raw materials materials raw sourced Responsibly the obtainment of SCCS Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 75 Reviews of performance Reviews palm confirmation of traceability to the completed We oil mills. are conducting assessment, we observation in our risk determined to need Regarding palm oil mills on-site visits in stages. confirmation for large palm completed traceability (palm farms), we Regarding production areas pursue traceability will continue to plantations. We and medium-scale farms in confirmation for small- farmers, NGOs, specialists coordination with suppliers, and third-party organizations. areas, traceability for paper and pulp producing nearly 100% once again achieved we In 2019, will continue to our goal for 2020. We achieving suppliers introduce certified products for small-scale and encourage confirmation of sustainability. 103-2, 103-3 103-2, monitoring Decarbonization: CDP evaluation p. 78 Our initiatives: Using Sedex in supplier in supplier Using Sedex p. 78 Our initiatives: ➡ healthier & cleaner > p. 89 Making the world ➡ on Sedex (as of November 2019: S evaluation: 25%, 2019: S evaluation: (as of November on Sedex 40% A evaluation: 2. Human rights initiatives assessments based on been conducting have We these assessments in expanded since 2017. We Sedex new all of our global business and added 2018 to cover standards. evaluation of supplier risk assessment based evaluation Overall • procurement 3. Green percentage of our total procurement conforming to The 90%. was the Green Procurement Standards in 2019 4. CDP evaluation

2

*1 ✓ of certified paper/pulp materials* □ of certified paper/pulp sustainable procurement of paper and pulp sustainable procurement sustainable procurement of palm oil and sustainable procurement oil palm kernel p. 78 Our initiatives: Initiatives toward toward Initiatives p. 78 Our initiatives: ➡ p. 76 Our initiatives: Initiatives toward toward Initiatives p. 76 Our initiatives: ➡

raw materials raw

products). procurement amount and the ratio of certified respective The ratio 2019. materials for the first half and the second half of apart from of certified materials among paper/pulp materials the ratio by corrugated board in Japan is tabulated based on of certified materials for each procured item. weight 100% confirmation of traceability 100% confirmation Of this, 91% Confirmation of traceability to the palm oil mills based Confirmation of traceability on supplier information *1 Covers paper/pulp used in Kao products (excludes some paper/pulp used in Kao products (excludes Covers *1 in Japan, this is calculated based on the corrugated board For *2 • Paper and pulp procurement Paper • • Palm oil and palm kernel oil procurement oil and palm kernel Palm • Performance of sustainable procurement the Promoting 1. Performance in 2019 Performance Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 76 2019 results Completed mill identification, deforestation monitoring for surrounding areas of high-risk Continued investigation mills Promoted 100% shift to RSPO- certified oil for consumer use in 2020 use of RSPO- Promoted expanded certified oil for industrial use Completed traceability confirmation for large-scale palm plantations Continued traceability confirmation for small- and medium-scale plantations for survey SUSTAIN a pilot Conducted small oil palm farmers traceability Completed acquisition in 2018 of RSPO SCCS certifications for 35 sites, including group plants and offices globally for the mills Completed traceability confirmation Targets By the end of 2015, purchase only sustainable palm oil traceable to the mill for use in Kao Group consumer products. By 2020, adequately confirm zero deforestation at the source through cooperation with plantations, suppliers (mills and refineries) and third-party will not organizations. In addition, we part in procurement activities that take use high conservation value (HCV) forests, high carbon stock (HCS) forests or peatlands. By 2020, purchase only sustainably sourced palm oil that is traceable to the plantation for use in Kao Group consumer products.

traceable supply chain for the group. certification of KaoGroup manufacturing sites in order to build a By 2020, towork RSPO obtainSCCS ❶ ❷ ❸ ❹ Sustainable Palm Oil Procurement Guidelines targets and targets Guidelines Oil Procurement Sustainable Palm 2019 performance have oil, we of palm oil and palm kernel In the procurement relating to biodiversity committed to considerations set for zero deforestation, and have conservation and support realization. their four goals toward Products 102-13, 102-43, 308-2, 414-2 308-2, 102-43, 102-13, plant (Kao) Oil chemistry Procurement of Raw Materials of Raw Procurement Guidelines for Sustainable Guidelines for ➡ www.kao.com/content/dam/sites/ kao/www-kao-com/global/en/ sustainability/pdf/procurement- raw-materials-guidelines.pdf e purchased the amount of certified palm oil refinery RSPO-certified palm oil credit trading system. to By purchasing “certification credits” issued in proportion the amount of palm oil produced and registered by oil are plantations certified by the RSPO, users of palm considered to hav oil corresponding to the amount of credits. This system oil corresponding to the amount of credits. This encourages plantations to produce certified oil. A certification system that permits mixing of RSPO-certified palm oil with non-certified palm oil. *1 NDPE: No Deforestation, No Peat and No Exploitation NDPE: No Deforestation, No Peat *1 oil and their derivatives. of palm oil, palm kernel Total *2 Book and Claim system *3 *4 Mass Balance system *4 (year) 92.3 *4 77.7 (Kao Group)

Achieving traceability to oil palm plantations by 2020 to oil palm plantations by traceability Achieving ✓ □ 2 Mass Balance system 54.4 ■

*3 Palm oil millPalm oil mill kernel Palm kernel Palm in our Guidelines for Sustainable in our Guidelines for 34.6 *1 24.2 2015 2016 2017 2018 2019

Our initiatives Book and Claim system 0 ■

80 60 40 20 100 (thousand tons) Oil palm plantations Procurement of Raw Materials. We are also working to are also working Materials. We Procurement of Raw oil, one of our principal palm kernel procure palm oil and sustainable manner as required by the materials, in a raw are and an RSPO member, are also guidelines. We traceable supply chain for palm oil. to create a working Certified palm oil purchases* Palm oil and palm kernel oil procurement oil and palm kernel Palm We support NDPE We Initiatives toward sustainable procurement of palm oil and palm kernel oil palm oil and palm kernel of procurement sustainable toward Initiatives Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 77 g Results Sustainable Palm Oil Network (JaSPON) Oil Network Sustainable Palm Sustainability topics: Participation in the Japan Sustainability topics: Participation ➡ www.kao.com/global/en/sustainability/topics/ sustainability-20190527-001/ Collected location information for each mill, conducted mappin Collected location information Verified 11 palm kernel oil mills that are representative of each are representative mills that oil kernel palm 11 ★ Verified region Conducted 3 on-site investigations, verified information for 5 verified ★ Conducted 3 on-site investigations, primary suppliers mills ★ Identified 89 high-risk Conducted pilot Bluenumber survey of small-scale agricultural of small-scale agricultural pilot Bluenumber survey ★ Conducted producers pilot survey ○ Conducted SUSTAIN Conducted pilot surveys of 3 companies ○ Conducted pilot surveys 5 major companies ★ Verified ★ certification mark differentiates and verifies that the verifies certification mark differentiates and in a manner that is produced product was with environmentally friendly and compatible sustainable social and plan We economic growth. the range of to expand products bearing this logo in 2020. in JaSPON Participation organizations, On April 11, 2019, 18 companies and and including retailers, consumables manufacturers Oil Palm NGOs, established the Japan Sustainable (JaSPON) to accelerate the sustainable Network oil in the procurement and consumption of palm participate in JaSPON as a We Japanese market. director. ★ ○ ★ Progress 308-2, 414-2 308-2, ○ ★ ★ ★ ★ ★ ★ ★★ ★ ★ ★ ★ ★ ★ ★ ○ ○ ★★ ★ ★ ★ ★ ★ ★ ★ ★ ★ ★ Co. A Co. B Co. C Co. D Co. E Co. F Co. G Small Oil Palm Farmers as Part of Efforts to of Efforts as Part Farmers Small Oil Palm Oil Supply Chain Establish a Sustainable Palm Sustainability topics: Kao Holds Dialogue with ➡ www.kao.com/global/en/sustainability/topics/ sustainability-20191002-001/ laundry detergent with the RSPO logo Attack laundry detergent launched in Taiwan launched Attack 2019, Kao (Taiwan) In November types) (nine product laundry detergent powder was the first This bearing the RSPO certification mark. and the first for the Kao market, product in the Taiwan This the RSPO certification mark. Group, to display Dialogue with small oil palm farmers in the participated In 2018 and again in 2019, we (SHE) Programme hosted Engagement Stakeholder Japan), visiting Japan (CRT by Caux Round Table engaging in small oil palm farmers in Indonesia and also participated in a meeting dialogue with them. We with local NGOs to discuss efforts to address environmental and human rights issues. Specific activities y of guidelines for small oil palm farmer engagement y of guidelines for small Conducted surve Verified information on palm oil mills Verified Risk mapping mills Identification of high-risk On-site investigation of high-risk mills On-site investigation Exploring methods to confirm traceability Exploring methods Verified supply chain information for palm kernel oil refineries supply chain information for palm Verified mills, palm oil mills oil for palm kernel Collected location information Scope

initiative that uses blockchain technology to have actors in the palm that uses blockchain technology to have initiative oil industry share supply chain information. [Quaternary suppliers] suppliers] [Quaternary [Primary suppliers] oil refineries kernel Palm (7 companies) [Secondary suppliers] [Secondary suppliers] oil mills (90 mills) kernel Palm [Tertiary suppliers] suppliers] [Tertiary oil mills (862 mills) Palm Small-scale agricultural producers agricultural Small-scale Activities in 2019 2018 ○ Activities in oil ★ Activities to of palm kernel progress Traceability Innovation Alliance): An Assurance & Innovation (Sustainability SUSTAIN * Traceability to small oil palm farmers Traceability member became a founding In September 2018, we to promote traceable and transparent of SUSTAIN* in a participated palm oil procurement. In 2019, we project to create a mechanism for confirming also participated in the traceability for plantations. We Group, which uses Sustainability Assurance Working to regard With blockchain technology. SUSTAIN SUSTAIN traceability for small oil palm farmers, Indonesia. Province, Jambi in survey pilot performed a will further promote traceability confirmation via We these mechanisms in 2020. to also plan to collaborate with stakeholders small farmers. types of support to We begin offering new Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 78 Using Sedex in supplier in supplier Sedex Using monitoring with the in confirming compliance use Sedex We which define Assessment, Guidelines for Supplier’s as the environment, safety, in such areas initiatives and social norms, and human laws conformance with and in risk assessments. rights and labor problems, respond to request that suppliers join Sedex, We and set up data access rights. questionnaires, Sedex of sites for which data access rights number as of the end of worldwide been established The have rights have Japan, data access 2019 is 1,812. Within represent 66% been established for 566 sites, which conducted we procurement value. In 2019, of overall tool for assessment risk assessments using the Sedex rights with Kao established access suppliers that have 2019). (as of November back the results of our assessment to to items that gave will request revisions We the suppliers. We can receive so that the suppliers require improvement we In particular, of A or better. evaluation an overall of C to evaluation suppliers with an overall asked evaluation suppliers with an overall and reply to SAQ, Kao. of − to confirm the status of their link to difficulty joining Sedex, suppliers who have an evaluation form as also use our original survey For we tool to supplement Sedex. the items involving fully revised have We such as confirmation of corporate social responsibility practices, as compliance, human rights and business of environmental confirmation as items involving well protection such as environmental policies, 308-2, 414-2 308-2, For corrugated board in Japan, this is calculated based on the corrugated board in For procurement amount and the ratio of certified materials respective The ratio of certified for the first half and the second half of 2019. corrugated board materials among paper/pulp materials apart from of certified in Japan is tabulated based on the ratio by weight materials for each procured item. * Covers paper/pulp used in our products (excludes some products). some products). in our products (excludes paper/pulp used Covers * procurement of sustainable are pursuing based on our Guidelines materials We pulp raw paper and Materials. of Raw Procurement for Sustainable we FSC-certified paper, Regarding the adoption of for our product packaging in began using the paper company in Japan became the first 2013. In 2016 we corrugated paper. to start using FSC-certified the ratio of certified paper/ pulp As of 2019, or other certification) among materials* (FSC, PEFC 91%. products was our paper and pulp use is now paper we 98% of the copy In Japan, (green procurement). produced sustainably toilet paper in our Japan business and the use of FSC-certified promoted In addition, we paper towels locations. Rate of achievement (%) achievement of the 2020 target 100％ 98％ ― 2019 Performance in Performance Copy paper (green Copy procurement domestic): product: 98% Introduced FSC- certified paper at 8 domestic towels offices Introduced FSC- certified toilet paper at 7 domestic offices Traceable paper and Traceable pulp: 100% (certified paper and pulp: 91%) materials that is more sustainable than natural is more sustainable than materials that and oils fats www.kao.com/jp/en/environment/lca/02/ The Future of Algae Research: a source of raw of raw Research: a source Future of Algae The ➡ Targets

By 2020, we will purchase By 2020, we only recycled paper and paper produced with due consideration for sustainability for the paper and pulp used in Kao Group products, packaging materials and When using pulp office paper. pulp (virgin other than waste will purchase only pulp), we pulp that is traceable to the source, and confirm zero deforestation at producers of materials through wood cooperation with suppliers and third-party organizations. Sustainable Pulp and Paper Procurement Procurement and Paper Sustainable Pulp and 2019 performance Guidelines targets committed to including considerations for have We and our support for zero preservation biodiversity deforestation in paper and pulp procurement. Initiatives toward sustainable sustainable toward Initiatives of paper and pulp procurement Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 79 ater resource use and . *2 CDP is an international NPO (with its headquarters in London) that CDP is an international NPO (with its headquarters CDP implements various is sponsored by institutional investors. to disclose activities to encourage business enterprises, etc. information relating to climate change, w forest resource use. The CDP Supply Chain Program is an initiative CDP Supply Chain Program is an initiative forest resource use. The up their make in which participating enterprises ask the firms that change, supply chain to disclose information relating to climate resource use and forest resource use via the CDP platform. water to disclose in which enterprises are asked A CDP initiative and usage information regarding forest resource management status, etc. *1 CDP (Carbon Disclosure Project) Supply Chain Program *1 CDP (Carbon Disclosure Project) Supply Chain Supply Chain Project) Disclosure CDP (Carbon Program recognize risks associated with sustainable We on resource constraints, loss of based development and other environmental global warming biodiversity, problems such as human rights, as problems as well materials. sustainably procure raw to and are working the entire must be managed across initiatives These water regard to climate change, supply chain. With participating in the CDP Supply are and forests, we to suppliers Chain Program and asking our key the supplier information. In 2019, disclose relevant change, 73% in regard to climate response rate was to forests. and 85% in regard 70% in regard to water, conducting risk are to the CDP information In regard to forests, we assessments by providing Program Forest *2 CDP Forest Program CDP Forest *2 499 525 503 473 506 Total 102-12, 102-43, 308-2, 414-2 308-2, 102-43, 102-12, 285 279 258 230 267 Japan Held outside 214 246 245 243 239 , which is an initiative for sustainable for sustainable , which is an initiative *1 Held in Japan 2015 2016 2017 2018 2019 and responsible procurement, and to join Sedex. In and to join Sedex. and responsible procurement, suppliers for to began to present awards 2016, we Cost, Delivery, in the areas of Quality, excellence and Information Sharing, and Company Management Sustainability. a Endo to give Teruyo invited attorney In 2019, we reporting lecture regarding compliance internal also invited Hiroaki Oshima of Nittsu systems. We on the Research and Consulting to a lecture environmental changes related to product to them. of responding distribution, and future ways Number of companies that participated in the vendor in the vendor Number of companies that participated firms) summits (Unit: Kao vendor summits Kao vendor for a venue provide summits to hold vendor We opinions with and exchanging sharing information a outside Japan. Each year, suppliers within and vendor summits, and for the specific theme is chosen in regard to that seek to foster communication we theme. asked summit in 2019, we cooperate with the CDP Supply vendor At the Japan suppliers to actively Chain Program 15％ 10％ 10％ Percentage - Good 40％ Excellent 25％ Kao evaluation Needs response 2 - - Low Low Sedex risk Sedex assessment* Medium or High Needs improvement 1 - rate* 80% or more 80% or more 80% or more Less than 80% SAQ response response SAQ

*3 S B C A ̶*4

(low, medium, high) of potential risk manifestation. (low, a C response rate of less than 80% uniformly receive SAQ evaluation. Response rate to Sedex self-assessment questionnaire for suppliers. Response rate to Sedex Overall Overall evaluation Results of 2019 supplier risk assessments based on Sedex Results of 2019 supplier *2 Evaluation using the Sedex assessment tool that uses three levels assessment tool that uses three levels Evaluation using the Sedex *2 risk, so all cases of a as high are evaluated without responses SAQ *3 due to inaccessible response results. Not evaluated *4

environmental objectives and various categories of various categories and objectives environmental including pollution management, environmental to began etc.). In 2018, we water, (air, prevention some direct material standard to revised apply this companies outside Japan, to suppliers to our group suppliers, and to indirect material domestic machinery manufacturing and sales suppliers (gift item the standard to expanded we companies). In 2019, material suppliers. some domestic direct also performing this assessment when are suppliers. We onboarding new Responsibly sourced raw materials materials raw sourced Responsibly *1 Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 80 Education through e-learning (Global) e-learning through Education so that all implemented an e-learning program We could acquire of the Procurement Division employees for sustainable and required the knowledge examination The responsible procurement. 100%. 2019 was participation rate in Meeting (Global) Global Procurement is attended Global Procurement Meeting, which The from our affiliates, is held by procurement managers for a venue provides Meeting The once a year. group’s regarding the education and verification procurement policy and sustainable, responsible procurement. 102-12, 102-43, 404-2 102-43, 102-12, This test promotes an environmentally and economically sustainable This society. * Eco Test® Examples of education and promotion and of education Examples Employee training and awareness-raising (Japan) and awareness-raising training Employee in employees Procurement Division educate new We to procurement, which includes our basic approach and and ethics adherence to laws fairness and equity, such education, we Through social responsibility. understand to to encourage our employees strive such as human rights and labor, global social issues to the United Nations Global which are fundamental ISO 26000 principles. Compact (UNGC) and the assigned to newly education in our basic nine employees In 2019, received Procurement Division approach to procurement. (Japan) certification testing Promoting So that all Procurement Division employees and the society understand the relationship between their environment, and as education to modify them to take encourage we accordingly, behavior examinations. certification (Eco Test for Environmental Specialists® the to take employees encouraged In 2019, we Certification 79% of current As of the end of the year, Test®*). the test. had passed employees

We conduct supplier satisfaction surveys every three every surveys supplier satisfaction conduct We are carrying out that we in order to ensure years Most fairly and equitably. procurement activities satisfaction survey conducted a supplier we recently, valuable feedback on topics in 2016 and received ordering, service quality, selection, including vendor In terms of ordering, we and communication. issues including rush deliveries were confirmed there as order amounts as well and request to change address and consultations. To response to proposals to Division is working these issues, the Procurement of the Kao Compliance Hotlines, spread awareness process supply and demand and building a new the coordinated with the SCM Division and Division. Information Technology from 2019 to 2020 moved Implementation was in the due to structural changes carried out Procurement Division. Surveying supplier satisfaction Surveying Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 81 ascertain the conditions of life under which small conditions of life ascertain the in dialogue with plantation farmers are living, engage be subject to human and others who may workers them with support. provide rights violations, and on a major influence have identify risks that may build structures to deal with them based and society, to see a like I would Elsewhere, on UNGPs guidelines. mechanism put into place to permanent, structured small palm oil workers, process complaints from a means for appropriate action farmers and others, as problems occur. whenever ESG activities linked to management strategy ESG activities linked its it is to be hoped that as part of Going forward, the response Kao will build management strategy, latent risks capability necessary to cope smoothly with become reality. when they such as those noted above the are European ESG-focused investors close attention to whether companies have paying In particular, to ability to build management structures needed business identify the latent risks attaching to their impacts on society. and minimize negative growth, are being initiatives while these implemented, regular dialogue with ESG-focused Further, and the “Quality Relationships” concept, investors, and exchange which prioritizes high-quality information important. relationships, will be extremely • To be prepared for latent risks, I would like to see Kao like risks, I would be prepared for latent To • 102-44 Raw Materials at an early stage. Raw materials sustainable procurement of natural raw progress including paper and pulp, and issues annual updates. palm oil mills. of palm oil mills it procures from that are suspected causing deforestation. with ESG Strategy with management strategy, indications of its future and qualitative quantitative aims. to see it also carry out human much like very would not. In rights due diligence, which it currently does I am most interested in seeing Kao particular, action plans and modern slavery acts aimed at acts aimed and modern slavery action plans in on companies involved strengthening restrictions such human rights violations. are but also stakeholders only ESG-focused investors, these restrictions, not respect to reinforcing of With doing business globally strongly calling on enterprises that ensure the to put in place mechanisms operations. appropriateness of their Notable Kao initiatives palm oil procurement without Kao aims for sustainable or effects on local communities, deforestation negative point to its human rights violations. I therefore would as notable. initiatives pursuit of the following Sustainable Procurement of It released Guidelines for • toward work its intention to It has expressed • oil mills and of palm kernel It publishes its mapping • results related to It conducts audits and publishes • actions Expected future design linking to see Kao outline a grand like I would • out environmental due diligence, I Kao carries While • Hiroshi Ishida Hiroshi Japan Caux Round Table Japan) (CRT Director Executive

Society is moving from EsG to ESG from Society is moving increasing been drawing have ESG-related initiatives but ESG-focused investors attention in recent years, fallen note that many Japanese enterprises have and in significantly behind with respect to S—society, —compared human rights-related initiatives particular, In effect, these to E (environment) and G (governance). ESG. Moving enterprises are practicing EsG rather than due from EsG to ESG will require human rights on diligence, in line with the UN Guiding Principles by Business and Human Rights (UNGPs) established to determining whether the UN in 2011—in particular, in the the human rights of small farmers and workers the rights supply chain are being violated, and whether violated of those living in local communities are being it will be by corporations operating there. In addition, capable of necessary to build management structures been many have addressing these problems. There implementing national recent cases of governments Expectations for Kao relating to Kao relating Expectations for from free oil procurement sustainable palm rights violations or human deforestation Message from External Expert External from Message Responsibly sourced raw materials materials raw sourced Responsibly Kao Kirei Lifestyle Plan Progress Report 2020 Contents Kirei Lifestyle Plan

2019 Our initiatives Editorial Policy CEO Message Making my everyday

Making the world more beautiful healthier & cleaner Kirei Lifestyle Plan KPI definitions choices for society Making thoughtful

Decarbonization ...... 83

Zero waste ...... 103

Water conservation ...... 117 Independent assurance report

Air & water pollution prevention ...... 125 healthier Making the world

Product lifecycle and environmental impact ... 130 & cleaner Environmental accounting ...... 132 Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 82 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 83 Contributions to the SDGs Kao’s creating value Kao’s creating gas emissions In order to reduce greenhouse set have we business activity, associated with our our plants and other facilities, and reduction targets at energy which improving are continuing activities energy used into green energy. efficiency and turning lifecycle analysis, as part of our product Additionally, material raw are carrying out activities that reduce we stages, waste procurement and use during necessary gas as greenhouse during each stage, as well emissions. of people and to enrich the lives are working We by providing contribute to the sustainability of society products that respond to changing consumer that are lifestyles in light of climate change, and to transitional environmentally conscious in response and physical risks. e . *2 C (or lower if possible) global if possible) with a 2°C (or lower that aligns to a level of our products emissions 2 Intergovernmental Panel on Climate Change Panel Intergovernmental established by the United Nations An organization was Meteorological Environment Programme and the World comprehensiv Organization in 1988 for the purpose of conducting evaluations from scientific, technical, and socio-economic evaluations climate change, its impact, adaptation and regarding perspectives mitigation measures. *1 IPCC Greenhouses gas Emissions, 2016 Resources Institute, World World destroyed and there is an accelerating trend toward the trend toward and there is an accelerating destroyed plantations, which is being establishment of new and human rights of biodiversity accompanied by a loss much are very etc. We workers, issues relating to local in relation to the need to exist of the risks that aware An additional point is realize sustainable development. from forest that greenhouse gas emissions deriving for 6.5% destruction and changes in land use account of total global greenhouse gas emissions already occurring due are to events expected and with this threat Extreme weather to global warming, need to in the future, there is an immediate grow changing implement measures to adapt to these circumstances. climate that will bear the brunt of the impact of younger generation Reflecting the fact that it is the the people throughout change in the future, young are taking action―such as the FridaysForFuture world action take ―to demand that governments movement in response to climate change. *2

2 102-12, 102-15, 103-1 102-15, 102-12, in October of *1

2018 that if the current situation continues, there is a 2018 that if the current situation continues, rise by more that temperatures will high likelihood 2030 and 2052,than 1.5°C between and that in order °C, it would temperatures from rising by 1.5 to keep 2050.be necessary to reach net ZERO around There in CO greater reductions even is thus a need to make important raw paper and paper pulp constitute very Kao, forest commodities such as palm oil and For in order to boost production world, materials. In today’s of these commodities, natural forests are being Social issues we are aware of aware are Social issues we Meteorological Organization, According to the World had risen by global temperature in 2018 the average prior to the Industrial 0.98°C compared to levels been at an all-time high for four and has Revolution, daytime since 2015. Maximum years consecutive has become been rising, and it temperatures have with days consecutive several common to have of 40°C. As a result, there has temperatures in excess affected by been an increase in the number of people there are reports of people year and every heatstroke, rising At the same time, dying from heatstroke. of stimulated the growth temperatures have cause food pathogenic E. Coli bacteria, which can of infection. poisoning, and there is an increased risk of 1.5°C issued by the IPCC Report on Global reported in the Special It was Warming Kao’s creating value to address social issues to address value Kao’s creating

Contribute to global decarbonization by reducing the full lifecycle CO lifecycle reducing the full by to global decarbonization Contribute Decarbonization Decarbonization warming scenario. scenario. warming emissions. Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 84 Responsibly sourced raw materials Responsibly sourced raw and Safety Environment Materials p. 72 Making thoughtful choices for society > choices for p. 72 Making thoughtful ➡ on Basic Principle and Basic Policies ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environment- safety-principle-policies.pdf Kao Responsible Care Policy ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/responsible-care- policy.pdf Statement Kao Environmental ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environmental- statement.pdf of Raw Sustainable Procurement Guidelines for ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/procurement-raw- materials-guidelines.pdf emissions 2 in relation to every aspect of our business strategy. aspect in relation to every environment and to “Assess undertake we Safety, Regarding the Environment and In our Policies the entire life cycle of the safety aspects throughout when products, from manufacture through disposal, Offer products products and technologies. developing environmental impact.” with a lower to shall strive declaration: “We contains the following Care Policy Furthermore, the Kao Responsible of our continue to reduce the environmental impact of uses of business operations by promoting reduction and energy.” resources such as water ... utilize commitment to ensuring that “Kao products embodies our Our Environmental Statement minimize the technologies to original Kao-developed just in the on the environment, not have impact they life of the manufacturing process, but in the daily materials procurement customers who use them. From use and final and manufacturing, to distribution, sales, with to engage in ‘eco together’ want disposal, we and consumers worldwide.” stakeholders for formulated the Guidelines have paper pulp, we oil and paper and Furthermore, in regard to palm and we Materials, Sustainable Procurement of Raw to zero support the goal of reducing forest destruction materials are by 2020 in the areas where these raw produced. Policies risk in relation to poses a major Climate change enrichment of people’s satisfaction and ensuring the Way Kao in the future. The and both now lives, for the wholehearted to strive enunciates our mission of people globally of the lives satisfaction, enrichment and the sustainability of the world, and to contribute to activities to reduce CO are implementing we 103-2 are adopted 2 emissions (Scope 2 emissions (Scope 1 + 2 eep the average global temperature eep the average , and we have identified have , and we *2 eep the average global temperature rise eep the average and 4°C Scenario *1 emissions by 22% by 2030 (compared to 2017), we we emissions by 22% by 2030 (compared to 2017), 2

This is equivalent to the IEA’s 2DS scenario or the IPCC’s RCP 2.6 scenario, etc. It refers to the 2DS scenario or the IPCC’s is equivalent to the IEA’s This be needed in order to k economic measures that would C compared to the situation prior to the Industrial Revolution, and to the to less than 4°C compared to the situation prior to the Industrial Revolution, rise down to result from such a rise in temperature. environmental damage etc. that is expected C compared to the situation prior to the Industrial Revolution, and to the to less than 2°C compared to the situation prior to the Industrial Revolution, down to result from such a rise in temperature. environmental damage that is expected RCP 8.5 scenario, etc. It refers Scenario or the IPCC’s Current Policy is equivalent to the IEA’s This be needed in order to k to the economic measures that would would be able to keep the amount of carbon tax that we would would that we the amount of carbon tax be able to keep would the and keep per year, around 4.5 billion yen to down need to pay per year. yen to around 5 billion costs down increase in overall 1 + 2) are expected to be 167% higher than in 2017. With the 2°C With to be 167% higher than in 2017. 1 + 2) are expected t-CO equivalent to US$89 / Scenario, if carbon taxes 2), which has now been in operation for 13 years, closely integrated been in operation for 13 years, 2), which has now the target of set ourselves with our business activities. Having reducing CO *1 2°C scenario to reduce emissions, then by 2030 our total CO no action is taken In respect to realizing our vision for 2030, if Risks and opportunities related to realization of our vision by 2030 of our vision by to realization related Risks and opportunities of evaluation and quantitative qualitative implemented have We to the realization of our opportunities relating the risks and to be by 2030, focusing our company want we vision of where on the 2°C Scenario

*2 4°C scenario Decarbonization Decarbonization worldwide, then this would lead to an increase in costs of around lead to an increase then this would worldwide, an introduced in 2006 we for us. However, per year 9.5 billion yen internal carbon pricing system to control CO the key items that could have a major impact on our business. have items that could the key the potential for the adoption and most important risks included confirmed that some of the results of this evaluation The increases in the cost of taxes, strengthening of carbon materials due to rises in the crude oil raw petroleum-derived risk of flood damage due to the trend price, and an increased also etc. We precipitation, increased short-term toward opportunities, including increased identified a number of to products such as deodorant due demand for summer-use such as changes in consumer behavior rising temperatures, and ethical consumption. the widespread trend toward Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 85 employees the opportunity to learn about climate the opportunity to learn employees programs and to actively change through various activities of their own engage in decarbonization accord. emissions, we view view emissions, we 2 emissions associated with 2 collaboration with raw materials suppliers as being materials suppliers collaboration with raw particularly important. “eco together” with society participate in activities organized by proactively We and by local government the central government information provide authorities, NPOs, etc., where we opinions with about Kao technologies and exchange decarbonized other participants. In order to realize the reducing the CO society, by using renewable energy generation is a particularly energy generation by using renewable to actively are working important approach, and we in this disseminate information about our activities area. education and promotion Employee to develop are not only in the position Our employees the leave and supply products, but once they are consumers for the rest of their they company, and are the ones who select those products. We lives thus recognize the importance of giving our partners that we collaborate with at every stage from with at every collaborate partners that we through production to materials procurement raw action can take and sales, so that we delivery a number of established have and we together, sharing information with them. for different venues for around 40% materials stage accounts As the raw CO of total product lifecycle 102-43, 404-2 102-43, emissions, raising 2 Sustainable lifestyle promotion > Collaboration promotion Sustainable lifestyle and engagement with stakeholders p. 61 Making thoughtful choices for society > p. 61 Making thoughtful choices for ➡ emission reduction and the environmental emission reduction and the environmental 2

emissions. It is thus very important for us to important for emissions. It is thus very 2

accurately communicate the environmental value that accurately communicate the environmental consumers and encourage Kao products can provide a wide range of By organizing to use them properly. the importance aim to get across we different events, of CO value of Kao’s activities and products. value of Kao’s consumers’ awareness is extremely important. For important. For is extremely consumers’ awareness buys single-rinse laundry if a consumer even example, machine sets the washing detergent, if the consumer there will be no reduction in rinses, then to do two CO “eco together” with business partners “eco together” with business partners a Kirei Lifestyle, In order to help our customers realize continue to implement heartfelt Yoki-Monozukuri we products to the resulting manufacturing and deliver that this is not something our customers. However, that believe by Kao acting alone. We can be achieved it is important to share our vision with the business “eco together” with consumers/customers “eco together” with stage accounts for around 40% As the product usage CO of total product lifecycle In line with the “eco together” motto of the Kao Environmental Statement, we are working together with a wide range of stakeholders to promote activities aimed at realizing activities aimed to promote stakeholders a wide range of together with working are we Environmental Statement, motto of the Kao the “eco together” In line with of our initiatives. to spread awareness education and working are also implementing carbon reduction decarbonization. We Education and promotion Education Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 86 * As of December 2019. ESG Committee Opportunity Management Directors Board of Board Committee Management horizontally. The Internal Control Committee, and the ESG Committee, and Internal Control The horizontally. and discuss climate change which it supervises, Committee as social and governance as well environmental issues issues. and is audited by the times a year Directors one or more Board of reports on its activities to the committee The Board of Directors. Logistics Co., Ltd. & D Division & RC Department and Executive Officer Responsible for Corporate Strategy Strategy Corporate Officer Responsible for Executive Kao Group Customer Marketing Co., Ltd. Customer Marketing Kao Group Consumer Products Business Division Consumer Products

Each division and Group company Each division and Group Risk and Crisis Management Committee Committee Promotion Responsible Care Quality Management Committee ● ● ● Quality Management Division Product Supply Chain Management Division Division Procurement Human Capital Development Head Office Division (Sumida Office) Kanebo Cosmetics Inc. Ltd. Services Co., Kao Professional Kao Transport Secretariat Chairperson Members Consumer Communication Center Chemical Business Division R Quality Management Division Product Responsible Care Promotion Committee Promotion Responsible Care Risk management Internal Control Committee Internal Control Corporate Strategy Division and Crisis Management Division Strategy Corporate Executive Officer Responsible for Corporate Strategy Corporate Officer Responsible for Executive Legal and Compliance Kao Group Customer Marketing Co., Ltd. Customer Marketing Kao Group

Disclosure Committee Disclosure Compliance Committee Security Committee Information President and CEO Chairperson: ● ● ● Secretariat Kanebo Cosmetics Inc. Communications Corporate Human Capital Development Technology Information Chairperson Members Business Division Consumer Products Chemical Business Division Quality Management Division Product Supply Chain Management Division Department of Internal Audit Communications Corporate Human Capital Development Accounting and Finance Technology Information Risk and Crisis Management Committee Decarbonization promotion structure Decarbonization promotion Management Committee which it oversees and auditing the and auditing it oversees Committee which Management committees. activities of the two ESG Committee, which meets four issues is handled by the change management relating to climate Opportunity in Committee members are the persons times a year. sales, R&D, SCM and other charge of the business, which connects divisions divisions, an arrangement

2 102-20, 103-2 102-20, reduction and other matters. 2

It also sets targets for the following year. The Responsible The year. It also sets targets for the following checks on Care Promotion Committee conducts monthly CO and regulations, monitors compliance with laws emission and water use, mainly at plants which have a large have use, mainly at plants which emission and water of chemical abreast of the amount impact, and keeps other reporting on these and substances in wastewater, members, matters to the head of the committee, committee auditors and members of the Internal Control Committee, Risk and Crisis Management Committee which others. The by climate manages natural disaster including caused times a year. change and reputational risks, meets four reports from the Responsible receiving activity times a year, meets one or more Internal Control Committee The Care Promotion Committee and the Risk and Crisis Risk management in relation to climate change issues is climate change issues in relation to Risk management Control Committee and carried out by the Internal is carried out by the ESG opportunity management supervision of the Board of Directors. Committee, under the and CEO. committees are headed by the President These regime and technology risks, manages policy/regulatory Responsible Care Promotion Committee, which The Management Committee, which and the Risk and Crisis and acute risks, are under the reputational manages market, are headed committees These Internal Control Committee. Corporate Strategy. officer in charge of the by the executive Care Promotion Strategy Division acts as the Responsible Responsible Care Department of Corporate The Committee Secretariat while the Crisis Management acts as the Risk Department of Corporate Strategy Division and Crisis Management Committee Secretariat. with laws to report on and discuss compliance twice a year Responsible Care Promotion Committee meets The and regulations, status of CO Framework Framework Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 87 emissions across 2 emissions during usage can contribute to emissions during usage can contribute emissions during usage, leading to reduced emissions during usage, 2 2 reduction in consumer spending because they they reduction in consumer spending because they Furthermore, consume less energy and water. of social in reducing the burden are also effective concerning infrastructure maintenance and renewal system. and sewage water energy, operating costs and sales growth. been costs have energy generating switching over years, As renewable falling steadily for the past few purchased 100% of the electricity that we to having lead to energy will generated using renewable future. reduced electricity purchase costs in the Social impacts reduce can goals, we the above By achieving to realizing greenhouse gas emissions and contribute products with Additionally, the decarbonized society. CO low product lifecycles can be achieved by reducing raw by reducing raw be achieved product lifecycles can sales of products with material use and increasing CO low Anticipated benefits from achieving mid- to achieving benefits from Anticipated long-term targets Business impacts energy consumption and targets (for Achieving for all sites in the group greenhouse gas emissions) contribute to the as they leads to better profits activity operating costs. reduction of business the reduction of CO Additionally, early targets 2030 long-term 100% renewable 100% renewable sources (year-on-year, (year-on-year, from 2021) 22% reduction (Compared to 2017)* 22% reduction (Compared to 2017)* 1% reduction y Scope Across the entire the entire Across product Kao Group lifecycle sites All Kao Group sites All Kao Group wer sites All Kao Group Index from the Science Based Targets initiative (SBTi). initiative from the Science Based Targets Purchased po Purchased Energy Energy consumption sales unit) (Per GHG emissions (absolute quantity) * Kao’s greenhouse gas reduction targets have received certification received have greenhouse gas reduction targets Kao’s * 2030 long-term targets 2030 long-term 35% 35% 35% 103-2, 103-3, 302-1, 302-3, 302-4, 302-5, 305-1, 302-5, 302-4, 302-3, 302-1, 103-3, 103-2, 305-2, 305-3, 305-4, 305-5 reduction reduction reduction emissions 2 2025 targets ― 34% 34% reduction reduction 100% renewable sources 100% renewable 2019 targets 2020 targets Scope Scope Kao Group in Japan Kao Group Across the entire the entire Across for lifecycle product in Japan the Kao Group All Kao Group sites All Kao Group

Index Index

2

Purchased power Purchased GHG emissions CO Energy Energy consumption emissions 2025 mid-term targets pertaining to the entire product lifecycle for group pertaining to the entire based on the national reduction companies in Japan, at the time government targets set by the Japanese on a per unit calculated were targets (all of the above of sales basis). Targets for 2020 for Targets 2020 targets for energy set the In 2013, we gas emissions consumption and greenhouse aimed to Group sites and have pertaining to all Kao In 2009, year. a standard 1% reduction each achieve targets for CO set the 2020 reduction we Targets for energy and greenhouse gas emissions gas and greenhouse energy for Targets Mid- to long-term targets and performance and targets long-term Mid- to Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 88

over the over 2 2 emissions of the Kao 2 emission reduction was 4,153 thousand emission reduction was 2 . * emissions across the entire product lifecycle in across the entire product emissions entire product lifecycle in emissions across the 2 2 product in Japan, compared with the standard product as of 2005. household products. scope includes industrial-use products and The Value is calculated as the reduced lifecycle CO is calculated as the reduced lifecycle Value Japan decreased by 288,000 tons over the previous the previous over by 288,000 tons Japan decreased a fall of 4% compared to 2017. The representing year, by 1 point to rate improved per unit (of sales) reduction 18% (2005 year. compared to the previous baseline) CO thousand tons-CO reduced by 133 Japan were tons previous year, and the per unit (of sales) reduction rate and the per unit (of sales) reduction year, previous by 2 point to 20% (2005 the improved baseline) over for this improvement main reason The year. previous brand of washing of a new the launch, in Japan, was for use in drum-type detergent specially designed tend to use less water. machines, which washing * Reviews of performance Reviews CO as in the rate at all Kao Group sites remained at 31% unit of sales reduction energy consumption per The the reduction did not achieve and we year, previous fell by 9% target of 34%. Greenhouse gas emissions basis the compared to 2017, and on a per unit of sales 37%, meeting the 2019 to reduction rate improved one year target of 34% and the 2020 target of 35% energy ratio of renewable ahead of schedule. The the Kao among purchased energy stood at 28% for Group in Group as a whole, and at 38% for the Kao Japan. that reduce CO products such as water-saving household products offer a wide selection of We emissions during the use stage, and also provide provide emissions during the use stage, and also same. various industrial-use products that do the consumption in the and power water reduce water/hot products that our range of will further expand We of total use stage, which contributes a large portion steps such as reducing lifecycle emissions, and take raw materials used and switching the amount of raw sources. materials to those made from renewable emissions, the contributed Including these avoided lifecycle CO

✓ □ 0 -20 -40 (%) Americas Asia Japan Europe (Year) -35 Target 0 -20 -40 (%) 80 60 40 20 (Year) 120 100 -20 2019 7,328 -35-35 Target Target -18 -37-37 964964 7,461 2019 -33-33 -15 1,0421,042 2017 2018 2020 7,651 emissions of individual products sold within Per unit (of sales) reduction rate Per 2

-30-30 ー 0 2017 2018 2020 1,0621,062 ● -16 500 ー 2016 7,647 (all sites) 2000 1500 1000 emissions figures and per unit (of sales) reduction rates.

2 ✓ □ -30-30 2016 1,0411,041 -17 2015 7,415 -29-29 2015 1,0711,071 0 emissions for sites outside Japan) 2 2 00 2005 6,248 Per unit (of sales) reduction rate Per 993993

e) 2005 CO 2

ー emissions across the entire product lifecycle” is calculated as the combined emissions across the entire product lifecycle” is calculated as ● 0 emissions across the entire product lifecycle product the entire emissions across ■ 2 0 2 ー and on International Financial Reporting Standards (IFRS) from fiscal 2016. and on International Financial 500 Values for Europe for 2017 and 2018 have been revised. (The revisions revisions (The been revised. for Europe for 2017 and 2018 have Values values for the Olesa Plant of Kao Corporation [Spain].) reflect the revised (only CO 8,000 4,000 total for the amount of lifecycle CO and outside Japan, multiplied by their annual sales quantity. Among the lifecycle, Among the lifecycle, and outside Japan, multiplied by their annual sales quantity. processes are the estimated emissions from the manufacturing and distribution this amount substituted by the actual emissions from these processes. However, does not include emissions related to the use and disposal of chemical products. (Thousand tons) (Thousand tons-CO 12,000 2,000 1,500 1,000 * Assurance provided for GHG emissions figures. Assurance provided * * * “CO for CO Assurance provided * up to fiscal 2015, unit of sales is calculated based on Japanese standards Per ＊ * Boundary: All Kao Group sites including company cars in Japan. Boundary: All Kao Group sites including company * Protocol Kyoto GHGs specified by the seven Gases included: The * CO in Japan) (Kao Group GHG emissions 0 -20 -40 (%)

Europe Americas Asia Japan (Year) ✓ □ -18-18 102-48, 103-2, 103-3, 302-1, 302-3, 302-4, 302-5, 305-1, 302-5, 302-4, 302-3, 302-1, 103-3, 103-2, 102-48, 305-2, 305-3, 305-4, 305-5 11,455 0 -20 -40 (%) 0 0 (Year) -20 -40 -60 -80 -20 -40 -60 -80 -100 -100 -17-17 -35-35 11,743 Target Target -31-31 19.019.0 2019 -14-14 2017 2018 2019 11,910 -31-31 19.219.2 (all sites) ✓ Per unit (of sales) reduction rate Per emissions of individual products sold within and □ -14-14 2 2016 -30-30 ー 11,699 19.119.1 2017 2018 2020 ● ー emissions figures and per unit (of sales) reduction rates.

2 -31-31 18.718.7 2016 -17-17 2015 11,360 -31-31 18.618.6 2015 00 emissions 2 00 2005 9,064 Per unit (of sales) reduction rate Per

17.917.9 2005

CO ー ● 0 0 emissions across the entire product lifecycle” is calculated as the combined emissions across the entire product lifecycle” is calculated as the ■ emissions across the entire product lifecycle product the entire emissions across 2 0 ー 2

10 20 30 40 (PJ) Values for Europe for 2016–2018 have been revised. (The coefficient for purchased (The revised. been for Europe for 2016–2018 have Values factor for each country.) to the conversion changed from 3.6 MJ/kWh was power renewable 6,000 total for the amount of lifecycle CO outside Japan, multiplied by their annual sales quantity. Among the lifecycle, the outside Japan, multiplied by their annual sales quantity. estimated emissions from the manufacturing and distribution processes are this amount substituted by the actual emissions from these processes. However, does not include emissions related to the use and disposal of chemical products. (Thousand tons) 12,000 18,000 (Kao Group) * Assurance provided for CO Assurance provided * * “CO CO * Boundary: All Kao Group sites including company cars in Japan. * for energy consumption figures. Assurance provided * * Performance* consumption Energy Performance in 2019 Performance Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 89 A-A- A-A A- A- A- A- A A A- A 2016 2017 2018 2019 ➡ CDP results CDP 2019 Climate change www.kao.com/content/dam/sites/kao/www- kao-com/global/en/sustainability/pdf/cdp2019- 001.pdf CDP 2019 Forests www.kao.com/content/dam/sites/kao/www- kao-com/global/en/sustainability/pdf/cdp2019- 003.pdf Security Water CDP 2019 www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/cdp2019-002.pdf Area CDP is a London-based NPO operated by institutional investors, investors, CDP is a London-based NPO operated by institutional information and it motivates business enterprises to disclose and forests. related to climate change, water Climate change (Timber) Forests Oil) (Palm Forests Security Water Supplier engagement A- B A- A A- A A- A * CDP CDP* evaluation been highly the environment have for Our initiatives as for 2019 was evaluation The CDP. rated by the follows. CDP evaluation 123 142 493 e) 2 135 145 553 08 0 8 0 7 40 4 0 4 0 0 0 0 29 2758 30 18 60 2197 56 106 17 107 253 253 254 239 269 342 119 119 111 4,496 4,430 4,295 1,415 1,452 1,432 4,687 4,570 4,510 2017 2018 2019 11,423 11,319 11,165 149 128 486 9,0471,383 9,123 1,331 8,936 1,405 ✓ □ 2017 2018 2019 ✓ □ ✓ □ emissions (Thousand tons-CO emissions (Thousand 2 ✓ □ Processing of sold Processing products sold products leased Downstream assets services Fuel- and energy-related activities (not included in scope 1 or scope 2) and distribution in generated Waste operations Downstream and transportation distribution site activities to save energy and reduce waste materials, as well materials, as well energy and reduce waste site activities to save as on the product lifecycle. Natural gas Natural Diesel oil Gasoline Other vegetable Waste oil (heat recovery) 14. Franchises 15. Investments Total 1. Purchased goods and goods Purchased 1. 2. Capital goods 3. 4. Upstream transportation 5. 6. Business travel commuting 7. Employee leased assets 8. Upstream 9. 10. 11. Use of sold products of treatment End-of-life 12. 13. * Kao focuses on the categories of 1, 3, 4, 5, 11 and 12 related to * Fuel consumption by fuel type (terajoules) by Fuel consumption Scope 3 CO 0 6 2 0 98 46 48 259 214 149 291 320 644 102-48, 103-2, 103-3, 302-1, 302-3, 302-4, 302-5, 305-1, 302-5, 302-4, 302-3, 302-1, 103-3, 103-2, 102-48, 305-2, 305-3, 305-4, 305-5 e) 2 e) 2 0 0 14 13 49 49 263 157 207 140 291 390 652 0 0 14 13 43 49 173 208 140 271 290 409 653 (Thousand tons-CO (Thousand 7,776 7,663 7,810 (Thousand tons-CO (Thousand ✓ □ ✓ □ 2017 2018 2019 2017 2018 2019 2017 2018 2019 emissions emissions 2 2 organization heat, etc. Countermeasures. Promotion of Global Warming the specific factor cannot be or regulations. When laws by the factor released obtained, the country-based International Energy Agency (IEA) is used.

initiative. initiative. accordingly. been revised have end outside energy (at the receiving end in Japan, generating Japan). Electricity Heat Steam Japan Asia Japan Asia Americas Europe Total Cooling Americas Europe Total Scope 1: GHG emissions emitted directly by the company/ Scope 1: * Emissions by scope conform to the Greenhouse Gas Protocol * Indirect GHG emissions from purchased electricity, Scope 2: * Emission factors In principle, uses factors defined in the Act on Scope 1: In principle, uses the specific factors of the country’s Scope 2: and values for Europe for 2017 and 2018 contained errors The * Electricity is calculated as the calorific value of the primary * Purchased electricity, steam, etc. (terajoules) electricity, Purchased Scope 2 CO Scope 1 CO Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 90 Y 5 N 1)–4) Step. satisfactory One (or more) Y 4 N emission amount reduction recording Evaluation targets Evaluation 2 1)–3) Step. emissions associated with the portion supplied to Kao emissions associated with the portion supplied to 2 satisfactory One (or more) emission amount (Scope 1 + 2) 2 Y 3 emission amount (Scope 1 + 2) N 2 All 1)–2) Step. satisfactory reduction project recording or CO 2 2) Ascertain changes in CO 1) Leadership / organizational readiness 2) Setting targets 1) CO 1) SBT setting energy 2) Adoption of low-carbon energy 3) Adoption of renewable energy targets 4) Setting of renewable 2) Scope 3 (procurement) estimation 3) Estimation of the amount of CO 1) Replies to some questions 1) Ascertain CO Y 2 N ● ● ● ● ● ● ● ● ● ● ● ● All 1)–2) Step. satisfactory Y ● ● ● ● ● 1 N 1) Step. 3 4 5 1 2 Step Conforming Implementing Satisfactory Determination flowchart 102-12, 102-43, 308-2 102-43, 102-12, reduction 2 reduction 2

Our initiatives

activities and have been working to provide the to provide been working activities and have suppliers. The back to our results of these evaluations that the number of showed results 2019 survey least “four of at suppliers obtaining an evaluation to the previous stars” had increased by 54 compared level supplier activity indicating that the overall year, to the roughly had risen. At the same time, in regard to the survey, 30% of suppliers who failed to respond engagement to encourage these on are working we suppliers to respond. CDP Supply Chain Program (Climate change) CDP Supply Chain Program company to became the first Japanese In 2009, we From participate in the CDP Supply Chain Program. will become that our suppliers 2017, in expectation promoting CO toward more active Mitigation Summit Vendor which important Summit, hold the Kao Vendor We give to attend, where we suppliers are invited including ESG-related initiatives, presentations on our request suppliers’ collaboration. decarbonization, and

Efforts in raw materials procurement materials in raw Efforts Decarbonization Decarbonization activities, we have been evaluating CO been evaluating have activities, we Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 91

2 emissions 2 emission emission 2 Responsibly sourced raw materials Responsibly sourced raw conservation Water p. 72 Making thoughtful choices for society > society p. 72 Making thoughtful choices for ➡ healthier & cleaner > p. 117 Making the world ➡ reductions of Kao products. Adaptation (Water) CDP Supply Chain Program is occurring weather Due to climate change, extreme instance, there is an increase in different places. For rain. Reflecting our focus heavy frequent in short-term of the need to on strengthening suppliers’ awareness to flooding risk systems in place in relation put water rain, systems caused by heavy and sewage of rivers action, we appropriate and on getting them to take Supply been participating in the CDP “Water” have Chain Program since 2015. improves the accuracy of our CO the accuracy of our improves calculations during the raw material procurement procurement material during the raw calculations the CO evaluate us to also allows process, but emissions reduction initiatives adopted by suppliers, adopted by suppliers, reduction initiatives emissions reflected in lifecycle CO which can then be

102-12, 102-43, 308-2 102-43, 102-12, 2

2 ) 2 emissions (LC-CO 2

emissions, we are collecting data on CO are collecting data on emissions, we emissions in the transport of raw materials. emissions in the transport of raw 2 2

More precise calculation of the environmental of the environmental calculation precise More calculating product materials for raw of burden CO lifecycle emissions by using plant-based and recycled plastics emissions by using plant-based and thinner cardboard. are reducing we and materials deliveries, the volume Furthermore, by optimizing frequency of raw CO Low-carbon raw materials procurement raw Low-carbon working are In collaboration with suppliers, we CO materials with lower to adopt raw actively CDP Supply Chain Program (Forests) Chain Program CDP Supply Supply CDP “Forest” participated in the have We suppliers expect since 2018. We Chain Program paper pulp to begin palm oil, paper or providing procurement, which sustainable and responsible We deforestation. preventing includes procurement suppliers status and provide assess forest activity results of this assessment. The with feedback on the that the number of results showed 2019 survey of at least “three an evaluation suppliers obtaining by 2 compared to the previous stars” had increased supplier activity level overall indicating that the year, time, in regard to the roughly had risen. At the same to the survey, 15% of suppliers who failed to respond engagement to encourage these on are working we suppliers to respond. Decarbonization Decarbonization With the cooperation of those suppliers from which With high particularly materials that have purchase raw we CO emissions produced in the procurement and emissions produced in the procurement measure only materials. This processing of raw Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 92 emissions by approximately 4.65 emissions by approximately 2 efficient operation of equipment efficient operation thousand tons annually. Affiliated companies outside Affiliated thousand tons annually. LED lights. switching to Japan are also proactively energy • Eliminating wasted to take continued in 2019 we year, As in the previous reduce energy wasted energy, steps to find areas with unused energy use to the minimum required and use in other processes. we of steam use, the efficiency Aiming to improve trap are continuing to strengthen our steam of steam we maintenance and increase the amount implementing are also actively We recover. at sites to reduce the amount activities improvement the set including lowering of required energy, tanks and shortening temperature of heat-insulated operating times. Efforts in manufacturing (plants, manufacturing in Efforts logistics centers) offices, Mitigation consumption energy to reduce 1. Efforts equipment, high-efficiency of Introduction • equipment such as year, previous Continuing from the and compressors were chillers, air conditioners (BPT) Practice Technologies replaced with Best optimized control using Through equipment in 2019. conditioners and compressors, multiple units of air operating equipment are more efficiently we corresponding to fluctuating demand. lights to LED around are switching and offices in Our plants, logistics centers In addition, we the world. plans announced in 2015, accomplished Japan have reducing CO Kao’s Bio IOS won an award for the best poster presentation at the an award Bio IOS won Kao’s Surfactant Congress. CESIO World As global warming progresses, it is apparent that there is a progresses, As global warming temperatures and an increased higher tendency toward Demand for UV care products as number of sunny days. to increase during etc. are expected as anti-perspirants, well as the probability of droughts Additionally, summer. products demand for water-saving occurring increases, the to actively are working We to increase. is also expected which there is high demand in products for develop products. summer and water-saving use in future, in order to meet the restrictions on resource to be significant that there are expected Given demand Agreement, there will be high goals set in the Paris with food. We for biomass materials that do not compete IOS surfactant, which uses a type of Bio developed have and which has biomass that does not compete with food is already in been used. Bio IOS surfactant not previously use in our Attack ZERO laundry detergent product. in 2019 was including climate change response measures, R&D, in environmentally-friendly Our total investment was R&D work while the total cost of this 2,361 million yen, 5,559 million yen. Adaptation 302-4 emissions, 2 emissions across the entire lifecycle. The entire lifecycle. The emissions across the Water conservation Water 2 p. 117 Making the world healthier & cleaner > p. 117 Making the world ➡ through the process of producing hot through the process of producing hot 2

water, it is more effective to focus on improving water water to focus on improving it is more effective water, hot water. conservation for products that require and we are actively promoting the development of promoting the development are actively and we like products. Furthermore, as products water-saving generate even to use shampoos that require hot water more CO results of these evaluations are used not only to results of these evaluations launches, but are also determine product product development. incorporated in future that the process are aware regarding products that require water Especially we during product usage, water that tap of using purification plants to purify the of treating is used by households, and the process plants after use, requires a in sewage tap water waste great deal of energy and generates CO Mitigation and improved deciding to launch new When that the products satisfy the verify products, we outlined by the Design for environmental standards At the same time, we Environment Guidelines. CO evaluate Developmental efforts Developmental Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 93

, 2 2 Water conservation Water p. 117 Making the world healthier & cleaner > p. 117 Making the world ➡ and other greenhouse gases greenhouse and other and offers excellent performance. and offers excellent Despite these activities, scope 1 and scope 2 CO 3. Reducing the volume of leaked refrigerants refrigerants of leaked volume Reducing the 3. are used in manufacturing and chillers Air conditioners high extremely has fluorocarbon that charged with reduce the volume (GWP). To potential global warming been we have from equipment, of fluorocarbon leaks equipment inspections. strengthening our regular refrigerant. We installed use low-GWP chillers to those that switching newly are In addition, we refrigerant that use low-GWP installed three systems in Japan. in the an HFO systems use R-1233zd(E), down readily broken refrigerant, which is These HFC that is atmosphere. Compared with R-134a, an has a GWP of the standard refrigerant for chillers and same as CO 1,300, R-1233zd(E) has a GWP of 1, the Adaptation rising summer temperatures, heat stroke With for our is essential in Japan. Especially prevention measures such to taken have we outdoor workers, shorten continuous heat index, share the day’s hours, and prepare drinking water. working risks, including more water as new rains, etc., typhoons and localized torrential Additionally, powerful as a result of climate change, to emerge are likely at our plants. are conducted risk surveys annual water emissions at Kao have decreased by 8 thousand tons decreased by 8 emissions at Kao have in 2019. and 70 thousand tons, respectively, 65 53 397 396 266 217 807 331 197 1,522 and *

2 Total generation (MWh) generation Total are all purchasing * Company / Plant Company Toyohashi Plant, Kao Corporation Toyohashi Kao Sanitary Products Ehime & Logistics Kao Transport Atsugi Logistics Center & Logistics Kao Transport Sumida Kita Logistics Center Office, Kao Corporation Wakayama Kao Industrial (Thailand) Kao Corporation Shanghai Group (Malaysia) Kao Penang Kao USA Tochigi Plant, Kao Corporation Tochigi emissions by 95 thousand tons. reduced CO power Use of this renewable * Started purchasing renewable power in 2019. power Started purchasing renewable * Plant. at Tochigi generating facilities (solar) power Photovoltaic equipment (2019) capacity of solar power generating Total all converted to purchasing only electric power that has only electric power to purchasing all converted sources. from renewable been generated Plant Plant, Toyohashi Plant, Tochigi Odawara Kashima Plant, Kao Corporation’s In addition, Kao Paper Manufacturing Fuji Manufacturing Kao Paper electric power generated from renewable sources (with from renewable generated electric power commenced Plant and Fuji Plant having the Toyohashi in 2019). have * 302-4, 305-6302-4, , Kao Corporation’s , Kao Corporation’s * reduction and 240 2 and Kao Sanitary Products Ehime *

Kawasaki Plant Kawasaki • Use of renewable energy • Use of renewable are promoting the introduction of solar We for on-site generation systems power photovoltaic systems The facilities. generation at Kao-owned power Plant of Plant and Toyohashi installed at the Tochigi The electricity. started generating Kao Corporation have capacity of these systems was generating total power generating capacity of in 2019. The 4,251MWh on the right. individual facilities is shown 2. Efforts to use cleaner energy 2. Efforts • Clean-burning fuel fossil Gas fuel, especially natural gas, is the cleanest use natural gas at all plants outfitted with the fuel. We not use any necessary infrastructure. Our plants do coal. million yen in cost reduction for the year. in cost reduction million yen We are also promoting the purchasing of electric power are also promoting the purchasing of electric power We Kao energy. that is generated using renewable GmbH, Chemicals GmbH, Kao Manufacturing Germany three plants in Spain, Kao Kao Corporation SA’s USA Kao Molton Brown, Chimigraf, off include turning are taking steps we Some of the at our offices. wastage to eliminate energy Striving sensors to lights, using person unnecessary optimizing air off, turn lights on and automatically settings and encouraging conditioner temperature to reduce unnecessary the stairs people to take use. elevator at activities offices in 2019, resulting in Japanese plants and energy-saving undertook 183 We tons of CO 7,095 approximately Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 94 -20 -40 0 (%) (Year) -30-30 101 97 -32-32 ✓ □ (Japan) 98 -32-32 2017 2018 2019 96 -33-33 Per unit (of sales) reduction rate Per

2016 emissions. 2 ー ● ー

95 -33-33 2015 00 99 emissions 2 2005 e) 2 CO

0 ■ emission during distribution 50 2 150 100 fiscal 2015, and on International Financial Reporting Standards (IFRS) fiscal 2015, and on International from fiscal 2016. (Thousand tons-CO Adaptation localized short-term, trend toward the worsening With is an increased risk of the supply torrential rain, there to our customers being factories chain from Kao’s products being unable to deliver disrupted, with Kao possible need to use roundabout on schedule, and a to an period, leading an extended routes over risks appear, burden. When increased environmental measures in a short appropriate in order to take are charged with amount of time, subsidiaries in transport to our main market managing product Japan. * Per unit of sales is calculated based on Japanese standards up to Per * CO Boundary: Kao Corporation and Kanebo Cosmetics Inc. * for CO Assurance provided *

2 emissions 2 emissions outside Japan for 2019 has emissions outside Japan for 2019 has 2 related energy usage and CO energy related been based on estimates. It is anticipated that, for been based on estimates. It is anticipated based on 2020, it will be possible to report amount actual distribution data. emissions outside Japan starting from 2019. emissions outside Japan starting from the calculation and reporting of distribution- However, related CO To spread awareness of the two companies’ corporate activities, of the two spread awareness To the corporate colors of Kao containers featuring specially-designed been used for this initiative. and AEON have enhance visualization of distribution- To 5. switch the trailers they are hauling at a relay point point at a relay are hauling trailers they switch the points of the and return the delivery between midway and the Chubu region in metropolitan area Tokyo between the first such collaboration was 2017. This industries in Japan. companies of different We had been making preparations to begin We usage and CO calculating distribution-related energy

2 305-3 in 2019, a 30% reduction (per unit in 2019, a 30% reduction 2 emissions (modal shift). 2

emissions during distribution in Japan were 101 in Japan were emissions during distribution 2

thousand tons-CO 3. Use cleaner shipping methods are pursuing steps such as switching from truck We ship, which to shipping methods such as rail and CO lower have 2. Shorten shipping distances shipping to revise are continuing to look at ways We and shift which routes, optimize manufacturing plants logistics center is used. 1. Increase shipment volumes per shipment shipment volumes 1. Increase including making adjustments are proactively We changing product sizes loading efficiency, improving and using larger vehicles. of sales, 2005 One of the main reasons for baseline). increase in the sales share of the this result was to their relative a large volume products that have weight. Mitigation CO

Efforts in distribution in Efforts Decarbonization Decarbonization emissions in shipping. Together with AEON Global emissions in shipping. Together of AEON SCM Co., Ltd., a consolidated subsidiary adopted a have Co., Ltd., which handles logistics, we transportation system in which drivers trailer relay 4. Improve loading ratios 4. Improve destination trucks return from their shipping Having after with a load, instead of returning empty ratio, the loading unloading, i.e., improving and CO energy efficiency contributes to improving Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 95 website (Japanese) ➡ Kao sonaeru website www.kao.co.jp/hisaiji/ website provides information about information provides sonaeru website Adaptation progresses, the period of time for As global warming demand for anti-perspirants etc. in which there is high and demand is expected the summer is lengthening, to strengthen our working are therefore to rise. We types of products. Additionally, of these development droughts occurring increases, the as the probability of to is also expected products demand for water-saving increase. Our useful in the unfortunate event products that will be particular focus of a natural disaster occurring, with a good on products that can help people to maintain facility. hygiene while living in an evacuation

2 emissions from fuel emissions from fuel 2 consumption, a water-based precision substrate cleanser precision substrate cleanser consumption, a water-based cleansers, an additive that replaces fluorocarbon-based fuel economy by that helps improve for coating material of wire harnesses for weight reducing the coating essential to improving additive automobiles, and an tires to dispersion of a required material for fuel-efficient demonstrate their performance. Essential Smart Blow-Dry hair from getting tangled and reduces the time needed for Prevents air more precise. drying by 20% by making the direction of dryer concentrated liquid clothing detergent, which has won the Ten the Ten Attack ZERO concentrated liquid clothing detergent, which has won Shimbun, Ltd.), and (organized by Nikkan Kogyo Greatest Products Award for Superiority (organized by Nikkei). Journal Awards Marketing the Nikkei emissions during the use stage. These include a toner use stage. These emissions during the fixing, which reduces the with low-temperature and rinsing washing consumption, power photocopier’s and rinse steel plates at low agents that can wash CO temperature to reduce industry that allow customers to reduce their CO customers allow industry that

2

2 2 305-3

emissions per wash by approximately 22%. In 2019, we 22%. In 2019, we by approximately emissions per wash clothing , a concentrated liquid introduced Attack ZERO concept of detergent that has redefined the whole which uses Bio IOS, sour most clothes washing, base, as its main ingredient. detergent advanced ever do their in which consumers Japan, the way Within washing has begun to be transformed, with washing allowing machines that come equipped with a button a standard the user to select a single rinse cycle as that feature becoming the norm. Laundry detergents in Japan and require only one rinse cycle are offered Taiwan. tangling, making it easier for hair from that prevent offer shampoos and other products we Additionally, hair and shorten to penetrate heated air from hair dryers drying time, reducing their energy consumption. reducing CO products, which are capable of effectively help ensure that when consumers use these To emissions during the use stage. emissions during the detergents that only require one concentrated laundry ultra- Some of these leading products include and dish detergent body wash rinse cycle, and shampoo, for rinsing. required of hot water that reduce the amount lifecycle CO , which reduced the launched Attack Neo 2009 we In the laundry detergent segment, in Mitigation reduce CO offer a wide selection of products that We

Efforts during use during Efforts Decarbonization Decarbonization emissions, they use them properly, we participate in we use them properly, emissions, they and hosted by local governments environmental events and compiled have distribution companies, and we eco together” brochure, which distributed our “Let’s to consumers. communicates our initiatives for also offer a wide selection of products We Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 96 reductions from the use of 2 chemical products. C Target Network Corporate Edition administered Corporate Network 2°C Target Ministry of the Environment, offering by Japan’s and example Scope 3 efforts as an Kao’s calculation of Scope 3 emissions contributing to the by corporations. and the contribution to lifestyle of the Environment, decarbonization. toward change for consumers on spread of information and opinion exchange various climate change measures promoted by constituents besides the national government. Industry Group organized by the Japan Chemical corporate Association (JCIA). Publicly disclosing to communicate carbon lifecycle analysis (c-LCA) contributions to CO Kao representatives attending the Japan Climate Action Summit 2019 attending Kao representatives (organized by the Japan Climate Initiative) Examples of major collaboration collaboration of major Examples with stakeholders projects Chain Platform and in the Green Value Participation • promoted by the Ministry awareness, Cool Choice • and the in the Japan Climate Initiative Participation • Working as a member of the LCA Participation • Zero waste Zero p. 103 Making the world healthier & cleaner > healthier p. 103 Making the world ➡

2 102-12, 102-43, 305-3 102-43, 102-12, emissions. We emissions. We 2 emitted from using energy required to operate emitted from using

2 emitted as materials and ingredients made from emitted as materials emissions in the disposal and recycling stage emissions in the disposal 2 2

petroleum degrade when packaging, diapers and petroleum degrade of by consumers after use other materials disposed containing wastewater are incinerated, or when other type agents is treated. The cleansing and other is CO consist of the following two types. One type is the two consist of the following CO incinerating and recycling equipment and wastewater equipment and wastewater incinerating and recycling to reduce the raw are working We treatment facilities. as as well materials used in packaging and diapers cleansing agents to reduce these CO are also using biomass and plant-based plastics are also using biomass and plant-based of the CO deemed to be carbon neutral in terms Adaptation continues In the future, while the human population strict to increase, it is anticipated that increasingly of fossil restrictions will be placed on the extraction Paris fuels, in order to meet the goals of the can Agreement, and as a result resource constraints challenging. to become more and more be expected in innovation are focusing on this in mind, we With of raw reduction*, which reduces the amount in recycling, use, and on innovation materials that we product packaging etc. after recycling which involves use. emitted during decomposition. * We define innovation in reduction as reducing the quantity of define innovation * We material that needs to be disposed of or recycled by reducing the utilized in production. materials quantity of raw Mitigation CO Efforts in disposal and recycling disposal and in Efforts Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 97 Analysis process Analysis in 2018 implemented scenario analysis that we The corporate activities. of Kao’s the entirety covered examine the impact to this made it difficult However, and individual brands. With on individual businesses clarified the objects of we this in mind, in 2019 approach to see “story-driven” analysis, adopting a affect scenario would each climate change how analysis, and performed individual objects of of the impact that climate- assessment quantitative on our have would related risks and opportunities for 2030, as our corporate vision ability to achieve as considering possible countermeasures. well 1. Refining the objects of analysis we business segments, five out of Kao’s First, the objects of selected four business segments to be which is out the Cosmetics business, analysis, leaving by climate unaffected to be relatively deemed likely to focus on a decided change. In each segment, we has its own particular product line, each of which body care and unique characteristics: body wash Care business, products from the Skin Care and Hair from the disposable diapers and sanitary products detergents Human Health Care business, laundry and Home Care business, and oleo from the Fabric chemicals from the Chemical business. product lines include our three mega- These climate change brands. By assessing the impact that can infer by product lines, we on these have would be analogy what the impact of climate change would on our other product lines. 2100 (Year)

compared to compared then there will be a rise then there the 1986–2005 average. in temperature of 0.9–2.3°C in temperature If rigorous measures are taken, are measures If rigorous 2050 102-15, 201-2 102-15, 2°C scenario 4°C scenario compared to compared there will be a rise there the 1986–2005 average. If measures beyond those beyond If measures in temperature of 3.2–5.4°C in temperature already taken are not adopted, are taken already

2000 0 2 4 6

-2 (°C) Source: Japan Meteorological Agency, Changes in Average Global Surface Temperature (Deviation from 1986–2005 average) from (Deviation Temperature Global Surface Changes in Average Agency, Japan Meteorological Source: Climate change scenario selection Climate change based on multiple evaluation (TFCD) final report requires Disclosures Climate-related Financial on Force Task The of 2°C or lower. rise in global temperature an average including a scenario that assumes climate-related scenarios, of business resilience opportunities and evaluation assessment of risks and qualitative undertook In 2018, we Nationally Determined Contribution (NDC) the 2°C scenario, the 1.5°C scenario, and the based on three scenarios: opportunities. assessment of risks and quantitative took on the challenge of undertaking scenario. In 2019, we the IEA 2DS 2°C scenario (such as opted to use the assessment, we the implementation of quantitative For Scenario and the IEA Current Policy C scenario (such as RCP2.6 Scenario, etc.) and the 4° Scenario and the IPCC the world used by many organizations throughout been widely etc.), which are have the IPCC RCP8.5 Scenario, for impact assessment. Source: IPCC Fifth Assessment Report Source: IPCC Fifth Scenario Analysis Scenario Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 98 Hair Care Business Skin Care and % Business Cosmetics 22.7 % % 20.1 17.0 Business net sales net Human Health Care FY2019 billion yen consolidated % % 1,502.2 16.3 23.9 Chemical Business Business Fabric and Fabric Home Care For reference (Current state of Kao’s response measures) state of Kao’s response (Current reference For Proactive development and provision of sunscreen and anti-perspirant products, etc. of sunscreen and provision development Proactive outdoors. measures for persons working Heatstroke-prevention Setting of a water usage reduction target: 45% reduction reduction target: usage Setting of a water 10% usage reduction target: Setting of a lifecycle water products of water-saving Provision plants located near the of production risk survey Implementation of a water coast. Business continuity planning (BCP) formulation, testing and updating. Business continuity planning (BCP) formulation, testing of production plants. risk survey Implementation of a water Setting of an energy usage reduction target: 1% reduction per year Setting of an energy usage reduction target: Reducing the quantity of raw materials used, and developing technology to use materials used, and developing Reducing the quantity of raw unused biomass-materials. previously Implementation of appropriate disclosure of information and of communication Implementation of appropriate disclosure of information with stakeholders. Implementation of appropriate disclosure of information and of communication Implementation of appropriate disclosure of information with stakeholders Setting of Scope 1 + 2 emissions reduction target: 22% reduction Setting of Scope 1 + 2 emissions reduction target: Setting of an annual adoption target for revolutionary new plastic-film new Setting of an annual adoption target for revolutionary containers: 300 million units 45% reduction usage reduction target: Setting of a water of production plants risk survey Implementation of a water Selection results Partial target Partial Partial target Partial Target ExcludedExcluded Essential Research 100% (for purchased electricity) energy target: Setting of a renewable Target Target targetPartial products. water-saving of low-carbon, and provision Development Excluded Excluded Target Target Excluded Impact on business Significant characteristics based on product lifecycle assessment lifecycle on product based characteristics Significant 102-15, 201-2 102-15, Water consumption during product has a significant impact. product has a significant consumption during Water The raw materials procurement process and the waste disposal and recycling process have and recycling process have disposal and the waste materials procurement process raw The a significant impact. materials. pulp are used as raw Large amounts of paper a significant impact. the product use process have materials procurement process and raw The (Palm oil is used as a raw material, and is also used in the household products business) material, used as a raw oil is (Palm adopt 100% renewable energy. adopt 100% renewable to climate change • Rising water use charges and raw materials prices. use charges and raw Rising water • products. demand for water-saving Growing • • Cessation of operations at production plants located near the coast.Cessation of operations • Excluded • Supply chain disruption due to severe weather conditions. weather Supply chain disruption due to severe • • Growing demand for sunscreen and anti-perspirant products. Growing • costs. costs and heatstroke-prevention Rising air-conditioning • • Increased plant operating costs. • • More rigorous requirements to implement decarbonization and • • Rising procurement costs for petrochemical-derived raw materials. raw Rising procurement costs for petrochemical-derived • Rising procurement costs for palm oil. • • Increased demand for products that help to mitigate or are adapted • • Taxation of greenhouse gas emissions. Taxation • capital investment. Additional energy-saving • • Taxation of packaging made using petrochemical-derived plastics. of packaging made using petrochemical-derived Taxation • to substitute materials. Cost of switching over • • Cessation of operations at production plants. • Selected product lines product Body wash and Body wash body care products Disposable diapers and sanitary products Laundry detergents Oleo chemical products Assessment item Demand for water Demand for water outstripping supply Rising sea levels Rising average Rising average temperatures Adoption of low-carbon Adoption of low-carbon energy sources Intensification of abnormal conditions weather Switching over to Switching over products low-carbon Rising price of energyIncreased plant operating costs. • Rising price of raw Rising price of raw materials Changes in consumer behavior Customers’ assessment brand value. Change in perceived • Investors’ assessmentInvestors’ assessment Change in investors’ • Adoption and increase of carbon tax Adoption of restrictions on plastic usage Adoption of water intake intake Adoption of water restrictions Business Chronic Markets Reputation Acute Technology Policies, Policies, legal restrictions

Skin Care and Hair Care Business Skin Care and Human Health Care Business Fabric and Home Care Business Fabric Physical risk Transition Transition risk Chemical Business On the basis of the scenario analysis performed in 2018, we assessed the relative importance of the impact on assessed the relative we scenario analysis performed in 2018, On the basis of the in those cases where for the individual brands. Then, of each risk or opportunity item sour business operations 4 the 2°C scenario and the °C a significant disparity between assessment showed the results of quantitative analysis. implemented further quantitative scenario, we Refining the objects of analysis The business segments and product lines covered in the analysis lines covered segments and product business The Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 99 Growth of Growth performance and bioplastics site development site development of sunscreen and of sunscreen in water-saving use efficiency Increased production Increased locations and multiple Enhanced water substitute raw materials substitute raw ethical products ethical products use of recycled plastics use of recycled anti-perspirant products anti-perspirant Adoption and increasing (including algae-derived oils and fats) (including algae-derived Further improvement Promoting development of development Promoting Change in production site Change in production Kao’s response measures Kao’s response volume products Reduced Increased production Higher sales of Rising procurement for water-saving derived raw materials raw derived production costs Growing demand Growing costs for petrochemical perspirant products sunscreen and anti- costs Impact on Kao’s business sunscreen and restrictions use charges Rising water Water intake Water raw materials raw procurement Rising price of during product use Rising palm oil Increased demand for Increasingly widespread Risk reduction strategyRisk reduction Opportunity seizing strategy the need to save water the need to save adoption of products that fossil fuel derived anti-perspirant products Increased awareness of Increased awareness use certified raw materials use certified raw Sales of Crude oil price (parameters) sunscreen and market for market Size of the Water stress Water and demand Postulated 4°C scenario Postulated Palm oil supply Palm anti-perspirant products ethical products Impact factors Impact factors Legend: Direction of change behavior Lack of Changes in unstable Increased Increased regulation oils and fats Increasingly of fossil fuels consumption temperatures water supply water Rising energy Rising average demand for edible demand for water consumer purchasing policies Unclear Changing urbanization and growing and growing to decarbonization Anticipated developments / background by 2030 by / background Anticipated developments Heightened consumer decarbonization Population growth growth Population weather patterns weather awareness with respect awareness Decarbonization policies are unclear, and new restrictions are not placed on the use of fossil fuels, restrictions new and are unclear, Decarbonization policies and is heightened to some extent, with respect to decarbonization but consumer awareness for demand increases. At the same time, there is growing materials also demand for certified raw the increased demand for manufactured materials, accompanying and for raw energy and water, the current rises by 3°C above temperature increase. Average goods resulting from population level. anti-perspirant products, etc. oil, and increased sales of sunscreen and higher demand for palm stress, of crude oil, increased water that this will result in a rise in the price It is anticipated for higher demand intake, materials, restrictions on water raw derived for purchasing fossil fuel costs these trends will lead to increased business operations, of Kao’s view the point of From sunscreen and anti-perspirant products. products, and increased demand for water-saving and include the development would Measures that Kao will be implementing in response setting of plastic film containers, the plastic-saving new widespread adoption of revolutionary reduction targets, the usage water usage reduction targets at production plants and lifecycle water materials), etc. unused raw use of algae and previously materials (e.g. adoption of substitute raw Growth of Growth performance and bioplastics Setting of own in water-saving of sunscreen and of sunscreen use efficiency Increased production Increased Enhanced water ethical products ethical products substitute raw materials substitute raw use of recycled plastics use of recycled Adoption and increasing (including algae-derived oils and fats) (including algae-derived Further improvement anti-perspirant products anti-perspirant Promoting development of development Promoting certification standards certification standards Kao’s response measures Kao’s response products Increased Higher sales of costs for plastic Rising procurement Rising procurement perspirant products sunscreen and anti- for water-saving derived raw materials raw derived production costs container raw materials container raw Growing demand Growing costs for petrochemical 102-15, 201-2 102-15, Impact on Kao’s business and bioplastics sunscreen and use charges Rising water Rising palm oil raw materials raw Rising price of during product use Increasingly widespread Increased demand for Risk reduction strategyRisk reduction Opportunity seizing strategy use of recycled plastics adoption of products that the need to save water the need to save fossil fuel derived use certified raw materials use certified raw anti-perspirant products Increased awareness of Increased awareness Adoption and increasing procurement costs Sales of oil price (parameters) market for market sunscreen and Size of the Water stress Water and demand Postulated 2°C scenario Postulated Certified palm Crude oil price ethical products Palm oil supply Palm anti-perspirant products of plastic recycling obligations Taxation of plastic used to Taxation make containers, and imposition make Impact factors Impact factors Legend: Direction of change behavior palm oil for water for edible Changes in unstable Tightening of Tightening restrictions on oils and fats for certified of fossil fuels Increasingly consumption temperatures water supply water Rising energy Rising average Tighter regulation Tighter consumer purchasing plantation development Growing demand Growing Increased demand Increased demand

policies Changing

and growing urbanization Strengthening to decarbonization Anticipated developments / background by 2030 by / background Anticipated developments Heightened consumer Strengthened protection as carbon dioxide sinks as carbon dioxide weather patterns weather Population growth Population of decarbonization of forests, which function awareness with respect awareness Decarbonization policies are strengthened throughout the world, restrictions on the use of fossil restrictions on the are strengthened throughout the world, Decarbonization policies In addition, and forest conservation policies are strengthened. materials are tightened, fuels and raw is heightened. Against this background, with respect to decarbonization consumer awareness demand for energy there is growing materials increases. At the same time, demand for certified raw increased demand for manufactured goods materials, accompanying the and for raw and water, the current level. by 1°C above temperature rises increase. Average resulting from population recycled or packaging and requirements to use plastics used for containers fossil fuel derived of taxation on in a rise in the price of crude oil, the imposition It is anticipated that this will result materials, a rise in the price products, higher demand for raw for ethical plastic, an increased market etc. sales of sunscreen and anti-perspirant products, materials, increased of certified raw procurement of certified materials (particularly in regard to the raw for purchasing fossil fuel derived business operations, these trends will lead to increased costs of Kao’s the point of view From products, and for water-saving materials), increased use of recycled plastic, higher demand raw products. Measures that Kao will be increased demand for sunscreen and anti-perspirant adoption of revolutionary and widespread include the development implementing in response would at production water usage reduction targets plastic film containers, the setting of plastic-saving new materials (e.g. use targets, the adoption of substitute raw usage reduction plants and lifecycle water materials), etc. unused raw of algae and previously Body wash and body care products and body care Body wash 2. Scenario definitions 2. Scenario is defined below. is actualized of climate changes by which the impact process The Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 100 advantage through advantage Ensuring competitive resource-saving products resource-saving Kao’s response measures Kao’s response Rising procurement derived raw materials raw derived costs for petrochemical Impact on Kao’s business roughly the same raw materials raw less unchanged Procurement costs Rising price of remaining more or Increasingly widespread adoption of products that Risk reduction strategyRisk reduction Opportunity seizing strategy use certified raw materials use certified raw Electric power costs Electric power fossil fuel derived for wood pulp remaining for wood price (parameters) market for market Size of the Pulp supply and demand Postulated 4°C scenario Postulated Crude oil price Retail electricity ethical products Impact factors Impact factors Legend: Direction of change behavior Lack of Changes in Growing Expanded Increased adoption of fossil fuels forest fires demand for incidence of regulation of certified pulp consumption Rising energy renewable energy renewable consumer purchasing policies Unclear awareness with awareness precipitation and and growing urbanization amount of sunlight Heightened consumer Anticipated developments / background by 2030 by / background Anticipated developments decarbonization Population growth Population respect to decarbonization Changes in temperature, Decarbonization policies are unclear, and new restrictions are not placed on the use of fossil fuels, restrictions new and are unclear, Decarbonization policies and is heightened to some extent, with respect to decarbonization but consumer awareness demand for increases. At the same time, there is growing materials also demand for certified raw goods resulting the increased demand for manufactured materials, accompanying energy and raw the current level. temperature rises by 3°C above Average from population increase. increased frequency of forest fires, etc. ethical products, and an for market in a rise in the price of crude oil, an expanded It is anticipated that this will result made using materials, and increased production of products raw purchasing fossil fuel derived to increased costs for of sour business operations, these trends will lead point of view the From would include the Kao will be implementing in response materials. Measures that certified raw diapers. of resource-saving continued development energy facilities energy advantage through advantage Ensuring competitive facilities and renewable facilities resource-saving products resource-saving Adoption of energy-saving Kao’s response measures Kao’s response Rising procurement derived raw materials raw derived costs for petrochemical 102-15, 201-2 102-15, Impact on Kao’s business roughly the same power costs power Procurement costs raw materials raw Rising price of Rising electric Increasingly widespread Risk reduction strategyRisk reduction Opportunity seizing strategy adoption of products that for wood pulp remaining for wood use certified raw materials use certified raw fossil fuel derived Retail (parameters) market for market Size of the Pulp supply and demand Postulated 2°C scenario Postulated Crude oil price electricity price ethical products Impact factors Impact factors Legend: Direction of change consumer Growing Changes in Expanded Increased Increased on new planted on new forest fires wood chip wood adoption of demand for incidence of of fossil fuels forest development certified pulp consumption consumption Rising energy Tightening of restrictions Tightening purchasing behavior Tighter regulation Tighter renewable energy renewable

policies Increased generation precipitation and

and growing urbanization amount of sunlight to decarbonization Anticipated developments / background by 2030 by / background Anticipated developments decarbonization as carbon dioxide sinks as carbon dioxide Heightened consumer Strengthened protection Strengthening of of forests, which function biomass electricity Changes in temperature, awareness with respect awareness Population growth Population Decarbonization policies are strengthened throughout the world, restrictions on the use of fossil restrictions on the are strengthened throughout the world, Decarbonization policies electric and there is increased use of biomass to generate materials are tightened, fuels and raw to decarbonization is heightened. Against this with respect awareness In addition, consumer power. is growing materials increases. At the same time, there certified raw background, demand for demand for manufactured materials, accompanying the increased raw demand for energy and increase. goods resulting from population for ethical market an expanded paper pulp supply and demand situation, and prices, changes in the retail electricity in a rise in the price of crude oil, higher It is anticipated that this will result products, etc. electricity purchase costs, and increased materials, higher raw derived for purchasing fossil fuel trends will lead to increased costs business operations, these of Kao’s the point of view From Measures that Kao will be implementing materials. raw production of products made using certified diapers, and continued investment of resource-saving include the development in response would energy. facilities and facilities that utilize renewable in energy-saving Disposable diapers and sanitary products and sanitary Disposable diapers Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 101 products products energy facilities energy preparations Supply chain diversification Strengthening Strengthening BCP measures facilities and renewable facilities Promoting development Promoting at high-risk sites Growth of ethical Growth management systems disaster-response Stricter environmental (including algae-derived oils and fats) (including algae-derived Adoption of energy-saving of substitute raw materials of substitute raw Kao’s response measures Kao’s response Lost costs Need to pay facility repair opportunities costs Impact on Kao’s business disruption Cessation of operations at Supply chain procurement of status quo Maintenance Rising palm oil Increasingly widespread Risk reduction strategyRisk reduction Opportunity seizing strategy adoption of products that Rising fuel costs production plants use certified raw materials use certified raw Increased oil price Palm oil Palm damage demand (parameters) market for market Size of the Amount of Carbon tax supply and making landfall Certified palm Postulated 4°C scenario Postulated from flooding Crude oil price ethical products frequency of typhoons Impact factors Impact factors Legend: Direction of change Lack of consumer Growing Changes in Increased conditions regulation demand for demand for oils and fats consumption of fossil fuels Rising energy of producer nations Intensification of Increased supply due abnormal weather to increase in number certified palm oil purchasing behavior policies Unclear Increased generation and growing urbanization to decarbonization Anticipated developments / background by 2030 by / background Anticipated developments as carbon dioxide sinks as carbon dioxide Heightened customer Strengthened protection decarbonization Population growth Population of forests, which function biomass electricity awareness with respect awareness Decarbonization policies are unclear, and new restrictions are not placed on the use of fossil fuels, restrictions new and are unclear, Decarbonization policies and is heightened to some extent, with respect to decarbonization but consumer awareness demand for increases. At the same time, there is growing materials also demand for certified raw goods resulting accompanying the increased demand for manufactured energy and for palm oil, an to forest conservation will be limited, and restrictions relating However, from population increase. will lead to increased supply of of countries engaged in palm oil production increase in the number that this weather conditions. It is anticipated of abnormal will be an intensification palm oil. There for ethical products, and an market price of crude oil, an expanded will result in a rise in the etc. of damage from typhoons and flooding, increased level and disrupted supply chains. costs, cessations of factory operation costs, higher palm oil purchasing will lead to increased fuel business operations, these trends of Kao’s the point of view From include the on a continuing basis would Measures that Kao will be implementing in response more rigorous energy, facilities and facilities that utilize renewable adoption of energy-saving materials, strengthening of raw of substitute environmental management systems, development in relation to the supply chain, etc. business continuity planning (BCP) measures Growth of Growth energy facilities energy facilities and renewable facilities Promoting development Promoting ethical products ethical products management systems Stricter environmental (including algae-derived oils and fats) (including algae-derived Adoption of energy-saving of substitute raw materials of substitute raw Kao’s response measures Kao’s response costs 102-15, 201-2 102-15, Impact on Kao’s business power costs power procurement Rising electric Rising palm oil of products that use Increased plant operating costs Risk reduction strategyRisk reduction Opportunity seizing strategy Widespread adoption Widespread Rising fuel costs certified raw materials certified raw Retail oil price Palm oil Palm demand (parameters) market for market Size of the Carbon tax supply and Certified palm Postulated 2°C scenario Postulated Crude oil price electricity price ethical products Impact factors Impact factors Legend: Direction of change Tighter palm oil consumer development Tightening of Tightening Changes in Expanded Increased adoption of for certified fossil fuels demand for oils and fats regulation of consumption Rising energy renewable energy renewable Growing demand Growing restrictions on plantation purchasing behavior

policies Increased generation and growing urbanization

to decarbonization Anticipated developments / background by 2030 by / background Anticipated developments Heightened customer decarbonization as carbon dioxide sinks as carbon dioxide Strengthened protection Population growth Population Strengthening of biomass electricity awareness with respect awareness of forests, which function Decarbonization policies are strengthened throughout the world, restrictions on the use of fossil restrictions on the are strengthened throughout the world, Decarbonization policies there is increased use of conservation policies are strengthened, and fuels are tightened, forest with respect to In addition, consumer awareness power. biomass to generate electric materials certified raw Against this background, demand for decarbonization is heightened. materials, accompanying demand for energy and raw time, there is growing increases. At the same increase. for manufactured goods resulting from population the increased demand for ethical products, etc. expanded market certified palm oil, and an increase in the price of an higher retail electricity prices, in higher carbon taxes, It is anticipated that this will result palm oil purchasing costs), and costs, fuel costs and power electric taxes, costs (including carbon to increased operating of sour business operations, these trends will lead point of view the From Kao will be materials. Measures that products made using certified raw increased production of gas targets, greenhouse include the setting of energy-saving implementing in response would materials substitute raw energy adoption targets, the adoption of emissions targets and renewable materials), etc. unused raw (e.g. use of algae and previously Oleo chemical products (Chemical Business) (Chemical Oleo chemical products Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 102 es Kao’s response measur Kao’s response Publicization of the innovation for recycling implementation strategy for recycling implementation Publicization of the innovation using recycled plastic Increasing use of packages made Publicization of the innovation in reduction implementation strategy in reduction implementation Publicization of the innovation plastic-film new for revolutionary Setting of an annual adoption target use reduction activities packages, and ongoing plastic Setting of Scope 1 + 2 emissions reduction target, and ongoing emission Setting of Scope 1 + 2 emissions reduction activities — Ms. Rika Sueyoshi, Director General of the Ethical Association, has been Ms. Rika Sueyoshi, are also invited to join our External ESG Advisory Board, and we of ethical products. and provision engaged in the development BCP adjustment with respect to suppliers risk surveys Implementing water Setting of energy consumption reduction targets, and proactive Setting of energy consumption reduction targets, and proactive use own installation of solar panels for the company’s raw Ongoing activities to reduce the quantity of fossil fuel derived materials raw materials included in products that use fossil fuel derived Production planning adjustment use reduction use reduction targets, and ongoing water Setting of water activities Promoting development of and commencing utilization of substitute raw materials of and commencing utilization of substitute raw Promoting development unused biomass materials) oils and fats, and previously (including algae-derived − − ＋ ＋ ND ND ND ND ＋＋ − − − 4°C scenario No new requirements to use recycled plastic No new No adoption of new taxes No adoption of new Increased demand for ethical products among the generation who will account for the largest share of consumption in 2030 leads to sales growth. overall Reduced costs due to the falling retail electricity price flood risk is increasing, it is difficult to accurately While forecast the amount of damage that will be suffered Increased sales in Japan year-round Increased costs due to the rising price of crude oil Increased operating costs at factories operating in areas drought-affected No adoption of carbon tax or increase in tax ratesNo adoption of carbon tax or increase ND No change in procurement costs due to increased supply palm oil plantations of new resulting from the development No change in procurement costs because supply remains adequate to meet demand despite the increase in forest fires − − − − − − ＋ ND − − − − ＋＋ 2°C scenario Assessment results for 2030 (+: a positive impact, -: a negative impact, impact, -: a negative 2030 (+: a positive for Assessment results ND: no significant impact, the number of symbols: the size of the impact) the number of symbols: the size ND: no significant impact, Increased procurement costs due to the rising price of Increased procurement costs due the introduction of recycled plastic resulting from requirements to use recycled plastic Increase in procurement costs due to adoption of new due to adoption of new Increase in procurement costs taxes Increased demand for ethical products among the generation who will account for the largest share of consumption in 2030 leads to sales growth. overall Increased costs due to the rising retail electricity price flood risk is increasing, it is difficult to accurately While forecast the amount of damage that will be suffered March and November Increased sales in Japan between each year Increased procurement costs due to supply shortages resulting from tighter restrictions on forest development Rising procurement costs for fossil fuel derived raw raw Rising procurement costs for fossil fuel derived materials Increased operating costs at factories operating in areas drought-affected Increase in operating costs due to adoption of new taxes taxes to adoption of new Increase in operating costs due and increase in tax rates No change in procurement costs because supply remains adequate to meet demand despite the increase in forest fires 102-15, 201-2 102-15, Assessed financial impact Increased costs due to requirement Increased costs due to requirement to use recycled plastic Taxation of packaging made using Taxation plastics petrochemical-derived Increased sales of ethical products Higher sales of sunscreen and anti-perspirant products Increased damage from flooding Fluctuations in the retail electricity price Rising procurement costs for palm oil Increase in operating costs due to charges increased water Rising procurement costs for fossil materials raw fuel derived Rising procurement costs for paper pulp Increase in operating costs due to Increase in operating costs due to tax adoption of and increase in carbon item Assessment Adoption of restrictions on plastic usage Changes in consumer behavior Rising average Rising average temperatures Intensification of abnormal weather conditions Rising price of energy Adoption of and increase in carbon tax Rising price of raw Rising price of raw materials Demand for water outstripping supply

Policies, legal restrictions Markets Acute Chronic

Transition risk Physical risk material for us. scenarios in terms of the impact on the production of palm oil, which constitutes an important raw the two indicating the possibility of a disparity between a lack of information was There to enhance the precision of will strive assessment is not practicable, then we on these items. If quantitative surveys will be implementing follow-up assessment. In the future, we qualitative is broadly satisfactory. were able to confirm that, at the present time, the response we Regarding the state of our response to financial impact assessment items, 1) Regarding the increase in sales of ethical products, which will have the biggest positive impact, we did not identify any information indicating a disparity between the two scenarios. the two indicating a disparity between did not identify any information impact, we the biggest positive Regarding the increase in sales of ethical products, which will have 1) already been actualized in Japan. will suffer from localized torrential rain and typhoons, risks which have not possible to quantify the damage that our business operations It was 2) 3) 4. Strategy for the future for 4. Strategy of the the existence able to determine were we Kao Aims to Be by 2030,” assessment of the impact on “What this quantitative On the basis of the results obtained in limits. following 3. Estimation of business impacts in 2030 of business 3. Estimation annual have would Kao that by 2030 we assumed More specifically, the four product lines. for each of to Be by 2030” separately Kao Aims “What the impact on assessed We would grow loss that profit / on the assumption was calculated 2030 profit / loss for 2018), and the baseline compared to 167% growth (representing trillion yen sales of 2.5 impact of order to compare the profit / loss. In on this baseline the business impacts We estimated 2018. in / loss level in sales from the profit to the increase in proportion 4°C the 2°C scenario and the between only on factors whose differing impact performed the assessment we our business across the different scenarios, the factors affecting be quite the potential impact of that factor could if even was not performed, were some factors for which the assessment this reason, there For scenario could be quantified. 2050 although the potential impact by also factors where, were was limited. in 2030 significant, the potential impact was substantial. There Decarbonization Decarbonization Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 103 Contents Contents Criticism of the industry or of individual companies, stronger concerns Criticism of the industry or of individual companies, stronger concerns changes in consumer preferences, etc. among stakeholders, disposal costs as a result of decreases in the volume Lower costs for generated from business sites and lower of waste etc. as a result of packaging, better transportation efficiency, reducing plastic consumption. generated through the of waste Reduction in the volume products, higher sales due of resource-saving development use of packaging using less plastic and to expanded income due to packaging, higher of innovative development technology. licensing of development use of markets, access to new Higher sales due to improved etc. technologies, innovative for developing public incentives continuing to promote resilience through actively Improved 3R activities for plastic packaging. Stricter regulations on the processing of waste generated from generated of waste Stricter regulations on the processing on consumption of plastic business sites, increased regulation recycled plastic, taxation), packaging (mandatory use of on plastic use, etc. mandatory labeling of information generated from business sites of waste Increased volumes and products of new in conjunction with the manufacture technology for reducing unsuccessful attempts to develop plastic consumption or using recycled plastic. of Higher disposal costs as a result of increases in the volume of disposal capacity throughout generated in excess waste changes in consumer preferences, rising costs for society, and virgin plastic or recycled plastic, etc., criticism of industries etc. individual companies, rising concerns from stakeholders, Items Items Resource Resource efficiency Policies, Policies, legal restrictions Markets Reputation Products, services Markets Resilience Technology Opportunities related to realization of our vision by 2030 of our vision by to realization Opportunities related Contributions to the SDGs Risks related to realization of our vision by 2030 of our vision by to realization Risks related drastically reduced. Consequently, production of Consequently, drastically reduced. fall made from fossils fuels, may plastics, which are It is obvious to current levels. dramatically compared plastic containers made with from clear that existing plastic are not fuel derived large amounts of fossil sustainable. value Kao’s creating in many activities for increasing are involved We with various resource productivity in collaboration stakeholders. are continuously implementing 3R activities to plastic generated at We reduce, reuse and recycle waste with regard plants, distribution sites and offices and to products and packaging. we and use of film in particular, In the area of plastic packaging are undertaking ongoing development plastic, and packages that use about one-sixth the are becoming products in refillable film containers are rolling out these popular in Japan. We making it group companies, technologies to overseas used in possible to reduce the amount of plastic that if ordinary packaging. It goes without saying effects will consumers also use these products, the more substantial. be even that has waste Furthermore, efforts to recover already been released into the environment greatly contribute to the protection of marine and land ecosystems. 102-12, 102-15, 103-1 102-15, 102-12,

Social issues we are aware of aware are Social issues we limited, resources are world’s Considering that the are rising, and needed resources standards of living as the global population are steadily increasing economic models the one-way continuously grows, support prosperous lifestyles of the past will no longer to efforts future. Consequently, and culture into the and create of economic growth high levels achieve to develop recycling-based societies, in other words, with high secular economies that seek compatibility are gaining momentum around resource productivity, the world. for (i.e., waste In regions where social infrastructure developed treatment systems) is not sufficiently generated the increases in the amount of waste numerous there are including household waste, to waste instances of environmental pollution due at disposal being dumped or insufficiently treated by consumers facilities. In addition, improper conduct land entering dumped on after use results in waste decompose the oceans. Plastic in particular does not plastic waste of marine and the volume naturally, by 2050,continues to increase. Estimates are that environment there will be more plastic in the ocean of all the fish in the oceans. than the weight by weight detrimental marine plastic is starting to have This impacts on marine ecosystems. temperature rise due to climate change keep To under 2°C/1.5°C, consumption of fossil fuels must be Kao’s creating value to address social issues to address value Kao’s creating Help drive the transition to a circular economy by optimizing material selection and minimizing their use, recycling all our waste, and making our packaging making our packaging and all our waste, use, recycling minimizing their selection and optimizing material by economy transition to a circular the Help drive reusable and recyclable. practically Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 104 emissions from the transport of raw transport of raw emissions from the 2 emissions in conjunction with waste emissions in conjunction with waste 2 processing. also use recycled plastic for some of our the are able to reduce We products. As a result, we to a amount of virgin plastic used, which leads material raw reduction in the use of fossil fuels, the that these measures are are aware for plastic. We and important for solving the problem of plastic creating a decarbonized society. on products to used plastic stickers a switch concerning are making In addition, we the eye-catching paper when attract consumers’ attention to certified all other absolutely must be used and eliminating they use by the end of 2021. materials. our products to in relation taken Measures diapers and offer products such as disposable We after consumer become waste cleaning sheets that are we ensuring product performance, use. While amount of technologies to reduce the developing to reducing materials used in products and contribute waste in order to reduce the amount of waste also reduces costs generated after product use. This and CO Efforts in raw materials procurement materials in raw Efforts our plants, we generated at reduce waste To suppliers to adjust with external work continuously materials deliveries. raw and frequency of the volume of packaging contributes to reducing the amount This as from suppliers as well procure materials we reducing CO Environment and Safety Environment New Challenges of the Kao Group into the Future Challenges of the Kao Group New Statement regarding our plastic packaging ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/plastic- packaging-001.pdf www.kao.com/global/en/news/business- finance/2019/20190926-001/ p. 113 RecyCreation activities ➡ p. 113 RecyCreation on Basic Principle and Basic Policies ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environment- safety-principle-policies.pdf Kao Responsible Care Policy ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/responsible-care- policy.pdf Statement Kao Environmental ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environmental- statement.pdf ➡ Plastic Packaging” in October 2018, expressly stating expressly in October 2018, Plastic Packaging” our by is driven on plastic packaging that our action improvement based on continuous 4R programme innovation. and bold Yoki- September 2019 that announced in of carrying out ESG-driven As a part Monozukuri, we for reduction and will focus on innovations we can create a plastic recycling recycling so that we based society. 103-2

We continue to implement activities aimed at to implement activities continue We from product stage at every waste reducing to disposal. development to are working we on with our fundamental policies In accordance safety, the environment and into consideration that take technologies develop energy conservation, waste resource conservation, issues in the product design reduction and other are taking measures to we stage. In production, and energy and to reduce, efficiently use resources and byproducts. reuse and recycle waste Policy Furthermore, the Kao Responsible Care shall reduce, declaration: “We contains the following continuously to and strive reuse and recycle waste reduce environmental impact.” embodies our Our Environmental Statement ... utilize commitment to ensuring that “Kao products minimize the technologies to original Kao-developed not just in the on the environment, have impact they life of the manufacturing process, but in the daily materials customers who use them. From procurement and manufacturing, to distribution, want to engage in we sales, use and final disposal, and consumers ‘eco together’ with stakeholders worldwide.” the as demand society, that in a decarbonized It is expected use of fossil fuels will be restricted even and we plastics increases worldwide, for convenient of plastic of the need to reduce the amount are aware that are used in the future while switching to plastics not made from fossil fuels. Philosophy & Action on announced “Our We Policies Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 105 Proper storage and treatment of PCB waste and treatment storage Proper formerly used in biphenyls (PCBs) were Polychlorinated ballasts, but insulating oil, such as in transformers and and therefore pose a risk degradability low have they in living to human health and to creating hazards appropriately store and treat PCB- environments. We until its in accordance with the law containing waste disposal is contracted to a service provider. we are making a transition to disseminating a transition to are making we using digital means. information recycling waste Enhancing waste to zero to reduce generated be difficult It would we Accordingly, technology. with currently available is thoroughly sorted, and waste ensure that generated appropriate recycling methods in select the most we treatment waste cooperation with contracted recycled the amount of waste monitor We providers. along with the amount of and sent for final disposal is treated waste how improve generated to waste overall. illegal dumping of waste Preventing to treatment service providers contracting waste When generated at our plants and offices, dispose of waste this risk, reduce there is a risk of illegal dumping. To that the to verify regularly visit the service providers we The is being disposed appropriately. contracted waste containing Kao Group in Japan has created a database treatment information including contracts with waste from surveys and the results obtained service providers illegal treatment to prevent of appropriate waste system is also connected to the dumping. This ensures Electronic Manifest System, which also of illegal dumping. prevention Efforts in development, manufacturing and sales and manufacturing in development, Efforts generated at our are reducing the amount of waste We we are reusing and recycling and plants and offices, inside and outside the and other materials waste much targets for how set reduction have We company. to company–wide generate and are working we waste them. achieve for liquid products, example, and products. For materials raw are reducing loss of At plants, we is produced as a result of cleaning sludge wastewater facility the mixing and storage tanks at the production sheet- For when the product produced is switched. is left type products, a portion of the sheet material are out. We unused when the material is switched on an studying loss reduction countermeasures loss that ongoing basis according to the type of to reduce then implement improvements occurs. We waste. expense considerable ultimately disposed of as waste, from stores are Because products that are returned including the and impose environmental burdens arise during the of resources and GHG emissions waste disposal- as considerable disposal process as well with will work we Going forward, related expense. product shipping and placement stores to review In addition, methods in an effort to minimize waste. sales promotion materials are discarded after use, so products through disposal and treatment. Based on the treatment. Based disposal and products through accumulated have we technology that fundamental on creating innovative are focused we until now, and plastic, developing technologies for used recycling recycled plastics, low-cost using high-quality, that generates value from used encouraging activities for industrial waste plastic and using plastic applications. 103-2

Initiatives targeting packaging targeting Initiatives ISO compliance with the measures in Kao undertakes and the standards for packaging 18600 series the amount we are reducing Specifically, environment. and reducing the use of of plastic used in packages a serious social become have plastic packages, which replace, reuse, recycle) issue, from a 4R (reduce, perspective. the adoption of refill and thinner packaging, are promoting the use of we In terms of reducing, film packaging use of plastic The replacement product. use of plastic to just one-sixth enables to slash the the use of film expand bottles. To compared to plastic improvements continued to make have packaging, we size, the to these refill products according to bottle refilling viscosity of the contents and so on to make the internal encourage easier for consumers, and we We are film packaging. use of innovative and external refilling the possibility of in-store also exploring the store and whereby consumers bring packaging to with. are filled purchase only the products they materials plastics with alternative fossil fuel derived to replace are working regard to replacing, we With plastic and as recycled such as paper and glass as well been using recycled have plastic. We plant-derived inserts for and instructional paper for the carton boxes detergent, laundry many products, including powdered use. plan to expand since the 1960s, and we consumers reusing bottles in the home by providing adopted an approach for have As for reuse, we We are also with refill and replacement product. packaging system to accept on a take-back working and reuse. from customers for washing Monozukuri measures, rather than treating the product Last is recycling. As one aspect of our Yoki- responsibility for take launches as the end point, we Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 106 102-43, 404-2 102-43,

Collaboration and engagement and engagement Collaboration with stakeholders Methods of processing waste generated from our generated Methods of processing waste by generated as waste business activities as well our products consumers and customers after using are We agencies. are regulated by government through to address this issue proactively working collaboration and consultation with government can that we agencies and industry associations so to process it easier or make more waste recycle even to reduce the Furthermore, it will be difficult waste. to increase amount of plastic used in packaging and suppliers, and recyclability without the cooperation of of engage in exchanges actively therefore, we opinions and joint development. after consumers use generated Reducing waste products products will require consumers to select actively we resources, so manufactured with fewer with engage in consumer education in collaboration bodies, industry associations and government distributors. Many of our products became waste after use. We We after use. waste products became Many of our earnestly and recognize the are facing this fact the chance to of our employees importance of giving from our business of waste learn about the generation products through various activities and used reduction engage in waste programs and to actively have this end, we accord. To measures of their own education. for employee created many opportunities Education and promotion Education Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 107 * As of December 2019. ESG Committee Directors Board of Board Committee Management

packaging as well as social and governance issues. and governance as social as well packaging with the SCM systematically in cooperation conducted are providers treatment service Site inspections of waste Logistics Division, Division, Division, Procurement Division and related Division, Sales Technology Information by using a database Data reliability is ensured companies. tasks data, and work manages environmental that centrally efficient to adequately and made more are standardized targeted outcomes. conduct activities with Logistics Co., Ltd. & D Division & Kao Group Customer Marketing Co., Ltd. Customer Marketing Kao Group Consumer Products Business Division Consumer Products Executive officer Responsible for Corporate Strategy Corporate officer Responsible for Executive Consumer Communication Center RC Department and

Each division and Group company Each division and Group Risk and Crisis Management Committee Committee Promotion Responsible Care Quality Management Committee ● ● ● Quality Management Division Product Supply Chain Management Division Division Procurement Human Capital Development Head Office Division (Sumida Office) Quality Management Division Product

Kanebo Cosmetics Inc. Services Co., Ltd. Kao Professional Secretariat Kao Transport Chairperson Members Chemical Business Division R Responsible Care Promotion Committee Promotion Responsible Care Internal Control Committee Internal Control Disclosure Committee Disclosure Compliance Committee Security Committee Information President and CEO Chairperson: ● ● ● subordinate committees that it oversees and auditing the the auditing and it oversees that committees subordinate of management Opportunity committees. of those activities by the ESG is handled products from used generated waste Committee a year. which meets four times Committee, of the business, sales, the persons in charge members are arrangement which other divisions, an R&D, SCM and Internal Control The horizontally. connects divisions and which supervise and the ESG Committee, Committee, from derived waste issues including discuss environmental Waste, Container and Packaging Management Systems Management Container and Packaging Waste, 102-20, 103-2 102-20,

Management of waste generated from business activities is from business activities generated of waste Management Committee and by the Internal Control carried out generated from use products as well management of waste by the ESG Committee under the as packaging is conducted committees are of Directors. These supervision of the Board officer responsible and CEO. The headed by the President as chair of the Department serves for the Corporate Strategy Committee, and the Corporate Responsible Care Promotion of the Responsible Care Division serves Strategy Department meets committee the committee. The as the Secretariat for on and discuss compliance with twice annually to report generated, the the amount of waste and regulations, laws other matters and sets targets for status of recycling, and Responsible Care Promotion The year. the following with Committee conducts monthly checks on compliance and the amounts and regulations, monitors waste laws a large have status of recycling, mainly at plants which to the head impact, and reports on these and other matters of the of the committee, committee members, members Internal Control Committee, auditors and others. under the Japan RC Meeting and Global RC Meeting are reported at the issues Activities related to waste Committee. supervision of the Responsible Care Promotion SCM Division, which manages our plants that account The generated by our plants and office, for the majority of waste Group Meeting with holds the Environment Working progress relating environmental staff at all plants, manages at reducing waste to activity targets regarding recycling and Best Practices. plants, and internally develops receiving activity reports from the times each year, Internal Control Committee meets one or more The other Responsible Care Promotion Committee and Framework Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 108 Anticipated benefits from achieving mid- to achieving benefits from Anticipated long-term targets Business impacts to raise productivity in order to It will be necessary generated and the like of waste curtail the amount If productivity is raised, from business activities. can be reduced. In addition, manufacturing costs to reduce can also be expected promoting recycling processing costs. waste film packaging both internally meeting our targets for reducing and innovative By using and externally in new can boost sales plastic consumption, we from licensing our patents. and earn revenue markets on the taxes new can also avoid of recycled and bio- By increasing consumption based plastics, we use of virgin plastic. Social impacts from generated and the like By curtailing waste to achieve business activities, promoting recycling a society where and developing zero waste, reduce film packages that can drastically innovative both the amount of plastic used are widespread to inside and outside Kao Group will contribute society enhancing resource productivity throughout to realizing a as a whole. Doing this will contribute to offer it possible recycle-based society and make society with consumers clean products in a future are important These limited resource availability. and approaches for carrying out the Kirei Lifestyle One Planet Living vision. achieving

*1 300 million products Zero elating to packaging Scope 2030 for Targets gets r Kao Group and other Kao Group companies All Kao Group sites All Kao Group *2 Items (When stickers are absolutely necessary, certified are absolutely necessary, stickers (When paper will be used) Quantity of film innovative packaging penetration Amount of waste 2030 mid-term targets relating to Zero waste to Zero relating 2030 mid-term targets *1 Annual penetration amount not recycled from business sites *2 Amount of waste • Develop film packaging made from a single material film packaging made from a single Develop • to 100% recyclable, reusable packaging Shift • of recycled plastics: x5 Consumption • of bio-based plastics: x3 Consumption • 2021 target relating to eye-catching stickers to eye-catching relating 2021 target stickers elimination of eye-catching Complete • 2025 mid-term tar 103-2, 103-3 103-2, 2019 targets 2020 targets 0.1% or lower 0.1% or lower 33% reduction 33% reduction All Kao Group All Kao Group sites All Kao Group sites in Japan 1

2 Index Scope

waste. Final disposal Final ratio* Generated Generated and waste other unwanted materials* *1 Per unit of sales (2005 baseline). *1 Per Ratio destined for final landfill disposal to the amount of generated *2 2020 target relating to waste relating 2020 target 2020 reduction targets for waste set the In 2013, we materials generated at all Kao and other unwanted a reduction of aimed to achieve Group sites and have target percentage of final The 0.5% each year. sites in Japan has been disposal at all Kao Group began with the target of We increased in phases. in 2007 lower in 2004, then 0.2% or 0.5% or lower since 2010. and 0.1% or lower Mid- to long-term targets and performance and targets long-term Mid- to Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 109 4. Eye-catching stickers 4. Eye-catching the complete towards working started have We stickers. plastic elimination of eye-catching Americas Europe Asia Japan 0 -20 -40 (%) (Year) -27-27 225 -26-26 228 -25-25 231 -25-25 224 2016 2017 2018 2019 -27-27 220 (all sites) 2015 ✓ □ Per unit (of sales) reduction rate Per 00 200 ー 2005 ● ー 0 production sites in Japan. From 2015, some non-production sites production sites in Japan. From outside Japan are also included. materials. unwanted Financial Reporting Standards fiscal 2015, and on International (IFRS) from fiscal 2016. 400 300 200 100 (Thousand tons) Amount of generated waste and other unwanted other unwanted and waste Amount of generated materials 2005,Boundary: For and non- all Kao Group production sites * and other for amount of generated waste Assurance provided * unit of sales is calculated based on Japanese standards up to Per * facilities treatment 3. Inspection of waste conducted inspections of 192 waste In 2019, we waste treatment sites with the cooperation of 153 no waste treatment companies (Japan). As a result, found to be in treatment companies were standards. noncompliance with our evaluation 301-2, 306-2, 306-4 306-2, 301-2,

unwanted materials unwanted

Waste * Includes thermal recycling (heat recovery). since 2015. for amount of generated waste * Assurance provided 2. Recycling came to 209 thousand tons reused or recycled* Waste ✓ Due to reduction efforts at our worksites in 2019, the at our worksites Due to reduction efforts and other unwanted waste amount of generated thousand tons, a decrease of 3 materials came to 225 year, with the previous thousand tons compared in the point improvement resulting in a 1 percentage year the previous of sales) over reduction rate (per unit our target of a 33% to 27%, but did not reach our activities will continue to strengthen reduction. We and other unwanted to reduce generated waste will continue to strengthen our activities materials. We and other unwanted to reduce generated waste materials. transported was hazardous waste No hazardous waste. 22 thousand tons were generated waste, Of the internationally under the Basel Convention. Performance in 2019 Performance our target of achieved have We final disposal ratio for waste. or lower maintained our target of a 0.1% We since the year zero emissions for the 15th consecutive waste disposal ratio to generated set (final target was in Japan). for all Kao Group worksites with our reducing the gap amount of generated waste, trend in the an improving saw while we In 2019, will continue 2020 target is a challenge and we conducting activities to reduce waste. Performance and other waste of generated Amount 1. □*, a recycling rate of 93%. Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 110 104.4 thousand tons Usage tons thousand 35.5 Reduction (Year) duct usage 16.8 18.7 62.7 41.7 16.3 17.4 59.5 39.0 Refill and replacement Pro Refill and to adoption compact packaging sizestopackaging adoption compact Reduction in plastic consumption due due plastic consumption in Reduction 17.0 15.4 57.5 34.8 15.9 14.9 53.1 30.6 14.3 15.7 51.4 28.6 5.2 17.5 20.5 11.2 2005 2015 2016 2017 2018 2019 0 cleaner, bleach, mold remover. cleaner, accordingly. been revised packaging sizes in 2018 contained errors and have and replacement product usage Original product usage product Original Reduction in plastic consumption due refill due plastic consumption in Reduction 60 40 20 00 80 60 40 20 (Thousand tons) * Boundary: Kao Corporation * household kitchen cleaner, hand soap, shampoo & rinse, liquid laundry detergent, fabric softener, Body wash, * product usage and Reduction in plastic consumption due to adoption compact values for Original The * Usage and reduction volume of plastic in refill and replacement categories and of plastic in refill volume Usage and reduction 1 1 1 1 5. Amount of packaging used 5. Amount of packaging of 160.6 Services Co., Ltd. combined used a total Cosmetics Inc. and Kao Professional Kao Corporation, Kanebo thousand tons of packaging. offers 326 Kao Corporation now year. compared to the previous were +2.8% and +4.6%, respectively, figures These plastic packaging. 59.7 thousand tons were thousand tons of packaging, of which Kao Corporation used 146.8 than 80% penetration rate of 84% and slightly more product (as of December 2019), with a refill and replacement basis). stands at more than 90% (unit particular now for fabric softener and fabric bleach in refill ratio The recently. thousand tons by 62.7 thousand tons, totaling 104.4 for refills and replacements has dropped Consumption of plastic been in original plastic compared to if products had more concentrated is accounted for, when making products 74.6%. rate was reduction packaging. Overall plastic, metal, glass * Corrugated board, paper, 102-48, 301-2 102-48,

Packaging 4. Amount of bio-based plastics used Bio-based plastics are used for Merit shampoo and CuCute shampoo and conditioner, Segreta conditioner, Refill, and Eco Pack 1,500ml containers, Raku-raku and the shampoo and treatment, and other products, (1.2 times the total amount used has reached 463 tons amount in 2018). 3. Amount of recycled plastic used 3. Amount of recycled Recycled plastic (PCR) is used for shampoo, by Kao (Taiwan) conditioner and body wash in the Americas, Corporation, for Jergens body wash and Guhl shampoo and other products sold in Europe, tons (2.2 and the total amount used has reached 333 times the amount in 2018). 2. Shift to 100% recyclable, reusable packaging reusable 2. Shift to 100% recyclable, for household products in Plastic packaging used structures that enable have Japan are required to on the Promotional Sort of facility under the Act Packaging Collection and Recycling of Containers and and are already 100% recyclable. regions. recyclable packaging in other countries and definition of are currently confirming the We 1. Develop film packaging made from a single a single film packaging made from 1. Develop material made from a single of film packaging Development with film makers in collaboration material is underway and converters. Performance in 2019 Performance Performance Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 111 Smart Holder and Eco Pack Raku-raku Refill In-store refilling system Refillable in stores has made refills of eau de toilette and Molton Brown in the UK in some stores eau de parfum available since 2019. Repeatedly using bottles reduces environmental impact. powder type laundry type laundry Attack powder measuring spoon for in 1987, first put on the market detergent, which was terephthalate (PET) in the and recycled polyethylene sheets, floor dry cleaning fibers of Quickle Wiper in 1994. on the market which first appeared and targeting Initiatives packaging to reduce Initiatives Refill Eco Pack Smart Holder and Raku-raku , Refill Eco Pack proposed Raku-raku In 2017, we , improving which can be used with our Smart Holder completely the product to be usability and allowing impact. This consumed, thus reducing environmental bottle. eliminates the need for an original plastic sold only on our online site, these were to stores in implemented a full-scale rollout Until now, but we them accessible this will make believe April 2020. We use. to more consumers and will encourage and Industry Prize, the grand prize Trade the Minister awarded were this technology we For of Economy, a Good Competition, and at the 57th Japan Packaging all in 2018. Design Award, 102-43, 301-2, 301-3 301-2, 102-43,

Our initiatives

Products that use recycled materials that use recycled Products use recycled materials for some of our products. We been using recycled paper in the carton have We products and instructional inserts of many boxes clothing since the 1960s, including powder-type (PP) in the use recycled polypropylene detergents. We Products that use raw materials with low with low materials that use raw Products impact environmental pipes handled by the Chemical hot water Paper with Business Division combine molding technologies and are made high-temperature material technologies hot Compared to general ceramic paper. from waste used is materials pipes, the amount of raw water to one- waste reduced to one-tenth and post-use sixteenth. Reducing the amount of product materials used of product Reducing the amount in making continue to reduce the materials used We after product use by waste products that become reduced the product we example, consumers. For of medium-sized Merries disposable taped weight function product diapers by 37% while improving compared to its 1990 version. Measures taken in relation to in relation taken Measures our products Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 112 brand haircare products sold in Germany, haircare products sold in Germany, brand Ghul Switzerland and the Netherlands: Austria, Shampoo bottles made with 50% recycled terephthalate (PET) and polyethylene conditioner tubes made 100% from recyclable introduced in stages starting in polypropylene 2019. Jergens brand products sold in the Americas: Bottles made with 50% recycled polyethylene terephthalate (PET) for some body wash products introduced in 2019. Sheets in Japan: Packaging Wet Quickle Wiper is made from 80% recycled plastic. and Men’s Bioré Bioré Prime Body, Wash, Kao Shampoo, Kao Body using 100% recycled plastics Adopted packaging Shampoo in Taiwan: since 2016. Products using packaging made from bio-polyethylene Initiatives to replace Initiatives plastic Use of recycled recycled plastic for the use of are increasing We around the world. packaging launched packaging made of recycled we In 2019, in Germany products for Ghul brand products sold Americas. and Jergens products sold in the plastics Use of bio-based technologies for using developing are actively We we bottles and refills. Since bio-based plastics for in 2012, our consumption of began this initiative the range of products for bio-based plastics and continued to expand. have are used which they are made Refills Ecco Pack Raku-raku example, basis. For from 15% bio-based plastic on a weight emissions at the 2 301-2, 301-3 301-2, After

Before ye-catching plastic stickers attached to products to products attached plastic stickers ye-catching provide consumers with information on product on product with information consumers provide at the time of purchase, and correct usage advantages amount of plastic used, and the increase the but they and CO increase in plastic waste time of disposal is an issue. time of disposal is an Some Bioré u plastic stickers. the use of eye-catching to completely eliminate working are As a result, we body care products and bath products, body wash released from April 2020 have successively additives contained on eye- that was all of the information the past printed on the bottle to in catching stickers stickers. eliminate the use of eye-catching Total elimination of eye-catching plastic stickers plastic of eye-catching elimination Total E Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 113 Efforts in development, development, in Efforts sales and manufacturing Reducing the amount of waste produced of waste Reducing the amount and handle a large number of liquid products, We produced from treating reducing the sludge generated in the process of concentrated wastewater switching products is a major cleaning tanks and issue. using treats wastewater according to treatment facilities (Thailand) Kao Industrial separate wastewater which has of the wastewater, the COD concentration produced successfully reduced the amount of sludge Chemical Fatty and contributes to reducing waste. considering introducing equipment is also (Malaysia) to treat wastewater. with the are working at retailers, we the amount of Also, to contribute to reducing generated waste to reduce understanding and cooperation of retailers of products. used in the delivery the number of boxes recycling Enhancing waste generated of this is recycling the waste One example products by the manufacture of diaper and feminine began test to be turned into plastic pallets. We in 2016, with operation of this system at our plants and related cooperation from research laboratories divisions using the strengths of our matrix management. recycle 615 tons of able to pallets. 39,520 plastic were into approximately By 2019, we waste reused can be assembled/ building blocks that Recycled into plastic RecyCreation on Facebook (Japanese) on Facebook ➡ RecyCreation www.facebook.com/RecyCreation.jp/ Used refill packs Cutting/cleaning Pelletizing Award ceremony for the EcoPro 2019 Executive Committee Chairman ceremony for the EcoPro 2019 Executive Award Award. The RecyCreation Concept RecyCreation The by the Environment issued on the 2019 in activities the reported project was Paper This White outside and has received the Environment Ministry of EcoPro 2019 Executive such as the commendation, Award. Committee Chairman’s 102-43, 301-2, 301-3 301-2, 102-43,

Initiatives to recycle Initiatives activities RecyCreation creating a been engaged in research toward have We We resource recycling system for packaging. new which proposed the RecyCreation approach, have by adding technology and the value generates new to used items. and ideas of various people knowledge verification continuously conducted have date, we To areas with members of the community. in five refill packs for laundry collected used In a trial, we from detergent, shampoo and other products them to members of the community and recycled symbolizes create a block of recycled plastic that objects and values that will be of various “creation” and lifestyle useful for community development development. Take back system creation back system Take Chemical Business Division is conducting a The back (take program to reuse sold product packaging impact. In system) to reduce their environmental IBC packages collected and reused 13,769 2019, we used by customer companies. Printer head refurbishment launched a refurbishment In 2012, Kao Collins printer heads that are no program for some inkjet the number of printer heads longer usable. Curtails leads to a reduction in that are discarded, environmental impact. Reuse: Promoting refill and replacement and replacement refill Reuse: Promoting products and replacement refill to provide continue We Smart Holder. sales of and expand products Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 114 waste (Japanese) waste ➡ Clean Ocean Material Alliance cloma.net/english/ of plastic Formulation of policies on the problem ➡ www.kao.com/jp/corporate/news/2019/20190605- 002/ “eco together” with society “eco together” Material Alliance Clean Ocean Ocean Material in the Clean are participating We to encourage global established was Alliance, which the ocean plastic pollution for solving initiatives President and CEO is Kao Corporation problem. The and Kao is taking a leading chairman of the alliance, businesses. role among Japanese of the problem policies to address Formulate Japan TCGF as a member of plastic waste in which participate in the Japan TCGF, We industries companies in consumer good distribution in non- common issues a central role, to solve play The Japan TCGF has fields in Japan. competitive will address and up the issues of plastic waste taken in the formulation of policies participated it, and we measures. as the foundations for future that will serve A packaging review meeting A packaging review with stakeholders Collaboration based on “eco together” “eco together” with consumers/customers at EcoPro in packaging Kao introduces its initiatives and at the Kao Eco-Lab Museum exhibition, more to help consumers opt to use elsewhere, to greatly product refills and replacements, in order reduce plastic consumption. “eco together” with business partners with Recognizing that it is essential to collaborate plastics manufacturers producing materials, recycled and launching new and packaging when developing together with a wide range of work packaging, we business partners. are launched. Members from the relevant divisions, divisions, the relevant Members from are launched. the SCM Division and business units, the including the evaluate Communication Center, Consumer of the packaging. In performance environmental meetings 48 times in review held packaging 2019, we in Asia. elsewhere Japan and 8 times 102-43, 308-2, 404-2 308-2, 102-43,

Spreading internal awareness awareness internal Spreading waste of zero Assessment of environmental of environmental Assessment on society impact A packaging review meeting A packaging review promote activities and understanding internally, To Research holds packaging Technology Packaging products and improved meetings when new review RC Environment Committee of the SCM Division RC Environment RC Environment Committee of the SCM Division The of meets twice annually to gain an understanding on conditions at each plant and share information the of curtailing best practices with the objectives from plants and promoting production of waste recycling. Global RC Meeting RC As a part of our responsible care measures, an annual managers of subsidiaries with plants hold aims are to invigorate RC meeting in Japan. The reducing including activities and raise their level produced by subsidiaries. waste In 2019, we continued our work with Norihiro Itsubo, our work continued In 2019, we Studies, Tokyo of Environmental Professor of Faculty LIME3 method to and used the City University, assessment of the use of conduct an environmental Results in Japanese society. refill packaging common indicated that societies that use of the assessment impact environmental a lower refill packaging have recycle original plastic packaging. than societies that Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 115 In Japan, there have been reported that many In Japan, there have treatment companies, which incidents occur at waste sufficient information on are caused by not providing to the contractor when the chemical substances treatment. contracting the waste present cases at various seminars we the aims of spreading our with Therefore, regarding waste successful cases of improving about past knowledge treatment companies, and waste communication with we in how identifying points of improvement communicate information. again no to these activities, there were contracted for disposal from waste Thanks incidents involving us in 2019. Introducing cases at seminars at seminars cases Introducing on waste and lectures 102-43

Package collection measures Package are involved with outside organizations, we Together etc. discharged into the packaging, in recovering also independently conduct natural environment. We and in waste and ocean clean-up activities for river the community. Containers and Packaging Diet Campaign Diet Campaign and Packaging Containers and of nine prefectures a group by sponsored cities in Japan by activities organized participate in proactively We provide we where governments, the central and local technologies and exchange information about Kao in participated participants. We opinions with other Diet Campaign Packaging the Containers and of nine prefectures and cities in sponsored by a group since the running, ever year Japan for the 10th campaign addresses consumers program began. This the amount of packaging waste to promote reducing discharged by households. Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 116 recovered from the market is considerably reduced, as the considerably reduced, is from the market recovered stable and the physical properties are material ratios are not In addition, since the volumes inferior to a single material. it is difficult to collect refill packs as generated are low, under the current collection system. source separated items to separate refill packs from other It is also quite difficult after collection. Because of these types of plastic packaging extremely of refill packs is an issues, material recycling in the past. has not been undertaken difficult challenge and and recycle plastics, and to recover the natural environment not to release plastic into Nonetheless, if a goal is set to how of considering the perspective a path will emerge from this can be achieved. companies; composition, including the products of other similar material a relatively Refill packs have packs, then therefore, if it is possible to collect only refill packs are material ratios will be quite stable. Since refill the burden frequency, and are generated at low lightweight sites is on consumers from bringing them to collection small, making them suitable for collection sites. to as local governments NPOs and the Girl Scouts as well Kao has collaborated with civic organizations including with some implement various types of collection systems step is to analyze the performance of next success. The to them with a view each collection method and expanding been tried for not yet implementing methods that have nationwide roll-out. too is a difficult task but using such major issue. This materials is another of uses for recovered Development path. These products can be an effective materials in Kao’s with technology issues are challenging, but Kao has grown be expected at the core of its corporate personality and can and design team them. I hope that the development to solve parties to external various involve for packaging would to collection create a team to systematize and expand close cooperation. major goals through achieve Upon reading Kao’s Kirei Lifestyle Plan 2020, its ESG Kirei Lifestyle Plan 2020, Kao’s Upon reading far Japanese companies with how impressed I was Strategy, companies have Japanese progressed. Until now, have problems by using an “actions solve earnestly attempted to have approach, but few type speak louder than words” in advance. announced their objectives externally issue with the cost of sites is an internal technical from plants and other Addressing pollution originating by companies. Although companies countermeasures borne demanded the objectives to achieve made their best efforts internalized and closed to measures were control by society, dealing with an issues that When those outside a company. a parties such as the creation of numerous diverse involves be limited to within measures cannot sustainable society, one company. among them, problem, the more difficult it is to coordinate in the measures to address a more parties involved The solve To but there is no other path to solving such problems. stand up and such problems, it is necessary that someone are most suited to Leading companies the initiative. take Philosophy & Action on Plastic “Our this role. Kao’s playing should be praised for stating that no plastic Packaging” and plastic should be released into the natural environment should be including that which has already been released collected and recycled. seeks to create a and Kao lofty ideal are not temporary, this that the measures to achieve I think it wonderful can carry out sustainable system where all stakeholders activities. measures with minimal burden on their day-to-day program seeks to collect used RecyCreation activities. This are the zero waste Among the measures for achieving to refill packs for soap, shampoo and other products made refill packs are conduct material recycling. However, plastics, and of composite films that use multiple kinds of generation are low. of waste the frequency and volume of different types of plastic value of mixtures The Supervisory & 102-44 Masanobu Ishikawa Professor Emeritus, Kobe University President, NPO Gomi-Japan

the entire system this possible to make incentives packaging reduction films and NPOs governments

1.1. Developing demand for recycled materials 1.1. Developing 1.2. Reducing cost of recycling by various actors and designing involvement Active 2. Increasing efficiency of collection from consumers 2.1 industry standards for target Establishing voluntary 3. Board Securing economic feasibility to ensure sustainability of 1. Future Issues for the Audit the Audit for Issues Future Main Points of Kao’s Zero Waste Measures Waste Zero Kao’s of Points Main 1. High-level commitment as a maker commitment High-level 1. simple weight Product system reductions going beyond 2. Step-up from high reduction achievements 3. the challenges of material recycling of laminate Tackling 4. parties including citizens, Collaboration with diverse 5. My Expectations for Kao’s Ambitious Kao’s for My Expectations Waste” “Zero for Targets Message from External Expert External from Message Zero waste waste Zero Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 117 Kao’s creating value Kao’s creating usage water aim to substantially improve We of the product lifecycles. At our efficiency in all stages to aim for water set targets and continue plants, we that this contributes toward believe use reduction. We and their sources) basins (rivers safeguarding the river to the plants. water that are used to supply products, to reduce water water-saving are also developing are rolling out globally, We which we see it, in this consumption during product use. As we usage, on water if restrictions are placed even way, of cleanliness. lives consumers can continue to enjoy Contributions to the SDGs 102-12, 102-15, 103-1, 303-1 (Water and effluents 2018) effluents and (Water 303-1 103-1, 102-15, 102-12, . Furthermore, given that . Furthermore, given *1 , we recognize that we have a have recognize that we , we *2

Bureau, Ministry of Land, Infrastructure, Transport and Tourism and Tourism Bureau, Ministry of Land, Infrastructure, Transport (MLIT). water used by Japanese households when using Kao used by Japanese households when water all household products accounts for around 15% of usage in Japan water big responsibility to society. including localized heavy problems Currently, related long- rains and floods, chronic drought and regions and term dry conditions, are arising in many future due to in severity are predicted to grow and climate change. population growth *1 Water Resources Department, Water and Disaster Management Resources Department, Water Water *1 conducted by Kao Corporation. Based on a survey *2 Social issues we are aware of aware are Social issues we on to life for all plants and animals is necessary Water also need access to the Planet. All humans in order to of sanitary water sustainable sources satisfaction and maintain the whole-hearted used for washing water enrichment. In Japan, for the largest share of total apparently accounts usage household water Kao’s creating value to address social issues to address value Kao’s creating Reduce water use across all of our business by adopting water-efficient formulations and production methods. and production formulations water-efficient adopting by of our business all use across Reduce water Water conservation conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 118 Future Forecasts and Management Reform, 2017. and Future Forecasts * Source: Development Bank of Japan, The Water Supply Sector: Water Bank of Japan, The Development * Source: reductions and increased profits. reductions in Kao Group as a whole usage of the water municipal reduce usage, the overall to is taken If no action higher than in 2017. Assuming 2030 will be 1.66 times by 20%*, then it can be charges rise that water We costs will rise by 771 million yen. anticipated that our usage by goal of reducing water the set ourselves have to 2005,45% by 2030 compared to which is expected to 51 million yen. costs down the increase in keep Water intake restrictions. intake Water Content ・ properly. In this case, citizens’ cleanliness and sanitation citizens’ cleanliness In this case, properly. if the cost of threat. Furthermore, be under may then factory operation supply rises, water municipal lead to a risk that this may costs will rise too, with reduced profits. and the need for cleanliness and water the need to save of in awareness On the other hand, because the rise emerged in relation to climate hygiene, which has current business areas, to Kao’s change, is closely linked a significant opportunity for also represent developments implementation of us. Furthermore, continuous usage in response to factory water measures to reduce should lead to both cost above the situations outlined 102-15, 103-1, 303-1 (Water and effluents 2018) effluents and (Water 303-1 103-1, 102-15, Regulation of use of chemical substances in products. ・ Construction of a more resilient infrastructure is also an opportunity to boost demand for concrete and cement additives essential for construction work. and cement additives Construction of a more resilient infrastructure is also an opportunity to boost demand for concrete products, an activity can forecast consumer trends and propose new we 40-plus years, and thanks to a database built up over 60 years, been offering advice to consumers for over have We In addition, national or regional policies to limit water intake depending on plant locations or increased risk of water sources drying up could cause unscheduled production stoppages and result unscheduled sources drying up could cause or increased risk of water locations plant depending on intake water limit or regional policies to national addition, In out. do not work Risk of failing to increase sales if technologies developed demanded by the market. to match levels fail technology levels product sales if water-saving Risk of lower Product labeling programs for environmental performance or chemical substance content. Product labeling programs for environmental performance Plant wastewater regulation. Plant wastewater Continuing to reduce water use at our plants reduces operating costs for manufacturing products and is an opportunity to increase profits. use at our plants reduces Continuing to reduce water technology enables us to continue This substances mix with each other. control literally means controlling how Interface system centers on interface control technology. Our product development changes. thus enabling us to respond appropriately to market detergents that rinse readily or cement that does not readily mix with water, products, for example, water-related developing products, presenting an opportunity to increase sales. water-saving the spotlight will be on use materialize after a disaster due to flooding or downpours, If restrictions on water the resilience of our business. necessary for improving Risk that short droughts or flooding due to localized downpours may stop plant operations and make production impossible. Similar conditions at suppliers’ plants could make it impossible for us Similar conditions at suppliers’ plants could make production impossible. and make stop plant operations may downpours Risk that short droughts or flooding due to localized suppliers to our plants, and from our plants to our is also the risk that supply chains, from could not continue manufacturing products. There materials, with the risk that we to procure raw impact sales, and if such risks actually materialized, would negatively would could no longer supply our products to the market, risks, meaning that we customers, could be interrupted. These reduce and consumers’ lives affect severely would widespread flooding to due addition, damage to infrastructure profits. In our reducing thus cost, measures at additional special require sales for us. which carries the risk of lower consumption activity, is also the There production necessary for future growth. not be able to increase may there is a risk that we occur, drought may where severe In the case of our plants or suppliers located in areas decline in these areas. products may risk that sales of water-using issues in manufacturing our products. our resilience with regard to water help improve risk surveys use at our plants and require suppliers to implement water Continuing to reduce water Enactment of water-related policies and regulatory regimes has the potential to increase our supervisory costs in this area. Investing in better facilities and developing of new technologies to technologies to of new in better facilities and developing costs in this area. Investing policies and regulatory regimes has the potential to increase our supervisory Enactment of water-related impact our profitability. equipment and operating costs, which could negatively comply with policies and regulations will mean higher sales. in lower or regulatory restrictions Examples of possible policy D costs for developing water-saving and other products for dealing with water risks. products for dealing with water and other water-saving costs entailed by higher R&D costs for developing Risk of profit reduction due to higher operating of stronger demand for water-saving this creates opportunities in the form While be imposed. use may consumption during product limits on water If drought persists at the national or local level, fall. products may face the risk that sales of non-water-saving products, we risks. or inadequate disclosure for dealing with the above Risk of reputational harm due to insufficient measures ・ ・

Items

Acute Chronic Policies, legal legal Policies, restrictions Technology Market Reputation

Physical risk Physical Transitional risk Transitional

Products, services Products, Markets Resource efficiency Resource Resilience

Opportunities Risks

Risks and opportunities related to realization of our vision by 2030 of our vision by to realization Risks and opportunities related Due to the impact of climate change, the impact of the impact of impact of climate change, Due to the rains is already being localized torrential drought and and business Governments the world. seen all over various measures to enterprises are implementing but further rises in temperature reduce GHG emissions, resulting impacts are sure to and the are inevitable, more serious. become even urban water major cities continues to increase. If world’s living in the At the same time, the number of people pace with urban to keep infrastructure is unable then increasing demand for water, residents’ continually to use, and it may enough water not have residents may treatment wastewater be impossible to implement Risks and opportunities related to realization of our vision by 2030 vision by of our to realization opportunities related Risks and Water conservation conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 119 two rinses, then there will be no reduction in water usage. usage. reduction in water then there will be no rinses, two accurately communicate important for us to It is thus very and products can provide value that our the environmental By organizing properly. consumers to use them encourage to get across the aim we events, a wide range of different conservation and the environmental importance of water products. activities and value of Kao’s “eco together” with society participate in activities organized by the proactively We and authorities local government central government, about Kao information provide NPOs, etc., where we opinions with other participants. technologies and exchange education and promotion Employee and to develop are not only in the position Our employees they company, the leave supply products, but once they are the ones and are consumers for the rest of their lives thus recognize the who select those products. We to the opportunity importance of giving our employees through various learn about issues related to water conservation engage in water programs and to actively accord. activities of their own “eco together” with business partners “eco together” with realize a Kirei Lifestyle, we In order to help our customers heartfelt Yoki-Monozukuri continue to implement the resulting products to our manufacturing and deliver that we is something This consumers and customers. from raw stage At every own. on our cannot achieve and to delivery materials procurement through production of business collaborate with a wide range sales, etc., we that it is important to share our vision believe partners. We and together, action can take with our partners so that we for venues established a number of different have we sharing information with them. Environment and Safety Environment Basic Principle and Basic Policies on Basic Principle and Basic Policies ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environment- safety-principle-policies.pdf Kao Responsible Care Policy ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/responsible-care- policy.pdf Statement Kao Environmental ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environmental- statement.pdf “eco together” with consumers/customers around 90% of As the product usage stage accounts for use, raising consumers’ total product lifecycle water important. For is extremely about water awareness if a consumer buys single-rinse laundry even example, machine to do detergent, if the consumer sets the washing Education and promotion Kao In line with the “eco together” motto of the together with a are working Environmental Statement, we of different to promote a variety wide range of stakeholders water environmental protection activities, including are also implementing water conservation. We to spread awareness conservation education and working of our initiatives. manufacturing process, but in the daily life of the process, but in manufacturing materials procurement who use them. From customers final sales, use and to distribution, and manufacturing, ‘eco together’ with to engage in want disposal, we worldwide.” and consumers stakeholders 102-43, 103-2, 303-1 (Water and effluents 2018), 303-2 (Water and effluents 2018), 404-2 2018), effluents and (Water 303-2 2018), effluents and (Water 303-1 103-2, 102-43,

The product use stage accounts for around 90% of total for around 90% of use stage accounts product The for Kao products, with the raw usage lifecycle water stage accounting for only around materials procurement of leading manufacturers 10%. As one of Japan’s are demonstrating leadership by we consumer products, and products water-saving rolling out new, actively engagement with government striving to realize effective bodies and suppliers. conservation at impact on water minimizing the negative to implement activities aimed at continue We through to development stage, from product every disposal. environment and safety to “Assess undertake we Safety, Regarding the Environment and In our Policies the products, aspects throughout the entire lifecycle of developing from manufacture through disposal, when with lower products and technologies. Offer products by environmental impact to ensure safe usage i.e. appropriate information consumers, providing instructions regarding proper use, cautions.” to shall strive declarations: “We contains the following Furthermore, the Kao Responsible Care Policy products that technologies and bring to market develop thereby reduce our impact on the environment, business contributing to the peace of mind of our to shall strive and “We customers and consumers,” of our continue to reduce the environmental impact of uses of business operations by promoting reduction resources such as water.” utilize commitment to ensuring that “Kao products Our Environmental Statement embodies our technologies to minimize the original Kao-developed on the environment, not just in the have impact they Policies Water conservation conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 120 40% 30% 2020 targets reduction reduction 2030 targets ― 40% 45% reduction (2005 baseline) 10% reduction (2017 baseline) 40% reduction (2017 baseline) 2019 targets reduction Scope Scope All Kao Group sites All Kao Group Kao Group Overall lifecycles product Kao Group Overall in lifecycles product areas drought During consumer During consumer the use for product in Japan Kao Group All Kao Group sites All Kao Group Item Index Water Water consumption (per unit of sales) Water Water consumption 2030 long-term targets mid- to achieving Anticipated benefits from long-term targets Business impacts for all Kao consumption targets water Achieving operational Group sites will contribute to lowering water achieving earnings. For costs and to improving must we consumption targets during product use, products, and reaching increase sales of water-saving this target can help increase sales. Social impacts to targets will contribute the above Achieving in the water or supply of fresh sustainable availability effect a positive basins in question, and will have river this will also on conserving ecosystems. In addition, infrastructure lead to reductions in waterworks and fees maintenance and replacement expenses service. and sewer for water consumers pay Decarbonization/Framework p. 86 Making the world healthier & cleaner > p. 86 Making the world ➡

Targets for 2020 for Targets set the 2020 reduction targets for water We 2013 and have consumption for all Kao Group sites in year. a 1% reduction each aimed to achieve set the 2020 reduction targets for water We for the consumption during the product use stage Kao Group in Japan in 2009. (2005 baseline) Mid- to long-term targets and Mid- to long-term targets performance more times a year, receiving activity reports from the receiving activity a year, more times Risk Committee and the Care Promotion Responsible which it oversees Management Committee and Crisis committees. the two the activities of and auditing issues management relating to water Opportunity Committee, which meets four is handled by the ESG in Committee members are the persons times a year. sales, R&D, SCM and other charge of the business, which connects divisions divisions, an arrangement Internal Control Committee, and the The horizontally. it supervises, discuss water ESG Committee which social and as issues as well and environmental on its committee reports The issues. governance or more times activities to the Board of Directors one and is audited by the Board of Directors. a year risk and opportunity management system for resources is the same as the management The water system for climate change. 102-20, 103-2, 103-3, 303-1 (Water and effluents 2018), 303-2 (Water and effluents 2018), effluents and (Water 2018), 303-2 effluents and (Water 103-3, 303-1 103-2, 102-20, 306-1 2018), and effluents (Water 303-5 2018), and effluents 303-4 (Water 2018), and effluents (Water 303-3

Risk management is carried out by the Internal is carried Risk management is management and opportunity Control Committee Committee, under the carried out by the ESG of Directors. These supervision of the Board by the President and CEO. committees are headed Care Promotion Committee, Responsible The regime and which manages policy/regulatory the Risk and Crisis Management technology risks, and reputational and manages market, Committee, which the Internal Control Committee. acute risks, are under officer executive committees are headed by the These in charge of the Corporate Strategy. Responsible Care Promotion Committee of The Responsible Corporate Strategy Division acts as the while the Care Promotion Committee Secretariat Strategy Crisis Management Department of Corporate Division acts as the Risk and Crisis Management Committee Secretariat. Responsible Care Promotion Committee to report on and discuss The meets twice a year status of water and regulations, compliance with laws sets targets use reduction and other matters. It also Responsible Care The year. for the following checks on Promotion Committee conducts monthly and monitors and regulations, compliance with laws a large impact use, mainly at plants which have water other matters issues, reporting on these and on water members, to the head of the committee, committee auditors members of the Internal Control Committee, Risk and Crisis Management and others. The and Committee which manages natural disaster reputational risks, meets four times a year. meets one or Internal Control Committee The Framework Water conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 121 ✓✓ □ * ) 3

, respectively, resulting in , respectively, 3 2.35.80.0 2.42.8 6.40.0 0.0 2.5 2.9 6.3 0.0 0.0 2.8 0.0 10.9 11.7 11.7 2017 2018 2019 world healthier & cleaner > Decarbonization/ world in 2019: CDP evaluation Performance For the CDP evaluation see p. 89 Making the see p. 89 Making For the CDP evaluation ➡ . and 107 million m 3 3 , slightly less than the previous year for a per unit (of for a per unit (of year , slightly less than the previous 3 Brackish water/ Brackish seawater Groundwater system Sewage to other Wastewater organizations Total Rivers/lakes sales) reduction rate of 42%, almost the same as the sales) reduction rate of 42%, almost the same our 2019 and 2020 again achieved We year. previous consumption at Water year. targets, as in the previous risks came to 3.0 intake production sites with water million m consumption during lifecycle (Kao Group) and water consumption across the entire product water Our by 105product use (Kao Group in Japan) decreased million m * Boundary: All Kao Group sites * Boundary: All Kao Group Reviews of performance Reviews million consumption (all sites) came to 17.7 Our water m Wastewater discharge by destination (Million m by discharge Wastewater respective improvement of 2 percentage points in the of 2 percentage improvement respective reduction per unit (of sales) reduction rate to a 23% improvement (6% reduction compared with 2017), and to a 29% year the previous of 5 percentage points over reduction. to further expand working are during the use stage. We consumption challenge is to reduce water The products. our water-saving 0 0 0 0 0 0 -20 -40 (%) ✓ (Year) □ * ) 3 (Kao Group) -23-23 2,819 ✓ □ 0 0 0 0 0 0 -20 -40 -60 -80 -100 -21-21

2,924

-19 -19 2017 2018 2019 2,961 0 0 0 0 0 5.1 5.3 5.1 12.20.03 12.5 0.02 12.5 0.07 2017 2018 2019 -17-17 2016 2,970 -21-21 2015 2,849 00 ) 3 2005 ocess water 2,378 Per unit (of sales) reduction rate Per ー Water consumption across the entire product lifecycle consumption Water ● 0 ー ■ calculated as the combined total for the amount of lifecycle calculated as the combined total for the amount of consumption of individual products sold within and water Among outside Japan, multiplied by their annual sales quantity. consumption during the the lifecycle, the estimated water by the manufacturing and distribution processes is substituted amount includes water actual use during these processes. This but does used for procurement in regard to chemical products used in the use and disposal of such products. not include water sales) reduction rates. Surface water Surface water/ Brackish seawater Rainwater Groundwater (renewable) Groundwater (not renewable) Oil-contaminated water/pr City water from Wastewater other organizations 5,000 4,000 3,000 2,000 1,000 (Million m * Boundary: All Kao Group sites * “Water consumption across the entire product lifecycle” is consumption across the entire “Water * consumption and per unit (of for water Assurance provided * (Million m source amount by withdrawal Water Water consumption across the entire product lifecycle product the entire across consumption Water

103-2,103-3,303-1 (Water and effluents 2018), 303-2 (Water and effluents 2018), 2018), and effluents 303-2 (Water 2018), effluents and (Water 103-2,103-3,303-1 306-1 2018), effluents (Water and 303-5 2018), effluents and (Water 2018),303-4 and effluents (Water 303-3 0 -20 -40 (%) Americas Europe Asia Japan (Year) -30 Target 0 -20 -40 (%) (Year) -29

2019 1,834 -40-40 (Kao Group in Japan) (Kao Group Target Target ✓ □ (all sites) ✓ □ -24 -42-42 17.717.7 2019 -42-42 -24 17.817.8 2017 2018 2020 1,943 1,941 -43-43 17.317.3 2017 2018 2020 -22 2016 1,994 -42-42 17.217.2 2016 -24 2015 1,916 -43-43 17.217.2 2015 0 ) 3 00 2005 Per unit (of sales) reduction rate Per 1,763 ) 3 Per unit (of sales) reduction rate Per 19.819.8 2005

ー Water consumption during product use consumption Water ー ● ● 0 ー ■ 0

ー

50 40 30 20 10 sales) reduction rates. production sites in Japan. In 2015, some non-production sites production sites in Japan. In 2015, some non-production are are included, and from 2016 all non-production sites included. Water consumption during product use is calculated by multiplying consumption during product use Water per unit of a product, mainly for consumer consumption the water products in Japan, by the annual sales quantity of the product, and then adding all the results for these products together. 1,000 2,000 3,000 (Million m (Million m * Assurance provided for water consumption and per unit (of for water Assurance provided * * Water consumption during product use consumption during product Water * Assurance provided for water consumption (withdrawal). for water Assurance provided * * Boundary: For 2005,Boundary: For and non- all Kao Group production sites * Performance* consumption (withdrawal) Water Performance in 2019 Performance Water conservation conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 122 Efforts in development, in development, Efforts and sales manufacturing as to as well as a product ingredient use water We set at our plants. We clean and cool equipment consumption at each plant targets to reduce water reduce consumption and increase to and are working the 3Rs (reduce, reuse and recycling based on recycling). Reduce GmbH in Multiple plants including Kao Chemicals number of Germany conduct efforts to increase the for cooling is reused for boilers and times that water consumption. to reduce their water Reuse green is collected and used to water Rainwater spaces at the Sumida Office, Kao Chemical Chemical (Malaysia). Corporation Shanghai and Fatty Recycle steam and recycling efforts, such as recovering Active used in that has been treating and reusing water out at many production processes, are being carried plants. Y 4 N All 1)–2) Step. satisfactory Y Evaluation targets Evaluation that the number results showed survey 2019 of at least “three The an evaluation of suppliers obtaining by eight compared to the stars” had increased supplier indicating that the overall year, previous At the same time, in regard to had risen. activity level suppliers who failed to respond to the roughly 30% of on engagement to are working we the survey, encourage these suppliers to respond. 3 N All 102-12, 102-43, 308-2 102-43, 102-12, 1)–2) Step. satisfactory Y 1) Identifies whether negative impacts on water exist water impacts on 1) Identifies whether negative 2) Clarifies impact content and countermeasures 1) Leadership / organizational readiness monitoring reports with respect to risk etc. 2) Periodic 1) Identifies facilities with water risk 1) Identifies facilities with consumption discharge and water water withdrawal, 2) Monitors amount of water 3) Monitors changes in volumes 1) Replies to some questions 2 N All 1)–3) Step. ● ● ● ● ● ● ● ● satisfactory Y ● ● ● ● 1 N

Our initiatives 1) 4 3 2 1 Step.

Step Conforming Implementing Satisfactory Determination flowchart We began participating in the CDP Supply Chain began participating in the CDP Supply We encourage suppliers in high we Program in 2015 and their water on improving work risk sectors to water we ask More specifically, management standards. We the CDP questionnaire survey. suppliers to fill out suppliers’ water to evaluate use our unique methods feedback on the provide management status, and we results. evaluation Efforts in raw materials procurement materials in raw Efforts Water conservation conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 123 Eco shampoo techniques to use less water when shampooing hair. Eco shampoo techniques to use less water offering water-saving products truly embodies “eco products truly embodies offering water-saving of the Kao Environmental the slogan together,” Statement. Efforts during use during Efforts product use stage consumption in the As water consumption 90% of water accounts for around water- are providing we across the entire lifecycle, implementing consumer products and saving to use these to how communication in regard launched Attack Neo In 2009, we products properly. which requires only one rinse laundry detergent, the launch of Attack ZERO, saw cycle, in Japan. 2019 and odor power washing which combines superb zero detergent residues. capability with removal that require only one rinse cycle Laundry detergents aim to We offered in Japan and Taiwan. are now washing. one rinse cycle the norm for clothes make our Essential Research focused on foam, amount of also succeeded in reducing the have Through we used when rinsing with other product water , launched Merit Shampoo categories too. In 2010 we than for rinsing which uses 20% less water by CuCute in 2014 products, followed conventional the detergent, which also reduces dishwashing 20%, and in needed for rinsing by amount of water 2015 by Bath Magiclean bathroom cleaning liquid, plan to We for rinsing. which uses 10% less water based products water-saving continue rolling out new on our Essential Research. to water to save also communicate ways We For consumers using a variety of approaches. eco shampoo developed have we example, hair, when shampooing techniques to use less water communicate these to consumers. and we while water to conserve Communicating ways 102-43 Description of activity Description Concluded an agreement with the local Concluded an agreement from water treated community to receive treatment wastewater the community’s to use osmosis is employed plant. Reverse and Quimi-kao further effectively, sewerage it has purchased water purifies the treated from production left over and releases water facility, through the community’s into a river recycling. thus contributing to local water Reduces its water consumption for the consumption for water Reduces its reusing of some products by manufacturing reaction processes of other from water products. technique for washing Introduced a spray in reducing its and sanitizing tanks, resulting and steam. use of water to a cooling overflow Returns cooling water pool to help eliminate unnecessary water consumption. water

Company name Company

Quimi-kao S.A. de C.V. (Mexico) Kao Chemical Kao Chemical Shanghai Corporation Kao Vietnam Kao Industrial (Thailand) Examples of 3R activities Examples Water conservation conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 124 Opening ceremony held in Xian, China. Society in China’s Nationwide Cleanliness Participation Initiatives and Water-saving efforts to raise awareness Chinese government’s The conservation align with water of the importance of “eco together” approach to implementing Kao’s in relation to for example, activities with customers, detergent. Since 2012, laundry sales of water-saving with the Chinese been collaborating have we Cleanliness and Nationwide on China’s government conservation a water Initiatives, Water-saving consecutive campaign, which had been held for eight the areas of activity expanded as of 2019. We years water for and conducted awareness-raising in China’s conservation at 64 universities campaign. in this year’s region northwestern 102-12, 102-43 102-12,

schools, to teach the children about water schools, to teach the children about water conservation. displays relating to water conservation, and also to water relating displays a presentation. gave suppliers are invited to attend, where we hold we suppliers are invited to attend, where presentations on our ESG-related initiatives, suppliers to conservation, and ask including water complete the CDP questionnaire survey. for our employees. working at applicable worksites at plants and worksites at applicable working secured ISO 14001 that have research institutes certification. Responsible Care activities, we implement relevant implement relevant we Responsible Care activities, education for all employees. • We implement visiting classes at elementary implement visiting classes We • Customers presented we At the EcoPro 2019 exhibition, • Business partners Summit, which important hold the Kao Vendor We • • We hold guided tours of the Kao Eco-Lab Museum guided tours of the Kao Eco-Lab Museum hold We • • We implement relevant education for all employees education for all employees relevant implement We • Employees education based on to employee In regard • Implementing education and activities based on “eco together” based on “eco activities and education Implementing Water conservation conservation Water Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 125 Contributions to the SDGs Kao’s creating value Kao’s creating pollution water air pollution and to prevent are working We production plants by reducing in the areas near Kao pollutants such as NOx, SOx emissions of atmospheric and reducing organic matter and VOCs from our plants discharged from our in wastewater and other substances and laws faithfully with the relevant plants, by complying which we regulations in each country and region in are even operate, and by setting reference values that to strictly more rigorous than those required by law manage pollutants. For the world. at our plants throughout people working great care to safeguard the health of the also take We where our control VOCs in the spaces we example, the use of printing operations are performed through pigment inkjet ink which does , a water-based LUNAJET measures Through not require the use of organic solvents. new of Bio IOS, a revolutionary such as the development of surfactant type of surfactant that reduces the amount of water prevention are contributing toward used, we pollution through our products. to confirm that conditions at each of our production plants of soil perform regular surveys Furthermore, we has not been used in the local community groundwater polluted. 102-12, 102-15, 103-1 102-15, 102-12, from impacts on human health resulting Negative the effects of both direct soil pollution include soil by touching it or eating it contacts with polluted that has by using groundwater and indirect contacts harmful substances that have been polluted with soil. Significant leached out from polluted the fact that, characteristics of soil pollution include harmful substances once soil pollution starts to occur, a long period, and the can accumulate in the soil over of soil to be aware fact that people are less likely and water are of air pollution pollution than they pollution.

Social issues we are aware of aware are Social issues we that air pollution, water It goes without saying a significant can have pollution and soil pollution agricultural impact on human health, on negative and on ecosystems. crops and other plants, (SOx), particulate matter (PM) pollutants such as nitrogen oxides Atmospheric (NOx), sulfur oxides to are known organic compounds (VOCs) and volatile diseases such of pulmonary increase the prevalence from derive as asthma. Most atmospheric pollutants solvents. burning of fossil fuels or usage of organic around 8.8 million people die prematurely Worldwide, In because of atmospheric pollution. each year over be to Europe alone, the figure is believed of 790,000 (according to a study by the University in recent years Mainz in Germany). At the same time, to be made there has been a trend for indoor spaces homes as airtight as possible in an effort to make As a result, chemical more energy-efficient. those spaces substances in indoor spaces remain in rise. A levels for long periods, and their concentration in Japan) National University report (by Yokohama impact on a negative suggests that this can have human health. Humans vast majority of living organisms, including without water. The human beings, cannot live in order to also need access to sanitary water main cause of water maintain kirei lifestyles. The pollution is various substances contained in from factories and household sewage. wastewater Kao’s creating value to address social issues to address value Kao’s creating Protect human health and the natural environment by preventing pollution of water and air through the manufacture or use of our products. the manufacture and air through water pollution of preventing by environment and the natural human health Protect water pollution prevention prevention pollution & water Air Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 126 ➡ Responsible care activities/Framework www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=18 Collaboration and engagement and engagement Collaboration with stakeholders to air pollution and linked Emissions of substances are from business activities, pollution, which water are agencies. We are regulated by government to address this issue through proactively working with government collaboration and consultation associations. agencies and industry Framework into bodies of Emissions of pollutants into the air or and the in relation to our business activities, water this issue, are current state of progress in addressing promotion managed under our Responsible Care system. (Water and effluents 2018) , 404-2 and effluents (Water 303-2 103-2, 102-43, Environment and Safety and Environment Basic Principle and Basic Policies on on Policies Basic Principle and Basic ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environment- safety-principle-policies.pdf Kao Responsible Care Policy ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/responsible-care- policy.pdf Statement Kao Environmental ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/environmental- statement.pdf Education and promotion recognize the importance of giving our employees We of who handle chemical substances a variety the about opportunities to obtain knowledge and our business activities relationship between to actively pollution, and products and air and water of their own activities engage in pollution prevention created many opportunities for have accord. We accordingly. education employee conduct environmental education we for all pollution prevention Specifically, including on air and water of our Responsible Care activities. as part employees education encompassing the also provide We to air and importance of legal compliance pertaining at factories working pollution to all employees water ISO 14001 obtained and research institutes that have or RC 14001 certification.

We utilize a wide range of chemical substances in our substances a wide range of chemical utilize We products to industrial products, from home-use to implement activities to continue products, and we of chemical substances at impacts minimize negative disposal. to post-use stage from development every to “assess undertake we on Principle and Basic Policies In our Basic Environment and Safety, aspects throughout the entire environment and safety from manufacture through lifecycle of the products, products and disposal, when developing products with a lower to “offer technologies” and environmental burden.” shall ... strive declarations: “We Care Policy Furthermore, the Kao Responsible contains the following products technologies and bring to market to develop thereby that reduce our impact on the environment, business contributing to the peace of mind of our to shall strive and “We customers and consumers.” impact of our continue to reduce the environmental wastewater business operations by ... disposing of gas appropriately.” and waste embodies our Our Environmental Statement ... utilize commitment to ensuring that “Kao products minimize the technologies to original Kao-developed not just in the on the environment, have impact they life of the manufacturing process, but in the daily materials customers who use them. From procurement and manufacturing, to distribution, want to engage in we sales, usage and final disposal, and consumers ‘eco together’ with stakeholders worldwide.” Policies water pollution prevention prevention pollution & water Air Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 127 Europe Americas Asia Japan 0 -20 -40 -60 (%) (Year) -53-53 316316 -52-52 326326 -55-55 303303 2017 2018 2019 ✓ (all production sites) □ (all production incidentsincidents 11 0 4 1 0 0 -53-53 1,000 yen1,000 yen 699 644 0 0 0 0 309309 2016 -42-42 386386 2015 2 1 00 436 Per unit (of sales) reduction rate Per 2005 ー Category Unit 2017 2018 2019 ● 0 ー (Tons) Of which, number of leaks Of which, number of leaks 800 600 400 200 FY2015, and on International Financial Reporting Standards FY2015, and on International Financial (IFRS) from FY2016. The amount of COD pollution load for wastewater entering sewer entering sewer amount of COD pollution load for wastewater The systems. rate from sewer into account the removal systems takes Total fines* Total Number of violations* *1 All incidents detected by authorities during the reporting period. *1 All incidents detected by authorities during the paid during the reporting period. *2 Fines * for COD pollution load. Assurance provided * legislation Compliance with environmental no violations of environmental In 2019, there were legislation. and regulations laws Compliance status with environmental standards up to unit of sales is calculated based on Japanese Per * COD pollution load (Year) 0.2 0.8 (Water and effluents 2018) , 305-7 and effluents (Water 0.2 0.8 ✓ □. (Water and effluents 2018) , and effluents (Water 303-2 103-3, 103-2, 303-4 Released into public water areas Released into public water

0.4 0.7 with total emissions ■

0.6 0.8 0.1 1.2 1.9 67.6 2000 2015 2016 2017 2018 2019 Released into the atmosphere

0 ■ 80 60 40 20 (Tons) * Boundary: All Kao Group production sites in Japan. into the atmosphere of 8.4 tons group in Japan handled 33 types of VOCs in The 1 ton in 2019, quantities over Emissions of volatile organic compounds organic Emissions of volatile (VOCs) no facilities subject to the VOC have Although we in the Air Pollution emission regulations provided cut VOC emissions. to voluntarily work Control Act, we issued by the Director General of the Environmental in the notice the 100 VOC substances defined For set we Management Bureau, Ministry of the Environment, targets on the annual atmospheric emissions voluntary or less in 2005,from each plant for each substance (5 tons conducted 3 tons or less in 2009, 1 ton or less in 2010), our emission reduction activities and accomplished are managing VOC emissions with the current targets. We target of maintaining our activities. Total emissions of chemical substances subject to the PRTR system substances subject to the PRTR emissions of chemical Total Europe Americas Asia Japan Europe Americas Asia Japan 0 -30 -60 -90 0 -30 -60 -90 (%) (%) (Year) (Year) -69-69 502502 -74-74 125125 -68-68 515515 -65-65 168168 -68-68 7676 521521 -84-84 2017 2018 2019 2017 2018 2019 -66-66 7272 544544 -85-85 2016 2016 ✓ (all production sites) □ (all production -61-61 6363 627627 -87-87 2015 2015 00 00 Per unit (of sales) reduction rate Per 2005 Per unit (of sales) reduction rate Per 1,0521,052 309309 2005 ー ー ● ● 0 ー ー 0

500 100 200 300 400 (Tons) (Tons) * Boundary: All Kao Group production sites. SOx emissions (all production sites) SOx emissions (all production * Boundary: All Kao Group production sites. for NOx emission figures. * Assurance provided Performance* NOx emissions Performance in 2019 Performance 1,000 1,500 2,000

Mid- to long-term targets and performance and targets long-term Mid- to water pollution prevention prevention pollution & water Air Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 128 Measures to prevent water pollution water to prevent Measures development to product in relation taken Measures incorporate we In product development, environments on the water considerations for impacts after product use. More of discharged water the biodegradability investigated we have specifically, be discharged into the may materials that of raw aquatic environment and their impacts on common and activated sludge water organisms using river this Through treatment plants. used at wastewater the promoting are actively we investigation, with reduced materials and use of raw development also plan to use AI and environmental impact. We substances chemical other technologies to investigate with high environmental compatibility. plants at Efforts and laws related Compliance with wastewater regulations discharged pollutants of densities and/or amounts The systems are the ocean and sewage into rivers, installed have agencies. We regulated by government maintenance and and conduct high-level facilities at treatment management of wastewater wastewater, many plants. After properly treating plant have it is discharged outside the plant. We management criteria voluntary established our own more rigorous than the statutory which are even comply with these to monitor requirements, and we pollutants. 303-2 “VOC-free” is defined as emitting less than 700 ppmC (in carbon conversion “VOC-free” is defined as emitting less than 700 ppmC (in carbon conversion compounds (VOC) during the printing process. organic terms) of volatile term for VOC is a collective organic compound): VOC (volatile and are transformed into organic compounds that are volatile gaseous form in the atmosphere. In Japan, VOC emissions are Act. Control Air Pollution regulated by the revised * VOC-free design for chemical substances subject to PRTR) of chemical subject to PRTR) for chemical substances Chemical Industry Association substances that the Japan voluntary surveys. subject to has specified as being compounds) organic of VOCs (volatile Reducing emissions outside Japan include some Our production plants to monitor not been possible have plants where they are relatively VOC emissions, or where the emissions to monitor and reduce VOC are working high. We emissions at these plants. to our products relation in taken Measures inkjet ink pigment Lunajet water-based that Using the pigment nano-dispersion technology successfully we developed, had previously we water-based first , the world’s LUNAJET developed design* pigment inkjet ink, featuring a VOC-free of VOCs small quantities which ensures that only very thereby are emitted during printing operations, making a air pollution and also helping to prevent the working improving major contribution toward also confirmed We environment of printing workers. pigment inkjet ink technology that this water-based ink. gravure-printing can be applied to water-based

Our initiatives

Reducing emissions of chemical substances subject to the Reducing emissions of chemical substances system Register (PRTR) Release and Transfer Japanese Pollutant began activities in this area by setting a voluntary We less for each target for annual emissions of one ton or this achieved substance from each plant in FY2000. We to achieve continued have target in FY2002. Since then, we leaks of chlorofluorocarbon excluding target, this voluntary and similar emissions. 1.0 ton handled over system of which we Japanese PRTR of chemical substances subject to the number The such substances 75, and the total discharge of in 2019 was 1.0 ton. In areas was into the atmosphere and public water monitoring and controlling are voluntarily addition, we be done as would releases and transfers (in the same way As burning of fossil fuels is accompanied by emission of As burning of fossil fuels is accompanied —which is a use natural gas NOx, SOx, PM, etc., we clean fossil fuel—at all plants outfitted with the not use any coal. necessary infrastructure. Our plants do Using cleaner fossil fuels Using cleaner fossil Efforts at plants Efforts regulations and laws Compliance with emitted into amounts and densities of pollutants The regulated by government the atmosphere are voluntary established our own have agencies. We more rigorous which are even management criteria comply with than the statutory requirements, and we these to monitor pollutants. Initiatives to prevent air pollution to prevent Initiatives water pollution prevention prevention pollution & water Air Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 129 perspective, by the perspective, VOC- LUNAJET free water-based inkjet ink that Kao has developed, which can be printed on film. its effectiveness in its effectiveness reducing environmental impact. Award ceremony Award Award ceremony Award won the Green Chemistry the Green won received the 2019 Green Chemistry received TM Main awards received in 2019 received Main awards TM Topic TRUpath TRUpath Won the Minister of Economy, Trade and Trade Economy, the Minister of Won & Sustainable in the Green Industry Award of realization Kao’s for Chemistry Awards printing on that allows printing technology inkjet ink water-based soft plastic film using and Trade of Economy, the Minister Kao received in the 18th Green & Sustainable Industry Award organized by which are Chemistry (GSC) Awards, for Chemical Innovation the Japan Association recognition of our realization of printing in (JACI), on soft plastic film printing technology that allows constituted award ink. This inkjet using water-based ESG value created, from an recognition of the new Challenge Award (GCCA) Challenge Award Challenge Award, which is awarded jointly by the which is awarded Challenge Award, and the U.S. Environmental Protection Agency (EPA) in recognition of American Chemical Society (ACS), 102-43, 303-2 102-43, washing system that can washing TM Visco Top the addition of Visco With enables washing to be completed within a enables washing TM

TM wash most products without using alkali (sodium most products without using alkali wash which is widely used in commercial hydroxide), cleaning but has large environmental impact. TRUpath Kao Group member company Washing Systems, LLC is Systems, LLC Kao Group member company Washing offering the TRUpath now Visco Top the addition of Visco Without TRUpath when construction is undertaken near underground is undertaken when construction the not to contaminate care must be taken watercourses, of water-related in this kind work For groundwater. of to increase the viscosity the use of additives environment, as grouting materials and concrete inorganic materials such performance. anti-washout can enhance underwater un-precedented viscosity provides that specialty thickener , a high-performance Top Visco developed have We it possible to and concrete, and makes for grouting materials or without polluting the riverine construction work undertake the has been also used in Top ocean environment. Visco from contaminated water of high concentration removal Plant. Daiichi Nuclear Power trenches at the Fukushima short time while saving water, and the system’s low- and the system’s water, short time while saving it possible to feature also makes temperature washing reduce fuel consumption. In addition, wastewater processing is easier than with alkali detergents.

When undertaking civil engineering work near water (for near water undertaking civil engineering work When is vitally important or on the coast), it on riverbanks example, from being to protect the water that measures are taken for contaminated. In the case of bridge pier construction long bridges or suspension bridges that cross ocean straits, or because the piers are actually built in the riverwater concrete that has high special underwater seawater, is used. Furthermore, viscosity and is resistant to washout Measures taken in relation to our products relation in taken Measures thickener specialty high-performance Top Visco Measures relating to wastewater after product use after product to wastewater relating Measures situation in are focusing on understanding the actual We discharge after product use and we relation to wastewater on an ongoing basis, field surveys are conducting our own to get an water monitoring of river such as environmental risks of chemical substances. To idea of the ecological are conducting monitoring we respond to globalization, mathematical models to develop with experts and working substances in that predict the concentration of chemical for aiming to conduct business with consideration rivers, Japan. the local environment in countries outside Japan Soap and Detergent Association by the undertaken are also participating in environmental monitoring We conducted environmental monitoring of have We (JSDA). (7 sites from systems four major surfactants in urban river in past 20 years for the 4 measurements per year) 4 rivers, ecosystems. order to assess environmental risk on aquatic that the results show so far, conducted In the surveys to aquatic risks consistently low these surfactants have organisms. Surveys of groundwater and soil contamination of groundwater Surveys use, chemical substance our past history of In light of of the levels measure voluntarily we year every in standards regulated by environmental substances plant premises. within the groundwater water pollution prevention prevention pollution & water Air Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 130 emissions 2 emissions and water emissions and water emissions and water emissions and water 2 2 emissions and water usage during emissions and water 2 disposal by the annual sales number of consumer products in 2019. disposal by the annual sales number of consumer usage during use or per unit CO usage in the raw materials production stage (excluding Kao Group materials production stage (excluding usage in the raw of consumer manufacturing processes) by the annual sales number and industrial products in 2019. for Figures calculated based on the Energy Conservation Act. CO outside Japan are calculated multiplying the per unit during transport (calculated based on figures for Japan) by the during transport (calculated based on figures for transport quantity sold in each country and the estimated domestic distance in each country. Co., Ltd. dormitories, etc.). Boundary of calculations *7 Consumer products and industrial products. Figures for Japan are Consumer products and industrial products. Figures *7 *8 Calculated by multiplying the per unit CO *8 *1 Kao Group in Japan. Services Kao Corporation, Kanebo Cosmetics Inc., Kao Professional *2 *3 All production sites. company All non-production sites (including training facilities, *4 *5 Consumer products. Calculated by multiplying the per unit CO *6 e e 3 2 3 3 3 2 thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons thousand tons CO thousand tons thousand tons thousand tons CO , 2018) and effluents (Water 2018), 303-4 and effluents (Water 302-1, 303-3 301-1, 2018), 305-1, and effluents (Water 303-5 305-2, 305-3, 305-7, 306-2 0.3 million m 28 0.3 47 254 660 tons 175 tons 21 million m 2,481 million m 4,295 1,432 160.6 80.6 12.2 65.6 1.9 0.3 4,510 2 * 917 502 tons 125 tons 8.4 tons 11.3 million m 316 tons 93 11 8 7 6 8 * * * * 1 1 1 ✓ ✓ □ □ ✓ ✓ ✓ ✓ □ □ □ □ emissions emissions emissions emissions 2 2 2 2 inal disposal amount of waste CO discharged Wastewater materials Packaging CO GHG emissions NOx emissions SOx emissions emissions* VOC discharged Wastewater COD pollution load discharged Waste disposal amount of waste Final GHG emissions discharged Wastewater discharged Waste F CO NOx emissions* SOx emissions* CO discharged Wastewater OUTPUT Corrugated board Paper Plastic Metal Glass ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● 3 5 4 5 Use* Sales* Material Disposal/ Development/ Distribution Manufacturing* Recycling* Distribution/ (Total production: production: (Total procurement (facilities and (facilities (transportation) company cars) company 3,635 thousand tons) 3 3 3 3 3 million m thousand tons million m thousand tons 929 160.6 300 million m 2,481 2 1.5PJ 8 6 0.9PJ 401MWh) 0.3 8 * 21 million m 18.2PJ 3,768MWh) m 17.3 million 1

(of which, solar energy Energy consumption Energy consumption Water Water consumption* Water Water consumption Water Energy consumption Energy Energy consumption Energy consumption Water Raw materials* Raw materials* Packaging consumption* Water INPUT

(of which, solar energy ● ● ● ● ● ● ● ● ● ● 2019 business operations and environmental impact and environmental operations 2019 business Kao is pursuing efficient resource utilization across the product lifecycle, as well as technologies to achieve further resource and energy savings. resource and further to achieve as technologies as well lifecycle, the product across resource utilization efficient Kao is pursuing Product lifecycle and environmental impact impact environmental and lifecycle Product Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 131 (Year) 0 30 20 10 27 2018 2019 2017 29 29 29 2016 (Japanese) “eco together” logo display standards ➡ “eco together” logo display the “eco together” logo displaying List of products ➡ 28 2015 0 10 20 30 (%) Percentage of total sales held by products displaying displaying products of total sales held by Percentage in Japan) the “eco together” logo (consumer products Expansion of the range of products that display that display of products of the range Expansion together” logo the “eco have impact that environmental with lower Products certification standards rigorous original passed our the “eco together” logo. display the the sales ratio of products displaying In 2019, (consumer products in Japan) “eco together” logo year. the 29% of the previous than 27%, lower was not displaying is attributed to some refill products This met the though they logo even the “eco together” the without displaying Even “eco together” standards. communicate themselves logo, refill products to consumers, and environmental considerations is therefore the ratio of eco-conscious products as be at the same level considered to substantively year. the previous

, 305-1, 2018) and effluents (Water 305-2, 305-3, 305-7, 417-1 306-2, , 2018) and effluents , 303-4 (Water 2018) and effluents (Water 302-1, 303-3 301-1, 303-5 emitted from 2 OUTPUT -emitting facilities and transportation. -emitting facilities -emitting facilities and transportation. equivalent, Scope 1+2). equivalent, Scope water discharged water 2

emissions 2 aste OC emissions otal amount of SOx emissions from smoke- waste manufacturing raw materials, consuming manufacturing raw of ingredients. energy and decomposition emissions from smoke- amount of NOx Total and-soot T The amount of CO The Total amount of packaging materials (including amount of packaging materials (including Total used for products sold. corrugated box) and-soot organic amount of VOCs (volatile Total compounds) emitted into the atmosphere from production sites. discharged at amount of wastewater The stages. production sites and consumer product use amount of COD pollution load in wastewater. The sites, the amount generated from Of the waste or recyclable that is sold or entrusted as waste companies, and treatment materials to waste to landfill. the amount of waste Total amount of greenhouse gas emissions from of greenhouse gas amount Total Protocol) Kyoto GHGs defined in the sites (seven (in CO CO NOx emissions SOx emissions COD pollution load GHG emissions GHG emissions Waste discharged and final disposal amount of discharged and final disposal Waste V W materials Packaging ● ● ● ● ● ● ● ● ●

cluding packaging cluding packaging oduct development/

INPUT

, rainwater consumed. , rainwater oltaic power generation is limited to on- oltaic power voltaic power generation is limited to on- power voltaic

ater consumption

(facilities and company cars)] and company (facilities generation) site power site power generation) site power manufacturing] materials and fuel). The amount of energy consumed during The (from transportation of consumer products plants to distribution bases), industrial materials, etc. products, raw municipal water, Industrial water, groundwater Total amount of energy consumed at amount of energy Total (Boundary for solar manufacturing sites. photov amount of energy consumed at non- The (used production sites and by vehicles for sales activities). (Boundary for solar photo The amount of raw materials directly used to materials directly of raw amount The (ex manufacture products amount of packaging used for products The box). sold (including corrugated Raw materials Raw Energy consumption [transportation] Energy consumption [distribution/sales Energy consumption [distribution/sales Packaging materials Packaging W Energy consumption [pr Energy consumption ● ● ● ● ● ● Product lifecycle and environmental impact environmental and lifecycle Product Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 132 1 1 Cost* Cost* (Unit: millions of yen) (Unit: (Unit: millions of yen) (Unit: Investment Investment Asia, Americas and Europe Asia, Americas and Europe 1 1 Cost* Cost* 0 1,878 0 180 20 455 2 6078 505 4 109 51 36 79 00 2,374 1,87780 0 110 0 0 85 203 13 0 9 10 0 0 60 320 928 4,258 691 1,543 171 1,328 189 1,025 173710 1,785928 471 823 1,884 1,592 382 691 750 1,461 710 471 322 408 valuable resources and fixed assets and the amount valuable resources and fixed of cost reductions are recorded. Economic effects based on assumption such as risk mitigation, so-called “deemed effects” are not recorded. year of the annual cost reduction for fiscal relevant Cost reduction items generated during that year. are not multiple years amounts generated over included. Inside Japan Inside Japan 2,359 5,446 2 113 2,359 5,446 2 112 1,811 4,140 1,896 3,803 4,178 13,947 1,911 4,223 4,178 13,947 1,911 4,223 *1 Cost includes depreciation costs. *1 economic effect, only amounts from selling For *2 amounts of cost reductions contains only the The 3 * Investment Investment 562 211 157 1,442 Amount Asia, Americas and Europe and Americas Asia, (Unit: millions of yen) (Unit: 192 420 223 1,135 1,970 2,372 2 Amount Inside Japan Key activities Key Key activities Key Acquisition and maintenance of EMS certification, activities within worksites tree-planting publicity, environmental Switch to CFC alternatives Switch to CFC alternatives dust pollution Air pollution prevention, malodor prevention prevention, contamination prevention Water recycling reductions, waste industrial conservation, Resource and production R&D on products and tree-planting conservation and environmental Nature donations activities outside worksites, Eco-conscious R&D Air pollution prevention, water contamination prevention water Air pollution prevention, conservation Energy and disposal processing waste conservation, Resource packaging recycling eco-conscious products, Plant and equipment for publicity, of EMS certification, environmental Acquisition and maintenance within worksites tree-planting donations activities outside worksites, and tree-planting conservation and environmental Nature Details of benefits Categories Reduction in operation costs (maintenance costs, Reduction in operation etc. of eco-conscious equipment) Reduction in costs through energy conservation energy Reduction in costs through conservation resource Reduction in costs through Sales value of valuable resources and fixed assets and fixed resources of valuable Sales value Pollution prevention Pollution Global environmental conservation circulation Resource 3 ② ③ ① Categories Environmental remediation costs remediation Environmental Upstream/downstream costs Upstream/downstream

conservation Cost related to ozone layer protection measures protection layer to ozone Cost related measures to air quality conservation Cost related measures conservation to environmental Cost related and geologic environments aquatic, ground, for measures and recycling to waste Cost related chemical risks and emissions to reduce to measures Cost related Breakdown Total Cost related to noise and vibration measures to noise and vibration ④Cost related Noise prevention ⑤ ⑨Other costs (3) Administration costs (3) Administration (4) R&D costs (6) Total (5) Social activity costs ⑦ Total Cost related to nature and environmental and environmental to nature Cost related ⑧ ③ ⑥ (2) Cost reductions* Revenue (1) Business area costs (1) Business area measures to global warming ①Cost related ② conservation Energy Economic effect associated with environmental conservation activities* conservation associated with environmental Economic effect Environmental conservation costs (categories corresponding to business activities) costs (categories corresponding conservation Environmental measures) conservation of environmental to areas (categories corresponding costs conservation Environmental and major *1 . *2 Product healthier & cleaner＞Product P130 Making the world impact and environmental lifecycle Please see below for environmental conservation conservation environmental for Please see below results (numerical results). ➡

overseas subsidiaries overseas The aggregation methods we use to comply with use to comply aggregation methods we The of the Environment’s the Japanese Ministry Guidelines 2005.Environmental Accounting We Accounting also reference the Environmental Companies (November Guidelines for Chemical Japan Chemical Industry 2003) issued by the Association. December 31, 2019.

Co., Ltd., Pilipinas Kao, Incorporated, Kao Industrial (Thailand) Co., Ltd., Kao Co., Ltd., Pilipinas Kao, Incorporated, Kao Industrial (Thailand) Sdn. Bhd., Kao Chemical (Malaysia) Sdn. Bhd., Fatty Soap (Malaysia) Sdn. Bhd., PT. Sdn. Bhd., Kao Oleochemical (Malaysia) Plasticizer (Malaysia) Quimi-Kao, S.A. de Kao Indonesia Chemicals, Kao Specialties Americas LLC, Kao Corporation S.A., Kao (Hefei) Co., Ltd., Kao Chemicals GmbH, PT C.V., Kao Indonesia, Kao Manufacturing Germany GmbH, Kao (Shanghai) Limited, Kao Chemical Industries Co., Ltd., Kao USA Inc., Molton Brown Corporation Shanghai, Huludao Jinxing Casting Materials Co., Ltd. Kao Corporation, Kao-Quaker Company, Limited., Kao Group Customer Company, Kao Corporation, Kao-Quaker Co., Ltd., Kao Sanitary Products Ehime Co., Ltd., Kanebo Cosmetics Marketing Services Co.,Inc., Kanebo Cosmetics Sales Inc., e’quipe, Ltd., Kao Professional Japan Ltd., Kao Paper Japan Co., Ltd., Molton Brown Ltd., Goldwell Logistics Co., Ltd., Manufacturing Fuji, Kao Business Associe Co., Ltd., Kao Ltd., Kao Creative Co., Marketing Kao System Logistics Co., Ltd., Kao Field Co., Ltd., Inc., Kao Peony House Corporation, Shohi Seikatsu Kenkyusho Co., Ltd. Healthcare Committee Inc., and Kao Cosmetic Products Odawara ❶ Boundary: the domestic Kao Group ❷ *2 Kao Chemical Corporation Shanghai, Kao (Taiwan) Corporation, Kao Vietnam Vietnam Corporation, Kao Kao Chemical Corporation Shanghai, Kao (Taiwan) *2 *1 2019 environmental accounting report 2019 environmental To efficiently and effectively promote its environmental activities, Kao quantifies the costs and results of those activities in numerical terms. activities in numerical results of those the costs and Kao quantifies activities, environmental its promote effectively efficiently and To Environmental accounting Environmental Concerns the period from January 1, 2019 to ❸ Kao Kirei Lifestyle Plan Progress Report 2020 Contents Kirei Lifestyle Plan

2019 Our initiatives Editorial Policy CEO Message Making my everyday

Walking the right path more beautiful Kirei Lifestyle Plan KPI definitions choices for society Making thoughtful

Effective corporate governance ...... 134

Full transparency ...... 144

Respecting human rights ...... 146 Independent assurance report

Human capital development ...... 151 healthier Making the world Inclusive & diverse workplaces ...... 162

...... & Employee wellbeing & safety 175 cleaner

Responsible chemicals management ...... 192 Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 133 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 134 We regard our value of Integrity as the starting point of We for earning compliance, and promote it as a foundation the respect and trust of all stakeholders. are we Integrity, Conduct Guidelines (BCG) that embody the Kao Business ensure greater efficacy of To serious implementing activities focused on reducing to create an compliance risks, and activities designed discovered atmosphere that allows open workplace to management improprieties to be immediately reported taken. and an appropriate response promptly be the Kao also established have and we the BCG as well, are clearly defined in Anti-bribery and anti-corruption which specify Anti-bribery (anti-corruption) Guidelines, for giving the standards and prior reporting obligations as rules as well and receiving of entertainment and gifts bribery including evaluating corruption, for preventing vendor and renewing risks when selecting vendors contracts. Contributions to the SDGs Contributions to the Policies Please see the following for corporate governance activities related to corporate governance for following Please see the structure. our management Corporate Governance Data Book 2020 ➡ Kao Sustainability Initiatives 2020 Corporate Governance ➡ Integrated Report Report ➡ Corporate Governance 102-12, 102-15, 102-16, 103-1, 103-2 103-1, 102-16, 102-15, 102-12, As a result of conducting our business with Integrity as one As a result of conducting our business with regarded by are highly of our most important values, we leads This society in terms of sustainability and compliance. shareholders to increasing trust on the part of consumers, our company, in our products and and other stakeholders for us to hire and retain talented it easier and also makes human capital. , based on contributing to the SDGs in our , based on contributing Yoki-Monozukuri our value of Integrity (to behave business activities with and conduct fair and honest business and ethically lawfully will continue We from our founder. activities) handed down and that complies with laws to implement Yoki-Monozukuri ethical principles. to fully talented human capital atmosphere that allow with an open are also creating workplaces We demonstrate their abilities on an equal standing. 2030 of our vision by to realization Risks related there is concern of As competition intensifies globally, including temptation to commit impropriety, growing product factors such as difficulty in achieving and differentiation, meeting product launch schedules The risk of and increasing profit. timelines, delivery and harassment from the generational gap in values is also increasing. diversity employee growing 2030 of our vision by to realization Opportunities related

We see our mission as contributing to society through see our mission as We Kao’s creating value Kao’s creating workforce harassment, due in part to an increasingly diverse number of cases of power are also a growing There as sexual and managers with outdated values, as well for the other by a lack of consideration harassment, marked these instances and achieve that to prevent believe We party. and highly social progress, it is important to create efficient on an to work all people that allow workplaces productive harassment power equal standing. Legislation on preventing will continue we is also being enacted in Japan in 2020, and harassment. our activities to thoroughly prevent Social issues we are aware of aware are Social issues we and other been many reports of data falsification have There industry in recent years, improprieties in the manufacturing as a whole. leading to distrust of the manufacturing industry that complies with laws As a consequence, Yoki-Monozukuri to maintain and ethics is becoming increasingly necessary in many In addition, our competitiveness. and improve without being on for years cases the improprieties went see creation of an open as problematic. We viewed improprieties atmosphere, in which discovered workplace and an are immediately reported to management issue. as a key appropriate response is taken, Kao’s creating value to address to address value Kao’s creating social issues We will steadily implement our ESG Strategy through examining our corporate our examining Strategy through implement our ESG will steadily We honest business and conducting fair and necessary, whenever system governance in to changes and ethics and responding with laws while acting in accordance activities Kao. presence for this will contribute to creating a global All of society. Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 135 Feedback Feedback ⑦ ⑥ Kao Compliance Hotline (internal) hotline Kao lawyers’ party) third (external Kao Consultation Room party) third (external Integrity Line (internal/external) Report ② Reports to Internal hotline system ① hotlines third parties of suppliers, etc. parties of suppliers, third Japan Outside Japan Employees (Japan/Outside Japan), Employees of findings Report ⑤ Compliance Committee Hotline report response system response Hotline report Compliance Committee Secretariat investigations measures •Conduct corrective •Take Promotion Employees for Compliance for ④ conduct investigations measures Instruct to corrective Take Person responsible Person (Japan/Outside Japan) ③ • • vements ke necessary ke Activities evaluation ma impro 】 Identify issues and 】 Management Committee Audit & Supervisory Board of Directors Board Meeting • • • Check Action 【 ③【 ④ Employees (Japan/Outside Japan) Formulate activities policy and annual activities plan instruction of above 】 Execution Actions 】 】 】 PDCA promotion structure promotion PDCA Compliance Committee Do Do Plan •Persons responsible for divisions for responsible •Persons •Subsidiary presidents Compliance for responsible •Persons Promotion 【 Compliance Committee Secretariat ②【 ①【 PDCA promotion structure and Response Process for Compliance Hotline Reports for and Response Process structure promotion PDCA Framework cycle for to implement the PDCA framework set up the following have We cycle PDCA The respond appropriately to reported incidents. compliance, and to plan and specific activities to implement consists of policies, an annual framework leaders and other Compliance Committee, comprising division by the these devised to persons for implementation given members, and its secretariat, with directives of by the Board activities are evaluated The responsible for divisions and subsidiaries. are used to inform improvement Directors among others, and the evaluations group a shared for responding to reported incidents involves framework activities. The by hotline reports, investigation receives hotline, the Compliance Committee, which responsible for compliance promotion at the Compliance Committee or the person matters. to resolve measures taken subsidiaries, and the necessary corrective Collaboration and engagement with stakeholders and engagement Collaboration BCG among support for the understanding and clearly states gaining BCG The and promotes human encouraging conduct based on this, and as well vendors in order of priority. rights and other fields 102-20, 102-43, 103-2, 205-2, 103-2, 102-43, 102-20, 404-2 Frequency Once every 2 years 2 years Once every (alternate each year Japan/outside between Japan) 2 years Once every between (alternate each year Japan/outside Japan) from Once within 3 years joining the company Once a year (in October) Once a year to after revisions Revise the BCG month Japan: Every a Outside Japan: Twice (April, October) year Third year at the at the year ①Third company ②At time of promotion On joining Japan: At time of promotion to manager 3 Outside Japan: Every years Objective Division leaders directly to communicate the message compliance to make employees to them personally relevant the BCG and identify Revisit divisions with high compliance risks and review revisit Periodically the importance of compliance Study the BCG using specific cases Study compliance points to in mind through cases at keep Kao and other companies ①Study compliance and BCG content that should be given particular attention in SCM using specific ②Division work cases Study the BCG’s content using Study the BCG’s related to each topic examples and in a group discussion format Study our compliance approach and the BCG to build managers’ Group work risk for compliance awareness reduction All employees New employees New Employees in ①Employees their third year ②Leaders Executives/ Managers/Non- Manager employees Managers/Non- Manager employees Managers/Non- Manager employees Japan: New Japan: New managers Outside Japan: Managers Managers/ Non-Manager employees New employees New Theme group Target Basic course BCG Casebook Compliance case studies SCM Division ① Integrity Workshop BCG refresher test + compliance survey awareness Compliance Month Awareness Manager training by Trainings division leaders New Employee Employee New Orientation ②Leading staff summary level training

Outside

Globally common Japan Japan Region and them opportunities to review periodically give a BCG refresher test to division and take organized by the leader of their participate in the training In addition, all employees is also designated as One month of the year for compliance. maintain their awareness and actions as Month, and the importance of thoughtful words Compliance Awareness as an open organizational culture is communicated among other topics. Education well and ordinances is planned and conducted by designated managing related to laws divisions. Employees take compliance training designed to learn their role when those roles change compliance take Employees are promoted to managerial when they join the company, including when they significantly, for subsidiaries outside Japan. assume responsibility positions, and when they Our compliance training system is as follows. training system Our compliance system Compliance training Education and promotion Education Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 136 external evaluation organizations, etc. organizations, evaluation external opinions Employee awareness survey awareness ● Employee among of compliance awareness group monitors the extent The , Find survey employee through the company-wide employees other year. which is conducted every by the as the open atmosphere of various organizations on such things other year is also conducted every A survey Compliance Committee. External evaluations organizations, third-party from Feedback ● (SRI) questionnaire socially responsible investing By answering and exchanging items that incorporate societal expectations incorporate items where information with other companies, we activities as year’s into the next action taken not yet have we necessary. Issues identified from risk surveys from ● Issues identified risks every includes compliance that conduct a risk survey We scenarios based on areas and specific risk and identify risk year, necessary steps while the take we the results, after which divisions. coordinating with the relevant of Internal Audit the Department by ● Audits and the Department and Supervisory Board Members Audit The for all regularly conduct operations audits of Internal Audit divisions, which also include compliance- group companies and conduct based on as verifying related audit items such guidelines. compliance-related internal listening to employees’ that involve Activities ● Compliance Committee secretariat creates opportunities for The and of the group companies inside dialogue with employees trainings and on outside Japan when visiting them to conduct compliance other occasions. Comments concerning current and proposals for along with requests activities are received, activities. new 103-2, 103-3 103-2, Conduct Guidelines (BCG) and other internal compliance- Conduct Guidelines (BCG) related rules and regulations. Integrity within and outside activities to instill and establish Japan. also propose necessary amendments to hotlines. We annual make compliance-related rules and regulations and activities report to the Board of Directors. Issues identified from compliance hotlines ● Issues identified from Reported incidents are regularly analyzed, and steps are taken based on identified trends, such as making necessary changes conducting in-house education and to the framework, promoting awareness. Check Internal evaluation of Directors the Board ● Opinions from Summary reports are made quarterly to the Management incidents Committee on compliance incidents including to which the reported to the compliance hotlines, in addition annual activities Management Committee summary reports and reports are also made to the Board of Directors. and opinions are used to improve activities, and its evaluation these of Directors monitors and evaluates Board The cycle. the activities through the PDCA Plan/Do chaired by Committee, established the Compliance have We Executive and Senior Managing Director the Representative divisions of relevant and comprised of representatives Officer, and affiliated companies. to promotional measures activities and devise following the six months to review committee meets every This risks and ensure Integrity. mitigate serious compliance the activities policy to ensure Integrity. Decide 1. of the Kao Business establishment and revision the Finalize 2. the annual plan for educational and awareness-raising Decide 3. compliance the operation and response status of Confirm 4. held each Compliance Department. At the secretariat meeting Compliance Committee has a secretariat led by the The the and review month, members of the secretariat confirm to compliance appropriateness of responses to all reports made also draft and hotlines both inside and outside Japan. They activities in implement plans for specific activities and promote Committee. accordance with decisions by the Compliance Do Check Respond appropriately to Respond appropriately hotline reports Promote specific activities Promote based on the activities policy and annual plan Internal evaluations External evaluations •Establish and revise rules •Establish and revise and regulations of training a variety •Provide opportunities activities Proactive improvement Plan Action

Identify the issues and conduct improvement activities Formulate the Formulate activities policy and annual activities plan taking into the consideration issues and from expectation society

PDCA cycle to continuously improve compliance continuously improve to cycle PDCA are implemented promotion activities Compliance Compliance The below. cycle shown PDCA using the and and annual plan, creates the policy Committee Secretariat breaks it down the Compliance Committee The that are then implemented. into specific activities and identified are evaluated, implemented activities are reported to inform the issues and improvements year from the following planning to be drafted onward. Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 137 structure inside and outside Japan to ensure structure inside and . consistent Yoki-Monozukuri serious compliance violations. efficiently prevent to promote early reporting and and followed known of improprieties. appropriate handling necessary internal regulations, and other prevention to realize and followed, them well-known and make work. to where people find it easy workplaces 2030 long-term targets 2030 long-term and maintain our legal compliance Establish • to activities focused on high-risk areas Conduct • them well- the reporting rules and make Clarify • our policy related to harassment Establish • 103-2, 103-3 103-2, stakeholders starting with shareholders and society. starting with shareholders stakeholders quality outcomes, provide products and services products and quality outcomes, provide including a Yoki-Monozukuri through improved focus on the environment. reduced trust in Kao products. reduced trust in Kao improprieties at by discovering prolonging impacts taking an appropriate response. an early stage and utilize talented human capital retain, hire and fully for employees. workplaces by creating work-friendly • Maintain and improve the trust placed in us by Maintain and improve • Social impacts higher improprieties and realizing By preventing • Anticipated benefits from achieving mid- to achieving benefits from Anticipated long-term targets Business impacts due to improprieties and incidents of loss Avoid • or expanding damage by avoiding Minimize • and high-quality outcomes more efficiently Realize • through a Yoki-Monozukuri

commitment to Integrity and prevent incidents of and prevent commitment to Integrity damage. improprieties to be allows open atmosphere that stage and the appropriate reported at an early response to be taken. conduct are considerate language and that people’s position and by creating of the other person’s on to work in which all people are able workplaces an equal standing. Mid- to long-term targets Mid- to long-term 1. Contribute to with an damage by creating workplaces Minimize 2. utilization of human capital by ensuring Maximize 3. Mid- to long-term targets and performance and targets long-term Mid- to Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 138 p. 142 Our initiatives: Compliance hotlines ➡ p. 142 Our initiatives: activities Evaluation ➡ p. 143 Our initiatives: Compliance promotion system development promotion Compliance to measure how established compliance activities are established compliance activities to measure how and the atmosphere at workplaces. to the Compliance Committee, the Management to the Compliance Committee, & Supervisory Board Members, Committee, the Audit and other groups, and the the Board of Directors response evaluated. appropriateness of the into operation in Japan in set up and put hotline was 2019. May hotlines Hotlines to heighten trust in the compliance and so that people feel reassured when making to make will work reports or seeking consultation. We the reporting regulations well-known. We identify issues and conduct improvement activities activities identify issues and conduct improvement We with other companies through information exchanges survey. evaluation and responses to external 4. Evaluation activities survey conduct a compliance awareness In Japan, we • • 3. place a put in have measures, we following the With risk by detecting system designed to reduce at an early stage and compliance-related problems them. appropriately resolving compliance incidents are regularly reported Serious • hotlines, an anonymous to the overseas In addition • established Rules for Operating Compliance have We • 103-1, 103-2, 103-3, 404-2 103-3, 103-2, 103-1, Business Conduct Guidelines (BCG) Business Conduct Guidelines p. 141 Our initiatives: Compliance education/ ➡ p. 141 Our initiatives: Month Compliance Awareness p. 140 Our initiatives: Revising the Kao Revising p. 140 Our initiatives: ➡ people inside and outside Japan). people inside and outside 390 people). manager trainings in Japan (approx. 24,350 people). in Japan (approx. survey in the United our corporate philosophy, Kao Way, 150 (total of approx. and Malaysia States, Vietnam people). Compliance displayed Month as in past years, posters and communicated other Month Awareness information. were officers that led by the President and executive steps to communicate to held in Japan in 2018. Took of fostering an the necessity individual employees open atmosphere in organizations and reporting 11,000 people). incidents at an early stage (approx. Compliance education activities Compliance education 36,000 BCG (approx. briefings on the revised Held • discussions on compliance risks at new Held • test and awareness Conducted a BCG refresher • to trainings on the linked Held compliance trainings • Compliance Awareness Established October as • compliance trainings in 2019 Globally conducted the • it, followed by briefings to employees on the revised on the revised to employees by briefings it, followed content. compliance risks p. 140 Our initiatives: Activities to reduce p. 140 Our initiatives: ➡

compliance awareness

Performance in 2019 Performance Amending the Kao Business Conduct Amending the Kao Business Conduct Guidelines (BCG) the BCG in April 2019 to address revised We it easier for from society and make expectations BCG the revised have to understand. To employees group-wide, we and followed become well-known and then had translated it into the necessary languages approve each group company inside and outside Japan 2. Activities to foster and establish Activities to foster 2. In our 2018 risk survey, we identified social media risks and we In our 2018 risk survey, not covered data falsification as serious compliance risks continued by legal compliance activities. In 2019, we charge and compliance activities led by the divisions in compliance literacy. activities to enhance employee Reduction of risk not covered by legal by Reduction of risk not covered compliance activities 1. Compliance risk reduction activities risk reduction Compliance 1. reorganization structural Legal compliance the managing division for promoting clarified have We and ordinances that apply to laws compliance with 248 and ordinances of 44 laws in Japan. For our worksites prioritized in 2019 we particular importance, the implementation status of confirmation of whether legal compliance plan was the managing division's also begun building have We appropriately monitored. in countries and regions in our compliance structure Americas. Asia, Europe and the Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 139 103-1, 103-2, 103-3, 404-2 103-3, 103-2, 103-1, reorganization of the overseas legal compliance legal compliance overseas reorganization of the structure. for legislation enacted to incidents by taking action harassment and so on. power prevent and when a compliance incident arises well-known followed. compliance status. Future actions Future and compliance with important laws Ensuring 1. of serious compliance prevention Enhancing 2. hotline regulations and reporting rules Making 3. Current issues Current legal of monitoring of our Reinforcement 1. in harassment incidents. Increase 2. early reporting of compliance incidents. Ensuring 3. years on one of the World’s Most Ethical World’s on one of the years Companies® 2020 list p. 143 Our initiatives: Fourteen consecutive Fourteen consecutive p. 143 Our initiatives: ➡

In 2019, Kao was again recognized as one of the again recognized was In 2019, Kao Most Ethical Companies®. World's 5. External evaluations 5. External Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 140 Revising the Kao Business the Kao Business Revising (BCG) Conduct Guidelines as (BCG) serve Kao Business Conduct Guidelines The our for practicing the Kao Way, our code of conduct is regularly revised content The corporate philosophy. our from society, based on expectations in revised was circumstances and other factors, and April 2019. to clarify were of the revision major objectives The realization of our commitment to contributing to the our internal of the effectiveness the SDGs, improve language and reporting system, streamline redundant them easier to reorganize sections to make into 9). understand (consolidating 11 sections of by the Board approved content was revised The of Directors or the Management Committee and briefing subsidiaries for which the BCG apply, content were sessions to communicate the revised not controlled by Kao held. In addition, joint ventures was also A briefing informed of the revisions. were materials raw summit for held at the annual vendor as well content suppliers to communicate the BCG’s that arise at an as the necessity of reporting problems compliance early stage and the importance of the hotlines. 205-2 Reduction of risk not covered by legal by not covered Reduction of risk compliance activities conducted of an internal risk survey the results From social media risks and data identified in 2018, we compliance risks not covered falsification as serious by our legal compliance activities. social media took steps to enhance In 2019, we literacy and to build appropriate advertising for of respect understanding from the viewpoint human rights. we envisioned specific data falsification, For occur and scenarios where data falsification could prevention drafted and implemented effective measures.

Our initiatives

Reinforcement of our legal compliance structure of our legal compliance structure Reinforcement activities) (Enhanced monitoring of promotion reorganized our legal compliance In 2018, we compliance structure to place responsibility for legal in charge of divisions. officers with executive in charge for we decided the divisions Specifically, and laws promoting legal compliance with the 248 44 in Japan. For ordinances that apply to worksites among and ordinances of particular importance laws promotion drafted an annual compliance the 248, we and plan, required a report on its implementation monitored compliance promotion activities. legal compliance ensure the function of the confirmed whether the To structure in Japan, in 2019 we the activities by divisions in charge targeting appropriately and ordinances were important laws In monitored by other divisions and organizations. and laws addition, for compliance with overseas local opinions with exchanged ordinances, we to build persons responsible for legal affairs on how systems to gauge activities in countries and regions. To reduce serious compliance risks, we continued risks, we reduce serious compliance To compliance structure in 2019 upgrading our legal in 2018, and took appropriate steps taken following by compliance risks not covered actions for serious activities. our legal compliance Activities to reduce compliance risks compliance reduce Activities to Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 141 Compliance Awareness Month Compliance Awareness October as Compliance designated have At Kao, we with the aim of encouraging Month, Awareness compliance as something that is to view employees activities to to them, and hold various directly relevant inside and outside Japan. instill compliance awareness In 2019, the message from the Compliance Compliance trainings linked with the Kao Way with linked trainings Compliance linked type training the group discussion also held We corporate our on the Kao Way, with training and States, Vietnam in the United philosophy, 150) total of approx. (No. of participants: Malaysia. and leaders regional led by Compliance trainings (global) presidents company regions and held compliance trainings in global We leaders and company countries with regional as instructors for the purpose of presidents serving internalize Integrity and creating participants having atmosphere that allows an open workplace stage and improprieties to be reported at an early appropriately dealt with. lectures on the importance of the first gave to They how report when a compliance violation occurs, consideration and actions show words ensure your an open atmosphere and achieving for the other party, by setting an example. in workplaces made company presidents regional leaders and words Having talk about these topics in their own for compliance more immediate and accessible 11,000) of participants: approx. (No. employees. 205-2, 404-2 Checklist used when selecting bribery (anti-corruption) the function of the Anti- investigate we In addition, intermediaries or and new cross-border distributors new ones. with existing contracts renewing education Compliance understanding of the BCG and deepen employees’ To we other compliance-related rules and regulations, employees, hold classroom-based training for new company appointed managers, and group newly managers) outside Japan. In (including employees other every addition, a BCG refresher test is given of BCG content. to check knowledge year educational conducted regional In 2019, we bring up cases programs using group discussions to arise at of compliance violations that could potentially such violations the causes of participants’ worksites, the compliance and countermeasures to make to participants. content personally relevant manager trainings New the above manager trainings in Japan included New group discussion type program. able to think deeply the discussions, I was feedback such as, Many participants offered “Through occur in our about the compliance risks that could to them, and I want to prevent and how workplaces put these ideas into practice back in my workplace.” 390) (No. of participants: approx. matters pertinent to the Guidelines for Avoiding for Avoiding to the Guidelines matters pertinent Anti-bribery (anti- of Interest and the Conflicts of the to members Guidelines with respect corruption) Board and Supervisory the Audit Board of Directors, and employees. members, officers

Annual confirmation confirm the submission of reports to we Once a year, the Compliance Committee secretariat regarding also been adopted of Interest have Conflicts Avoiding for the Kao Guidelines In addition to the above, outside Japan, at the group companies both inside and situations of or notification in and require approval in competition or involvement individuals having in transactions with group companies, investments or companies that engage in such competition with group transactions, financial loans and so on in such acts. engaging companies, and close relatives The Kao Business Conduct Guidelines Casebook, Kao Business Conduct Guidelines The to the BCG possible scenarios relating which covers compiled in Japanese, in a Q&A format, has been languages. English and 17 other defines anti- the BCG explicitly In addition, regardless of the identity of corruption compliance which bans facilitation payments, the other party and amounts made to individual of small are payments donations is officials. Making political government also prohibited in the BCG and in the Donation (anti- the Kao Anti-bribery Guidelines. Moreover, the approval corruption) Guidelines, which describe of procedures and rules for giving and receiving procedures entertainment and gifts and notification have officials, relating to invitations to government companies been adopted, including at the group outside Japan. Deployment of the BCG of the Deployment and other Casebook rules compliance-related Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 142 Response to compliance violations, Response to compliance and legal violations in 2019 the right path” in the Kirei Lifestyle Under “Walking the indicator of set Plan announced in April 2019, we zero serious compliance violations. serious compliance violations refer to These impact compliance violations that significantly loss to our management and result in significant are decided based on the corporate value. They malicious nature of the violation (importance/ continuity, seriousness of the legal infraction, intent, external organizational nature), the internal and impacts of the violation, and deliberation by the Compliance Committee and the Management business partners. Since May 2019, employees can 2019, employees partners. Since May business also we but reports anonymously, not only make leave it is possible to a hotline where began operating receiving a rising are As a result, we feedback. hotlines. number of calls to the outside Japan Response framework an outside set up the Integrity Line, operated by We Japan. at the group companies outside service provider, 24 hours a day, calls Integrity Line is able to receive The home country language. Most in the a year 365 days established internal compliance group companies have HR manager or other company’s hotlines in which the inquiries. handles representative company publicized the hotlines at group In 2019, we Awareness compliance seminars and during Compliance Month. 102-17, 419-1 102-17, Response framework in Japan Response framework established internal compliance have In Japan, we hotlines operated by the Compliance Committee by outside hotlines operated secretariat and external hotlines and clinical psychologists. Internal lawyers accept hotlines operated by lawyers and external reports and consultations not only from our but also from related parties including employees companies outside Japan), hotlines (including group 409 reports made to the were In 2019, there reports from management which also encompassed cases and ongoing excluding lines. Of these reports, the management lines and external reports handled by minor in nature and were hotlines, about 60% or closed through responses from ultimately resolved face-to-face meetings with the the secretariat or in handled with measures were remaining 40% The caller. the person in question based on to such as warnings face-to-face of the matters, including investigations Further persons. meetings with multiple relevant that items reveals reports received of the breakdown and power related to harassment, including sexual harassment, abuse of authority and bullying, items represented roughly 30% of the total, while at including those related to miscommunication conditions and employment, working workplaces, these two represented around 40%. Together, of reports. No 70% categories comprised approximately in the organizations, observed particular trends were belonged. or occupations to which callers worksites caller’s consent when an investigation of related when an investigation consent caller’s inquiries are conducted. Anonymous parties is to identify but callers are encouraged accepted, investigation. to facilitate proper themselves oration e pp airman, airman, b

or h rr CC ee Ch

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fficer H O ty i : r o r o mittee irector Senio irector i tive tive t teg m D u h Managing Executive Officer Managing Executive Chairman, CommitteeCompliance Kao Corporation Representative Director Senior Senior Director Representative Mr.Yoshihiro Hasebe Mr.Yoshihiro Your supervisorYour HCD or Legal Integrity Line Please reportPlease any concerns to: October is ComplianceOctober Month Awareness Let’s behave in the behave same Let’s considerate manner toward your co-workers as you would your family. 。 月はコンプライアンス月間です 10 職 場 で も 長長 宏宏 員 委 佳

会 部 家 族 と 同 じ 長谷部 佳宏長谷部 コンプライアンス委員会 委員長 コンプライアンス委員会

や り 思 い

steps to respect the take wishes, companies confirming the In operating the hotlines, after caller’s to the maximum extent privacy and strive individual’s retaliation or possible to ensure that callers suffer no disadvantage as a result of their good-faith the consultation. In principle, companies also receive According to the needs of each country and region, group According to the needs of each country and established either both internal companies have hotlines. compliance hotlines or only external external Compliance Hotlines The Compliance Awareness Month poster displayed at worksites in at worksites Month poster displayed Compliance Awareness The countries and regions Committee chairperson was “Let’s behave in the behave “Let’s chairperson was Committee as co-workers your manner toward same considerate conducted activities and we family,” your would you by atmosphere an enthusiastic workplace to realize communication for workplace building awareness to others’ feelings. consideration that gives from the Compliance Committee message via the company disseminated The chairperson was on posters as in past years. intranet and displayed also created messages were with compliance Posters and company presidents globally by regional leaders along with case studies. and communicated Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 143 about information exchanged In 2019, we companies and activities with six compliance from on SRI and the like to questionnaires responded these responses, and institutes. Through 13 vendors of issues and future- our identification reviewed we and will incorporate these into our oriented response, 2020 activities. insights on Sharing our with outside groups compliance July and September 2019, times between Five President of the Legal Vice Senior Officer, Executive to share and Compliance Division attended sessions corporate opinions on principles for preventing Exchange scandals. Based on these sessions, Japan studies for Regulation released a compilation of case in November misconduct on the website preventing compilation introduces specific This of the same year. misconduct implemented by the to prevent initiatives exchange companies participating in the opinion people involved as a useful guide for sessions to serve in a He also participated in similar initiatives. to Initiatives roundtable discussion on “Peacetime by Japan Reduce Compliance Risks” sponsored the contents were and Institute of Business Law, Shojihome” (organ magazine) published in “Junkan number 2218. a lecture at Doshisha affairs and on the role of corporate legal In July 2019, he also gave University activities. the importance of ethics and compliance 102-43 In 2019, we conducted a compliance compliance conducted a compliance In 2019, we how in Japan to measure survey awareness the established compliance activities are and the survey Based on atmosphere at workplaces. activities plan to conduct responses, in 2020 we organizations with issues in their designed to improve atmosphere and other areas. Evaluation activities Evaluation based think tank Ethisphere Institute. We have been have Institute. We tank Ethisphere based think since the award’s years the list 14 straight named to only Japanese are the in 2007. We inception fast-moving manufacturer of and the only company, to be chemicals in the world consumer goods and years. honored for 14 consecutive 1) Corporate Ethics and factors: of five on the of companies for the list is based Selection evaluation 2) Corporate Citizenship and Compliance Program; of Ethics; 4) Corporate Responsibility; 3) Culture and Leadership, Innovation and 5) Governance; Reputation. recognition reflects the fact that the spirit of continues to from our founder This Integrity passed down to in day be implemented by all Kao Group members and Kao Way operations through practice of the day the Kao Business Conduct Guideline (BCG).

In February 2020, Kao was recognized as one of the 2020, Kao was In February Most Ethical Companies® 2020 by the U.S.- World’s Fourteen consecutive years on years consecutive Fourteen Most Ethical one of the World’s Companies® 2020 list Committee, and reported to the Board of Directors. the Board of Directors. and reported to Committee, that violations no such serious compliance were There above. apply to the groups, etc. of trade committees, working our participation in In addition, through opinions that could influence convey associations, we to the government. of laws enactment and revision fees to these trade Apart from membership were that no donations verified associations, it was campaigns or organizations, made regarding political entities or tax-exempt lobbying, trade associations, role is to influence political other groups whose policy and legislation in 2019. campaigns or public outside a total of 23 cases within and were their companies Japan that resulted in persons leaving There These (including resignation under instruction). violations of safety included cases involving falsified management rules, theft and embezzlement, serious hours, harassment and reporting of work of these occurrences To prevent traffic violations. efforts to thoroughly establish made have cases, we educational our core value of Integrity through internal a high number of harassment were activities. There on focused our efforts and we incidents in particular, from harassment, as it hinders employees preventing greater with enthusiasm and achieving working outcomes. Effective corporate governance governance corporate Effective Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 144 Mid- to long-term targets and Mid- to long-term targets performance defined brands as transparent brands when the We in both information that consumers need is available set the target of have And we quality and quantity. products making all our brands selling consumer are also looking at transparent brands by 2030. We consumers that to disclose information in ways how find easier to understand. Japan, Europe and the Americas, linking created a we Among our activities in 2019, framework obtained information for added information disclosure, made preparations for disclosing map. information and created a long-term road Framework a task force for disclosing established In 2019, we in the ESG Promotion Meeting, product information the ESG Committee, and it has an organization under task force has set up activities. The begun conducting working themes, and these five groups on working their progress once a month groups mutually confirm Meeting. and report the results in the ESG Promotion Contributions to the SDGs addition, the individual choices of consumers addition, the individual of without them being aware contribute to the SDGs environmental in the need for the believe it, and we within the range that to stay impact of these activities safely absorb. can our natural world in which of this helps create a world result The wider society are filled with trust, consumers and the are generated, and innovation sustainable growth and markets value is offered, and new new are created. employment Policies activities conduct we Regarding transparency, and the Kao Business founded in the Kao Way easily get the Conduct Guidelines so that people can it for the right need need when they information they and the choices to be made for individuals, society Earth, and based on that accurate information, more can become dialogue with stakeholders developed. 102-12, 102-15, 103-1, 103-2 103-1, 102-15, 102-12,

Kao’s creating value Kao’s creating it easier for Obtaining accurate information makes products and consumers to choose safe and reliable In services, and be able to lead comfortable lives. Social issues we are aware of aware are Social issues we as information today Living in modern society on a variety of fronts, individuals disclosure advances and desires to obtain necessary or greater needs have of the development The important information. individuals to easily (IoT) allows internet of Things obtain a greater amount of information. products and Ethical consumption, where social services created with environmental and is showing considerations are chosen and consumed, are also among consumers. Consumers growth with seeking information about corporate activities products of the desire to purchase not only individual from companies they but also products high quality, can trust. to encourage by As such, companies are expected dialogue with consumers and other stakeholders properly disclosing accurate information. information place top priority on delivering We frequent, direct about products that consumers are in contact with and conduct activities accordingly. Kao’s creating value to address to address value Kao’s creating social issues We believe that communicating accurate information about our products, in ways that are appropriate and easy to understand, is essential to have people essential to have is and easy to understand, are appropriate that in ways about our products, accurate information that communicating believe We lives. and lead comfortable the right choices make engage with stakeholders. opportunities to and various our websites through in a timely manner disclose information We Full transparency transparency Full Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 145 UK website for the prestige brand SENSAI. UK website Product catalog website ➡ Product www.kao.com/jp/en/products/ 417-1

Our initiatives

We disclose information needed to make decisions disclose information needed to make We that customers are planning about whether products that customers already to purchase and products be purchased and used with purchased can have peace of mind. information provide and on we website In product catalogs on our individual product websites, used in on product features and the ingredients evidence. products based on scientific to disclose a made preparations In 2019, we for brands in greater amount of information mainly with Europe and the Americas targeting consumers for ethical consumption. strong awareness Considerations in the product catalog website and individual product websites individual product and website catalog in the product Considerations Full transparency transparency Full Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 146 Global network of consumer goods retailers and manufacturers. We goods retailers and manufacturers. We of consumer Global network are participating as a member company. in the Global Compact, which defines ten principles 2005, In declared our support for the UN we the environment and four areas of human rights, labor, also support for CGF’s* anti-corruption. And we Resolution and its Priority Industry Labour Forced Principles. Consumer Goods Forum) CGF (The * which serve as our code of conduct for practicing the as our which serve the need to respect human clearly stipulate Kao Way, with involved are not that we rights and to ensure human trafficking or forced labor. child labor, for chain also, our Policies In the supply the need for purchasing Procurement stipulate respect for human rights, and operations to embody fulfillment of our corporate social to contribute to the for Supplier’s In addition, the Guidelines responsibility. of their Assessment include suppliers’ fulfillment item, corporate social responsibility as an assessment measures take and note that suppliers are required to child labor and other illegal labor, forced to prevent labor practices. stipulate the Materials clearly for Sustainable Furthermore, our Guidelines Procurement of Raw of sustainable need to demonstrate awareness rights, and to issues, including human development materials in a of raw the procurement undertake formulated Sustainable have We sustainable manner. Oil Procurement Guidelines and Sustainable Palm Guidelines. Procurement Pulp and Paper processes. Yoki-Monozukuri 102-12, 102-15, 103-1, 103-2 103-1, 102-15, 102-12, human rights risks, it may adversely affect purchasing adversely it may human rights risks, motivation and loyalty, employee lower behavior, employee impact productivity and increase negatively turnover. of our vision to realization Opportunities related 2030 by rights and promoting fair Respecting human support for our purchasing activities invites consumer maintain corporate approach and helps build and with suppliers. Improved relations trustworthy also leads to higher productivity. loyalty employee Contributions to the SDGs Policies the Kao formulated and announced In 2015, we respect stipulates that we which Human Rights Policy, rights, such as international norms relating to human and that we the International Bill of Human Rights, and human will conduct human rights due diligence diligently to working rights education for employees, respecting fulfill our responsibilities in regard to aspect of our operations. human rights in every Guidelines (BCG), Kao Business Conduct The

Risks related to realization of our vision by 2030 of our vision by to realization Risks related rights is companies address human Interest in how adequate and not demonstrating rising globally, reputational consideration for human rights increases risk. products In our business activities, manufacturing such as in environments with poor labor conditions forced labor has the potential to create quality problems. In addition, if trust in us is damaged from Kao’s creating value Kao’s creating of stakeholders range By collaborating with a diverse respect to implement various measures that embody and to prevent for human rights and endeavoring to creating contribute mitigate human rights risks, we Kao Way the society and achieving a cooperative for the wholehearted mission, which is “to strive of people satisfaction and enrichment of the lives globally.” Social issues we are aware of aware are Social issues we of corporate activities advances As the globalization human rights risks expands, and the supply chain are increasing. In addition, such as forced labor rights is increasingly needed consideration for human values and work as employees, inside workplaces styles become more diverse. Kao’s creating value to address to address value Kao’s creating social issues We have developed the Kao Human Rights Policy, which is based on the United Nations (UN) Guiding Principles on Business and Human Rights. Kao is and Human on Business (UN) Guiding Principles the United Nations is based on which Rights Policy, the Kao Human developed have We of our aspect in every human rights for respect at fostering measures aimed implementing Respecting human rights rights human Respecting Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 147 discussing specific human rights initiatives at regular at regular initiatives specific human rights discussing and liaising with held four times a year meetings companies inside and group departments relevant under are implemented Japan. Measures and outside Officer in charge of the Executive the responsibility of are reported to the the ESG Division, and and the Corporate Management Committee once a year. Committee under it what therefore assess We a wide rights problems potentially impact Human range of stakeholders. for each type of stakeholder, exist human rights risks priority to those risks that and address them giving impact our business activities if significantly would to manifest. were they our and suppliers as designate employees and are conducting stakeholders, We highest-priority within the measures based on risk related surveys Kao group and the Guidelines for Supplier’s Assessment. ESG Division functions as the secretariat for The within matters relating to human rights due diligence measures in the Kao group, and implements relevant Division, the coordination with the Corporate Strategy and the Legal Division Human Capital Development ensure that our and Compliance Division. To to report and consult on are able employees internal compliance related issues when necessary, been compliance hotlines have and/or external established in each group company. regard to human rights related measures With Division, targeting the supply chain, the Procurement with which is our point of contact for communication suppliers a central role in encouraging suppliers, plays appropriate steps. to take 102-20, 102-43, 103-2, 404-2 103-2, 102-43, 102-20, Reflecting the multi-faceted nature of human rights Reflecting the multi-faceted nature of measures implement human rights related issues, we the Human the Corporate Strategy Division, by having Division, the Division, the ESG Capital Development Legal and Compliance Division, the Procurement a central role, Division and other divisions play Collaboration and engagement Collaboration with stakeholders use of a variety of opportunities and make We consumers, methods to communicate with suppliers, communities, shareholders, business partners, local to ensure agencies, etc., endeavoring government ethical understand our policies and that they standards. Framework Education and promotion Education human rights related and mitigate prevent In order to vitally activities, it is aspect of corporate risks in every has an employee that every important to ensure of human rights issues, and in-depth understanding to foster respect for human to implement measures line with the Kao Human Rights this end, in rights. To to opportunity use of every make we Policy, education and employee implement appropriate through the dissemination of training, for example and through the company, information throughout etc. division-specific training,

Materials www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/procurement-raw- materials-guidelines.pdf Kao Human Rights Policy ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/kao-humanrights- policy.pdf Kao Business Conduct Guidelines (BCG) ➡ www.kao.com/global/en/about/policies/compliance/ business-conduct-guideline/ Procurement for Policies ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/procurement- policy.pdf Supplier’s Assessment Guidelines for ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/procurement- supplier-guidelines.pdf of Raw Sustainable Procurement Guidelines for ➡ Respecting human rights rights human Respecting Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 148 Social impacts measures to ensure respect for Expanding company for to enhanced awareness human rights contributes as a whole. Our measures are human rights in society deepening example, one part of this. For enhances stakeholders understanding among rights in society as a whole, for human awareness problems such as forced mitigates human rights environmental negative and can also prevent labor, in indiscriminate development impact by reducing countries. developing with consideration for products made Providing consumers human rights reduces the chances of leads to less indirectly infringing on human rights and whole. human rights violations in society as a 103-2, 103-3, 412-1, 412-2, 412-3 412-2, 412-1, 103-3, 103-2, Business impacts violation occurs, the company is Once a human rights risks and forced to bear to direct litigation exposed and other collection expenses litigation expenses, is also greater probability of There economic burden. company image, a lower damage to our severe employee weakened reputation among consumers, relations with loss of trustworthy and loyalty, suppliers. and mitigate prevent Continuing to identify, not only human rights risks in our business activities contributes to direct economic losses but also avoids to choose our increasing opportunities for consumers corporate products through their support for our by approach, reduces procurement risks strengthening trust with suppliers, improves and loyalty, productivity from increased employee turnover. employee reduces hiring costs from lower Anticipated benefits from achieving mid- to long-term targets mid- to long-term achieving benefits from Anticipated

Mid- to long-term targets Mid- to long-term and are using human rights due diligence We to deepen understanding activities awareness-raising continue to will human rights. We of stakeholders’ and mitigate human rights related prevent identify, activities. risks in our business what therefore assess We a wide rights problems potentially impact Human range of stakeholders. for each type of stakeholder, exist human rights risks priority to those risks that and address them giving impact our business activities if significantly would set have In addition, we to manifest. were they of raising the human rights due the target ourselves 100% for Kao implementation rate to diligence survey that Group companies, suppliers, and contractors by 2030. at Kao worksites, perform work Mid- to long-term targets and performance and targets long-term Mid- to Respecting human rights rights human Respecting Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 149 respect for human rights through Kao Business respect for human rights training and refresher test Conduct Guidelines (BCG) implementation. intranet to raise awareness topics on the company among employees. recruitment, as part of our sessions and LGBT ALLY by diverse participation efforts to promote active of diverse and to foster understanding employees types of customers. Reviews of performance Reviews assessing human rights due diligence at our Through Checklist, at group companies using the Human Rights and at assessment, production sites using the Sedex with Sedex, suppliers by encouraging them to register and prevent advanced efforts to identify, have we activities, mitigate human rights risks in our business which is one of our mid- to long-term targets. Human rights awareness-raising activities Human rights awareness-raising of of the importance promoted awareness have We • that addresses human rights posted material have We • LGBT study continued to implement have We • 103-2, 103-3, 412-1, 412-2, 412-3 412-2, 412-1, 103-3, 103-2, register with Sedex. register with Sedex. us of sites for which access rights with number The (as of December 31, been established is 1,812 have 2019). been established by have access rights with us 30, 2019. November etc. consumers using our website, of the Japan and in the Human Rights Coalition exchange and we Consumer Goods Forum, at other business information with experts and enterprises, NPOs, international organizations agencies. government Supply chain to encouraged suppliers were year, the previous As in • conducted at sites for which assessments were Risk • and shareholders Consumers is shared with initiatives Information about Kao’s • local communities, Business partners, agencies, etc. government Global Compact Network Kao participates in the UN’s • Self-Assessment *1 Modern Slavery Act Statement ➡ Modern Slavery www.kao.com/global/en/sustainability/topics- you-care-about/modern-slavery-act-statement/ was enacted and came into effect in the U.K. was *2

ceed a certain scale to produce and release annual ceed a certain scale to produce and release annual

A large-scale global platform for the sharing and verification of verification A large-scale global platform for the sharing and safety, information relating to labor standards, health and aimed at environmental protection and business practices, business promoting the adoption and maintenance of ethical practices in global supply chains. statements about measures enacted to ensure that slave labor slave statements about measures enacted to ensure that not been committed. and human trafficking offenses have Modern Slavery Act 2015 Modern Slavery groups and companies conducting Act requires for-profit The annual sales business activities in the United Kingdom whose ex A statement noting the measures taken by the group by the A statement noting the measures taken our website. in relation to the Act has been posted on servitude and forced or compulsory labour and about servitude and forced for the provision human trafficking, including for an provision protection of victims; to make Commissioner; and for Independent Anti-slavery Act connected purposes” (the “Modern Slavery 2015”) Questionnaire (100% response rate from surveyed response rate from surveyed Questionnaire (100% plants). plants in total) using the Sedex plants in total) using the Human Rights Checklist (100% response rate the Human Rights Checklist companies). from surveyed • In 2015, the “Act to make provision about slavery, slavery, about provision to make the “Act In 2015, • *1 Sedex (Supplier Ethical Data Exchange) (Supplier Ethical Data Exchange) Sedex *1 *2 • Conducted a survey of the group production sites (40 a survey Conducted • Performance Internal of the group companies using a survey Conducted • Performance in 2019 Performance Respecting human rights rights human Respecting Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 150 for newly appointed managers, etc. appointed managers, for newly Respect for human rights in advertising (Japan) advertising human rights in Respect for to facilitate self-checks in put in place a framework have We perspective the human rights of how relation to verification etc., and product packaging, is presented in advertisements, once a week opportunities to hold discussions provide we among on incidents that are difficult to decide independently in involved members of business divisions, departments Management the Product Quality producing advertisements, are conducting Division and the ESG Division. We ensure that educational activities to awareness-raising Division and PR personnel in business divisions, the Creative in the production of departments, etc. who are involved of human product packaging, etc. are aware advertisements, that apply to advertising. rights perspectives Raising awareness of the importance of respecting of the importance of respecting Raising awareness (Japan) intranet the company’s human rights using rights topics posted material that addresses human have We among to raise awareness on the company intranet of our Procurement 2019, a manager In August employees. relating to human rights, which Division posted an essay in the world in today’s labor still exists that forced explained and in the agriculture, forestry and fisheries industries people who are working and that there are mining industry, on small-scale oil palm environments in harsh working are taking to farms, and described the measures that we 2019, address these issues. In September and December to in relation initiatives posted about Kao’s information was of the sustainable procurement and the 70th anniversary Declaration of Human Rights, respectively. Universal 412-1, 412-2, 412-3, 414-1, 414-2 414-1, 412-3, 412-2, 412-1, Request for self-assessment and monitoring Request for been required to perform self- have Since 2008, suppliers conformity with the Guidelines for assessments of their In the case then monitor. we Assessment, which Supplier’s a failure to meet shows of suppliers whose self-assessment our personnel visit the supplier so the required standards, share information about the problems, that the supplier can improvements. can collaborate on achieving and so that we held presentations to have 2014, we in Since joining Sedex to request that continue to suppliers, and we Sedex explain and questionnaires, respond to Sedex suppliers join Sedex, number of sites for which data set up data access rights. The is 1,812. been established so far access rights have education Internal human rights of the importance of Raising awareness the BCG (global) human rights using respecting to deepen throughout the world hold workshops We Guidelines understanding for the Kao Business Conduct respect for (BCG), which set out our approach to ensuring in all of our group human rights among employees in April 2019, revised BCG, which were companies. The respect human clearly stipulate the need to understand and and to have rights, to abide by the Kao Human Rights Policy, human trafficking and forced zero tolerance for child labor, sought to enunciate our stance regarding have We labor. of our aspect respect for human rights through every of the BCG, we business activities. In line with the revision testing to held presentations and also implemented refresher in Japan had familiarized that all employees verify also provide with the BCG in 2019. We themselves and recruited employees classroom-based training for newly Our initiatives

In 2012, new clauses relating to concern for the environment clauses relating to concern for In 2012, new added to the master agreement and for human rights were sign with suppliers. In principle, this master that we agreement is used when signing contracts with new contracts. existing suppliers or renewing 2. Efforts in the supply chain 2. Efforts and the environment to concern for clauses relating New with suppliers contract human rights added to standard for 1. Efforts in the group 1. Efforts all of perform a risk assessment targeting we year, Every respect With our business locations throughout the world. a use of Sedex, effective make to production sites, we platform. For global corporate ethics information sharing sites, a other Kao Group companies besides the production these compiled, which Human Rights Checklist was a total of 40 companies are required to complete. In 2019, Self-Assessment production sites completed the Sedex other Kao Group companies, a total of 56 Questionnaire. For the Human Kao Group companies completed and returned a 100% Rights Checklist. In both cases, there was results obtained did not completion and return rate. The our any human rights related risks at either show are There production sites or our group companies. being implemented as therefore no cases of improvements a result of human rights due diligence. We are making efforts to investigate and identify human and identify are making efforts to investigate We group, including forced labor, the rights risks involving and discrimination. labor conditions workplace Human rights due diligence process Human rights Respecting human rights rights human Respecting Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 151 Opportunities related to realization of our vision by 2030 of our vision by to realization Opportunities related of next-generation By reinforcing the development leaders who can anticipate changes, conducting diverse business that enables each member of a and in a healthy to perform their work workforce by growth and achieving enthusiastic manner, will we and contributing to society, performing work that become a company with a global presence and By maintaining undergoes continuous growth. can strengthen healthy labor relations, we developing engagement. employee be able may that we then it can be anticipated creativity, their are able to further exercise If our employees that surpass the business objectives results to achieve by 2030. planned in order to realize our vision that we Contributions to the SDGs leaders who can anticipate changes, conducting leaders who can anticipate each member of a diverse business that enables in a healthy and their work to perform workforce by growth and achieving enthusiastic manner, will we contributing to society, and performing work with a global presence that become a company growth. undergoes continuous is a risk that fall, and there engagement may employee fail to maintain healthy labor relations, then If we the business objectives be unable to achieve may we for 2030. planned in order to realize our vision that we 102-12, 102-15, 103-1, 404-2 103-1, 102-15, 102-12, wellbeing & safety wellbeing workplaces diverse Employee ＞ Employee the right path Walking p. 175 ➡ & the right path ＞ Inclusive Walking p. 162 ➡ Risks related to realization of our vision by 2030 of our vision by to realization Risks related of next-generation By reinforcing the development are able to so that all employees and inclusion diversity making a global effort to promote are therefore We characteristics and demonstrate their different possible extent. capabilities to the maximum that can make basis, measures to cultivate human talent are strengthening and promoting, on a global We contribution to society through a wide-ranging positive corporate activity. authoritarian eliminate motivation, we and employee Besides aiming to enhance both corporate growth on a corporate approaches and place great importance culture in which top management and employees business goals. together to achieve work collaboratively provide we labor relations, In order to build favorable with employee opportunities for sharing and discussion situation and with regard to our current representatives capital as measures for human policies as well to further encourages our employees This development. higher- even and to provide their creativity, exercise quality products and services.

foundation represents not only a key health employees’ of the fact that awareness Furthermore, reflecting our life but also an important asset for of each employee’s the company and a fundamental source of corporate support to encourage active are providing we growth, health properly. to look after their own employees Kao’s creating value Kao’s creating our support measures in relation to are expanding We needs, and we childcare, nursing care and long-term care of are implementing measures to promote empowerment (expand promote normalization female employees, disabilities), and utilization of persons with employment utilization of and active the continued employment expand already passed retirement age, who have older employees work styles, and raise productivity promote more flexible by enhancing efficiency and changing attitudes. Social issues we are aware of aware are Social issues we such as the digital revolution In the midst of trends with AI, ESG management symbolized by coexistence the society in Japan, of a super-aged and the advent systems and social people live, optimal forms of how jobs are undergoing major changes. a period of human capital management are also entering and employment In conjunction with these changes, anticipate these Human capital strategies that innovation. growth types of changes are important for the continued of a company. Kao’s creating value to address to address value Kao’s creating social issues Employees are a company’s most important asset. Aiming to draw out the unlimited potential that every employee possesses to generate immense vitality, immense vitality, possesses to generate employee every potential that out the unlimited to draw asset. Aiming most important are a company’s Employees in which both corporate culture and a to create an environment strive We as an organization. extent maximum possible this vitality to the and utilize society. contributions to and making positive work completion of successful together through grow and the company individuals Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 152 Vision of Vision Human CapitalHuman Development challenges Challenge & Change Professional Capabilities Global Perspective superior performance Communication & Collaboration Integrity Ideal Human Capital on with consistent willingness to take 1. People with high expertise 2. People with a global perspective 3. People with the team spirit needed to achieve 4. People with strong ethics 5. People Ideal Organization are committed to building organizations that are We and frankness so as to characterized by openness by pursue innovation, encourage people to greater characterized by empowerment and by organizational management transparency, to also endeavor We based on the Kao Way. in which the entire Kao actualize organizations concept Group operates harmoniously based on the that functional organization” of an “organically and quickly adapts to environmental change. flexibly Yoki-

Guidelines for Guidelines for 103-2, 404-2 103-2, Human Capital Development Continuously improve overall efficiency based on overall Continuously improve activities aimed at the and innovative creative Kao Group through of the sustainable growth of efficiency) (Pursuit each individual’s environment where a work Provide full use of and which makes dignity is respected, since the diversity, autonomy and employees’ their to display enthusiasm of all employees of creation and boundless wisdom is the wellspring innovation. human dignity) (Respect for efforts Integrate organizational efforts and individual activities so as to and innovative through creative efforts to improve for all. Make evolution achieve to policies in order to offer all individuals freedom to enable combined individual wisdom, and display efforts to lead the Kao Group to further prosperity. at integration) aimed (Efforts Monozukuri.

company capabilities and growth, and at levels ensuring market ensuring market and at levels company capabilities and growth, and other external markets of through verification competitiveness factors. take also adequately compensation levels this verification, Through into consideration living wages. * Employee compensation is set at levels commensurate with our is set at levels compensation Employee * The efforts of each and every employee to pursue to employee of each and every efforts The his or her own by exercising individual achievements to the utmost can abilities and characteristics Based on of the employer. contribute to the success to create such an environment aim this concept, we and corporate culture. this policy as the defined have we this end, and have To Capital Development Guidelines for Human an Ideal Organization made clear what constitutes of the objective With and Ideal Human Capital. various opportunities provide we this policy, achieving their skills and to develop and support for employees line management framework capabilities within Kao’s of motivation and level in accordance with their own organizational goals. the evaluate to fairly roles and clearly state Furthermore, we responsibilities and endeavor on a regular basis in performance of each employee and compensation fair evaluations order to provide or gender, status, without regard for employment other individual attributes. Policies Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 153 to improve our to improve * 102-43, 404-2 102-43, A cycle for operational improvement. Doing so A cycle for operational improvement. has allowed us to strengthen our ability to respond to changing has allowed circumstances. This adds “Research” (which equates to “analysis of the current adds “Research” (which equates to “analysis This to the PDC situation”) * RPDCA cycle Collaboration and engagement and engagement Collaboration with stakeholders by engagement to enhance employee strive We of views the exchange holding activities involving as and employees senior management between opportunities for dialogue. survey, employee also conduct Find We a “Great periodically to realize the goal of creating then confirm the respective We place to work.” is needed of strengths and areas where improvement each organization by visualizing the organizational we status using numerical data. Subsequently, of these identify our challenges based on analyses results, and formulate and set and implement to endeavor we In these ways, action plans. effective cycle consolidate the RPDCA us to respond to the labor unions’ proposals and proposals and to the labor unions’ us to respond possible for management and making it expectations, of our current to share details and employees strategy. situation and future organization and workplaces. , the global Find survey answer 70%, with the affirmative In the 2018 employee response rate was of rates to a question on “Engagement/Employer “Development Choice” of 66% and to a question on Opportunities & Climate” of 52%.

Our Guidelines for Human Capital Development, and Development, for Human Capital Our Guidelines Ideal Organization and Ideal the concepts of the constitute our vision for human Human Capital that intranet so that on our company’s capital, are posted are also We can check them at any time. employees this vision is disseminated as to ensure that working by sharing the vision during a widely as possible, activities, including training for wide range of training to just been appointed who have employees and training for cultivating managerial positions, global leaders, etc. by understanding to foster strive senior management and employees In addition, we between with the facilitating opportunities for mutual dialog, throughout a sense of unity of developing objective promote mutual understanding the group. We by senior management and employees between of opinions opportunities for the exchange providing explains whereby the senior management and views current priority issues such as the company’s to situation, policies and human capital development as responding to their questions. In as well employees establish an understanding of the we this way, which genuine concerns and opinions of employees, human then feeds into ongoing measures to develop the workplace capital and policies to improve environment, among other undertakings. are regular opportunities for dialog between There the factory labor unions at Kao Corporation’s Plant and Sakata Plant, and the labor Wakayama unions of our affiliate companies, and our senior managers and human resource managers, enabling Education and promotion Education Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 154 Held annually Employees Persons responsible for human capital development * As of December 2019. Overseas Group company presidents company Group Employees Persons responsible for human capital development Find Find Europe/Americas/Asia Human Capital Development Conferences Human Capital Development Europe/Americas/Asia Hosting organization: Human Capital Development Members: Persons responsible for human capital development at overseas companies Details: Sharing information on and discussing policies, confirming activity status Employees Persons responsible for human capital development Human capital development functions at group companies at group functions Human capital development ESG Committee as members, meets monthly to participate top executives Committee, where Human Capital Development The organizational development, discuss human capital matters in addition to deliberation operation and other submitted criteria. matters pursuant to Career coordinator criteria and establishment, modification and elimination of personnel systems criteria and establishment, modification and elimination operations, etc. Organizational changes, personnel transfers in accordance with submitted Organizational changes, personnel transfers in accordance organizational Deliberations concerning human capital development,

Held monthly and establishment, modification and elimination of personnel systems and establishment, modification systems and establishment, modification and elimination of personnel Guidelines for Human Capital Development Guidelines for Human Capital transfers in accordance with submitted criteria Organizational changes, personnel survey Report on results of the employee with submitted criteria Organizational changes, personnel transfers in accordance Report on results of the employee survey ・ ・ Held monthly

・ ・ ・ ・ ・ Employees Persons responsible for human capital development Senior Managing Executive Officers and Managing Executive Officers President and CEO Japan Career coordinator Board of Directors Board Senior Vice President of President Senior Vice Human Capital Development Management Committee Members:

Chairperson: Human Capital Development Committee Human Capital Development Employees Hosting organization: Human Capital Development Members: Persons responsible for human capital development in each division and group company Career coordinator Details: Sharing information on and discussing policies, confirming activity status Human Capital Development Conference Human Capital Development Persons responsible for human capital development Human capital development functions in each division and group company each division and group functions in Human capital development 102-20, 102-8, 103-2, 404-2 103-2, 102-8, 102-20, Committee Internal Control Internal Control Group company presidents company Group Person responsible for the division for responsible Person Human Capital Development Structures Human Capital Development deliberated on by the Board of Directors, Management Directors, Management on by the Board of deliberated Committee. Capital Development Committee and Human reports on human Division Human Capital Development the officer responsible for the In addition to the above, policies and the results of the capital development to the Board of Directors. Find opinion survey employee

Human Capital Development Structures Development Human Capital the group in accordance with promote activities within To have we Capital Development, the Guidelines for Human that is shared and utilized introduced a framework and make manage labor costs we example, For globally. information via a global human use of human capital our also improve We capital information system. survey through the employee organizational capabilities capital management and and bolster our human Find the establishment of job rank, through development systems and compensation and training evaluation policies that are shared globally. and our matrix President of Human Capital Development pursue these activities under Senior Vice We the human management structures in cooperation with company, divisions of each group capital development both within and outside Japan. establishing within major divisions in Japan while also human affairs functions set up have Furthermore, we the nurturing of on-site career coordinators who oversee career assistance in and provide each employee development. human capital is made up of the persons responsible for Conference, which Human Capital Development The companies in in major divisions and group development responsible for while persons Japan, meets monthly, annually to meet overseas human capital development relating to share information on and discuss policies the group and throughout human capital development the status of activities at each group company. accordance with submitted criteria and establishment, personnel transfers in Major organizational changes, modification and elimination of personnel systems are Framework Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 155 Meeting for each for Employee- Committee Management Kao Logistics Logistics Centers Employee Welfare Welfare Employee Meeting Employee- Committee Kao Sanitary Management Products Ehime Products Employee Welfare Welfare Employee KPS Meeting Kao Forum Employee- Workplace Committee Management Employee Welfare Welfare Employee KCMK Meeting Employee- Information sharing on group policies/strategy/targets sharing on group Information each branch Management Committee for Committee for Employee Welfare Welfare Employee Discussion and information sharing on specific themes/issues for each group company each group themes/issues for sharing on specific Discussion and information Discussion and information sharing on specific themes/challenges for each worksite and branch each worksite themes/challenges for sharing on specific Discussion and information Meetings Employee- Process for election of representatives from employees of representatives Process for election of discussions feedback on information sharing/content Process of Management each worksite Committee for Committee for Kao Corporation Kao Corporation Employee Welfare Welfare Employee 103-2, 103-3, 404-2 103-3, 103-2, (worksite/branch) Members (employees) Members Kao Forum representatives Kao Forum Employee representatives representatives Employee Employee Welfare Committee Welfare Employee Employee dialogue structure dialogue Employee . *

the number of employee union member. Due to information union member. the number of employee countries/regions protection reasons and freedom of association of the rights to have doesn’t operate business, employer where they confirm about the Union membership. * This figure excludes Kao Group member companies that do not track Kao Group member companies that do not excludes figure This * Employee dialogue structure dialogue Employee include with employees for regular dialogue Platforms and at each worksite Committees Welfare Employee Meetings at every branch, Employee-Management for the group as and the Kao Forum group company, a whole. both Japan and Europe, is held in Forum Kao from Kao Corporation, representatives The with employee Ltd. (KCMK), Co., Marketing Kao Group Customer Co., Ltd. (KPS), Kao Kao Professional Services Co., Ltd. and Kao Logistics Sanitary Products Ehime in Japan. in the Kao Forum Co., Ltd. participating and the Employee-Management Committee are Welfare Meetings of the Employee conducted monthly, are conducted twice a year. Meetings and Kao Forum on the Continuous mutual information sharing shared at content of the discussions and information each meeting is implemented for all employees and Employee representatives through the employee Committees. Welfare of the group as a whole, the percentage union members is 36% that are Within employees Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 156 103-2, 103-3, 404-2 103-3, 103-2, Anticipated benefits from achieving mid- to achieving benefits from Anticipated long-term targets Business impacts skills of employees’ By promoting the enhancement and the retention of human and sense of purpose to fully individual employees capital, and by enabling the organization as a demonstrate their abilities, high performance, while ensuring whole can generate for dialog and thereby appropriate opportunities we engagement. In this way, enhancing employee or even goals, our planned growth can achieve these goals, which in turn exceed results that achieve profitability. will ensure and expand turnover fall in to lead not only to a in employee In addition, the reduction can be expected on return recruitment costs and an improved to an in human capital, but also investment reputation as an employer. enhancement in Kao’s Social impacts engagement, employee thanks to improved When, on challenges without fearing take boldly employees feel a sense of where they change in workplaces problems social purpose, ideas that potentially solve and products can provide are generated, and we and even services that enhance consumer satisfaction to realize a better products and services that help sustainable society.

Mid- to long-term targets Mid- to long-term and fostering the process of respecting, eliciting For in all individuals, such as pursuit the potential inherent values, and to generate new of the essence, creating seek to identify the we initiative, learning on their own from multiple potential of each individual support so that all provide and we perspectives, capabilities, can continue to hone their employees an ongoing on experience skills and knowledge, basis. regular implementation also seek enhance and consolidate the toward cycle moving We RPDCA and organizational Find survey of employee improvements. Mid- to long-term targets and performance and targets long-term Mid- to Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 157 yen 51,000 yen 56,000 yen 13.0 12.6 14.1 58,000 yen 66,000 ―― yen 2015 2016 2017 2018 2019 69,000 employees who are re-employed after reaching retirement after reaching retirement re-employed who are employees views. progress and exchange report on age, we Average training hours Average Expenditure on education and training per employee (consolidated) Dialogue with employees are continuing to implement action plans In 2020, we the results formulated to address the issues identified from are 2018, and we Find survey obtained in the employee these issues. We implementing measures to resolve the issues implement concrete action plans, in line with the key affecting individual organizations, which embody features of the strategy adopted for company-wide measures, including Communication and Challenge, etc. Human capital development costs Human capital development of performance Reviews to encourage programs Implementation of training self-learning and the ability to guide change our programs will be strengthening we 2020 onwards, From generation of the next for supporting the developing leaders. We managers who will function as global business to undertake will also be creating opportunities for managers are further we liberal arts study at an earlier stage. In addition, Program the Managing Human Performance expanding will We (MHPP) to strengthen line management capabilities. learning the range of opportunities for individual expand needs, so that to their own to learn according employees of motivation to continue to with a high level employees can put themselves by themselves learn, change and grow and challenge themselves. forward • Regarding the expansion of career support options for of career support expansion Regarding the • 102-44, 103-2, 103-3, 404-1, 404-2 404-1, 103-3, 103-2, 102-44, we share information regarding the system’s usage status share information regarding the system’s we views. and continue to exchange that was implemented implemented that was Find survey the employee obtained in in 2018. • Employee communication and July 2019, Employee-Management In February conducted in each Kao were Forum Meetings and the Kao conducted was European Forum Kao The Group company. in June 2019, with 18 employees in the European region representatives. participating as regional brought together, companies were from different Kao Group representatives where employee At the Kao Forum, 15 from participated: representatives a total of 29 employee from KPS, one from KCMK, two Kao Corporation, 10 from from Kao Kao Sanitary Products Ehime Co., Ltd., and one fielded from employee Logistics Co., Ltd. Questions were the which included questions regarding representatives, business areas, product orientation of respective of sales measures, activities and deployment development ESG activities, etc. and relating to advanced technology, from employee received comments were Many positive to the including: “My sense of belonging representatives, about our Kao Group has increased” and “I learned more guide as a useful direction and approaches, which will serve for the future.” and measures concrete discussion regarding the strategies Meetings, there was At the Employee-Management etc. During the being implemented by individual companies, at Kao Corporation, the Meeting Employee-Management and human resources management discussion between relating to human resources focused on issues employees of views matters, with an exchange welfare and employee regarding measures to promote better workstyles. system, the adoption of the working-from-home Following • and actions taken based on the and actions taken Find

results We have implemented the action plan based on the results implemented the action plan based have We • Employee survey Dialogue with employees • Providing employees with diversified development support development with diversified employees Providing • implemented a 50+ Career have Starting in 2017, we reached the age of 50 who have Seminar for employees the Life Career (starting with Kao Corporation), in addition to reached the age of who have Design Seminar for employees in their late 50s. 45 and the Life Plan Seminar for employees Implementation of training programs to encourage to encourage programs of training Implementation change self-learning and lead global leaders of Development • Program has been Leadership Development Global The program common to all group implemented as a global selected from individual companies, in which members management challenges from Kao’s group companies study to top proposals and make a broader perspective management. Japan, and 11 from Kao Group Group companies outside had 19 participants in 2019 (8 from Kao program The companies within Japan). Program (MHPP) in Managing Human Performance implemented the roll-out of the have In addition, we to strengthen line management countries around the world capabilities. MHPP training in underwent and 187 female employees) (174 male employees In 2019, a total of 361 employees program has been implemented in MHPP Japan. A revised to foster Kao Group companies outside Japan since 2017 the group closer coordination and collaboration throughout and strengthen management. from participants. high evaluations Each of these programs has received Performance in 2019 Performance Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 158 individualized career development support based on development individualized career and suitability human capital development perspectives. pride and out the motivation, are able to draw we through of individual employees personal growth achieving the process of taking on challenges and goals, implementing systematic and carefully both the planned human capital cultivation over short term and the medium to long term. affiliates in management system with some of our put and have Japan, Europe, the Americas and Asia, metrics. into operation infrastructure using common implement an annual cycle that includes a series We (1) Setting of targets as follows: processes of linked of and task implementation, (2) Monitoring during the performance and follow-up determination implementation period, (3) Evaluation and achieved, based on confirmation of the results using feedback review (4) Capability development sessions. interview Human capital development through the through Human capital development system evaluation employee system, our fair and transparent evaluation Through • standardized our performance have We • 404-2 Development Scheme (SeEDS), whereby, once the Scheme (SeEDS), whereby, Development has decided on which direction individual employee implement their career in, we hope to take they throughout the group for all employees regardless throughout the group for all employees by and are employed of which group company they and are regardless of the type of employment can building an environment in which all employees toward while working challenge themselves goals. forward-looking career development that takes into account the that takes career development who wish to styles appropriate for employees work been have we after the age of 60, continue working Plan implementing programs such as the Life Seminar for middle-aged and older employees. Development Scheme (SeEDS), whereby, once the once the (SeEDS), whereby, Scheme Development hopes to take employee direction that the individual we promote confirmed, their career in has been based on human development individualized career and suitability perspectives. capital development • We have adopted the Self Education & adopted the Self Education have We • Career development support development Career career development are promoting individual We • • In Japan, recognizing the growing importance of importance In Japan, recognizing the growing • • We have adopted the Self Education & have We •

Our initiatives

exchange when employees are reaching milestones are reaching when employees exchange to expand in their careers, and building networks provided have we perspectives, employees’ activity. enhanced stimulus for intellectually creative Kao business locations, working with speed and with Kao business locations, working attention to detail to ensure that all employees emphasis on and Kao’s absorb the Kao Way business skills. and acquire necessary Integrity, • By expanding opportunities for cross-industry By expanding • Providing employees with diversified with diversified employees Providing support development been cultivated at individual In-house trainers have • Developing global leaders global leaders Developing our global leaders who can drive future In developing collaborate with high- we business development, business schools to implement profile international to enhance working training. Besides intensive also been have skills, we trainees’ management to opportunities for them to expand working in a wide range of encounter the latest discoveries Liberal arts fields and to build their personal networks. to cultivate been included as a way also studies have depth of insight and a strong value system. Human Capital Development Programs Development Human Capital Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 159 Training Training Stage 1 Stage 2 Stage 3 Training Training Integrated IT Training Systems Methodology Training for for Training Specialist IT Methodology Training (Basic) Training Information Information Applied Application Applied Applied Technology Applied New Employees New Basic Application Basic Technology Training (Application) Training

Managers and Supervisors Forum R&D Forum” Academy

Specialist Programs “Freshman Science Basics SCM Course Program - Advanced Supply Chain Development Transmission C Transmission Supply Chain Development Supply Chain Development School Kao Techno Kao Engineer School Technology Academy” Technology Training (OJT) Training “High Pressure Academy” “High Pressure “Anti-microbial Quality On-the-job SHIC ni Skills Program - Basic Course Program ・・・・・・Field Sales 404-2 Excellence Excellence Key Account Key Management BLDP Program Exchange Basic Sales AC BLDP Advanced Training Training Introductory Marketing Marketing University” University” “Marketing “Marketing (Basic Level) Marketing Sales MK Management (Master Level) Communication Research Fundamentals II Marketing Fundamentals I Strategy Fundamentals Strategy ・ ・ ・ Global Leadership Global Leadership II Program Development Management Global Top Promotion for Training to G3 Level Global Leadership I Program Development Managing Human (MHPP) Program Performance for Program Training International Assignment Business Skills New Employee Orientation Employee New Facilitation, negotiation, Facilitation, management project Kao Way Integrity

S LS MP SMP Level Level Level Level SMP Level: Senior management/senior professional level SMP Level: Management/professional level MP Level: Leading staff level LS Level: Staff level S Level: Kao Group global common training program and specialist programs and program common training global Kao Group Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 160 & Recognition & Fairness 8. Respect for the individual Compensation 9. Development Opportunities Climate 10. Reward Employee Function Contribution to company ● survey is normally implemented once is normally survey Find progress status was monitored on a periodic basis by on a periodic basis monitored was progress status and the individual employees. both the company The the in order to reevaluate However, years. two every be able to implement more questions, so as to is being survey measures, the next effective be implemented and will now year, postponed by one will continue to focus on in 2021. In 2020, we the action plans, with all implementation of our overall together to enhance working employees organizational capabilities. Workplace & Communication & Action plan Commitment ● Quality of Work/Workplace 6. Teamwork 7. Work Process Satisfaction with Company/Work (Engagement) Satisfaction at work ● 102-43, 404-2 102-43, Strategy & Quality Orientation & Compliance & Organizational Function 1. Leadership 2. Organization 3. Ethics Company Reputation 4. Customer 5. Performance-Driven Culture Company/Organization Function Business Function questionnaire items questionnaire Find survey Employee strategic direction for company-wide action, we we action, for company-wide strategic direction to forward including moving items, key selected five challenges relating to the big changes and K20, and Return to the basics of implementation of consumers and be closest to “To the Kao Way following formulated plans were Action customers.” and taking into account worksite, discussion at each individual companies and the issues already affecting these to implement worked divisions. All employees ensure mindset. To ownership action plans with an properly implemented, the that action plans were Feedback (once every two years) two (once every Implement employee survey Find review Action plan is implemented regularly, once regularly, is implemented implementation/

Identify issues employee survey Find survey employee for improvement for

Action plans by division Action plans by Company-wide action plans Company-wide RPDCA to improve organizational capacities organizational to improve RPDCA The The

, and drafting of action plans of action drafting , and Find survey the employee of Implementation Human capital development development capital Human every two years. In the first year, the focus is on year, the first In years. two every results analysis and implementation, survey the plans. In the second year, of action development implementation into practice. The action plans are put thus survey, Find in the next results are then verified implementation of the RPDCA the ensuring effective cycle. implemented, on a company-wide we In 2019, based on the results obtained in basis, the action plan . As regards the overall Find survey the 2018 employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 161 External Evaluation External

Topic Recognition in Nikkei’s Smart Work survey Smart Work Recognition in Nikkei’s of 4.5 stars an evaluation Kao Corporation received survey enterprise management in the Smart Work Inc. implemented by Nikkei, listed larger unlisted companies, companies and some which targets Japan’s survey, The as business Work management defines Smart the maximization of management that realizes through the effective organizational performance elements such as the integration of three key work practices, a and flexible adoption of diverse the and corporate structure that fosters innovation, Evaluation and markets. ability to develop scale certification is performed using a five-point into account other management that also takes fundamentals, such as corporate governance. Human capital development development capital Human Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 162 Education and promotion for our a source of vitality diversity In order to make of the meaning of are spreading awareness organization, we needed and information the knowledge D&I, and providing are significant differences in the to put it into practice. There issues and in the relevant current state of diversity being performed, etc., depending on the nature of the work or unit. and depending on the individual group company to properly it possible aim to make this in mind, we With identify the issues relating to D&I promotion and to as to enable formulate and implement related plans, as well in relation to realize improvements each individual employee need to take. to the action that they Policies personalities and values of diverse By including the individual passion and employees’ and by developing employees, invigorate our can we extent, capabilities to the maximum as a capabilities. Taking its overall organization and enhance of trust that has been formed through foundation the relationship and employees, management between smooth communication which employees to create an environment in are working we an culture and with enthusiasm, and can focus on their work use of effective to make strive environment in which employees and in which people in their work, experience diverse their own their utmost. for doing are properly rewarded feel that they organizational and personal growth. of aim to realize a virtuous circle these efforts, we Through 102-12, 102-15, 103-1, 103-2, 404-2 103-2, 103-1, 102-15, 102-12, Risks related to realization of our vision by 2030 of our vision by to realization Risks related to employ that a company that is unable believe We it difficult to find would human resources diverse in employee A decline continuous growth. achieve increase in the number of enthusiasm and an as difficulty as well the company, leaving employees the prevent in recruiting talented people, may overall company from fully demonstrating its capabilities. of our vision to realization Opportunities related 2030 by to the enthusiasm, contributing Increasing employee a global presence and expressing growth company’s inclusion (D&I) and within the promotion of diversity the company enhance the value that society perceives employee the pool of future and expand as providing for Kao. to work candidates who want Contributions to the SDGs

regardless of personal attributes can work employees where environment the work will improve We gender orientation, sexual gender, (such as nationality, age and disability), and promote support for identity, with childcare, nursing care, or family balancing work the comfort of all care with the aim of improving and maximizing the results of our operations. employees Kao’s creating value Kao’s creating the with different backgrounds By giving employees by pooling the opportunity to fulfil their potential, and can we capabilities of each individual employee, of our enhance the creativity and innovation products organization, and can continue to provide than higher satisfaction and services that realize even of urgency. in the past to customers with a sense Social issues we are aware of aware are Social issues we are undergoing significant Social values and lifestyles In addition, as business changes and are diversifying. economic and social uncertainty becomes globalized, has increased. the number of employees while dealing with problems in their In this changing society, who are working of employees and so is the number is growing, lives who need to adopt different workstyles. a business enterprise to realize sustainable of it is vitally important to be accepting For growth, a proactive and also to adopt employees, diverse social change. approach toward Kao’s creating value to address social issues to address value Kao’s creating Kao believes that the vitality derived from diversity can create new value for society. To this end, as a company, we strive to have all employees to maximize all employees to have strive we end, as a company, this To society. for value create new can diversity from vitality derived that the Kao believes to their abilities and to combine employees, of individual values and personalities the diverse culture that accepts an organizational and skills in their passion capabilities. our overall enhance diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 163 I Promotion Plans. & * As of December 2019. I awareness-raising activities. I awareness-raising & Human Capital Development and responsible for Human Capital Development Persons career coordinators in each division and group company Department Career Development Kao Corporation’s Making proposals on and discussing the recruitment, assignment, Making proposals on and discussing the recruitment, assignment, human capital. cultivation and appointment of diverse Confirming the PDCA cycle in relation to D cycle Confirming the PDCA Reporting D Implementation of human capital strategy through line through Implementation of human capital strategy Human Capital Development Meetings, once monthly Human Capital Development Details appropriate at topics are addressed when following The related matters meetings where human capital development information is shared. are discussed and relevant Hosting organization Members Secretariat ・ ・ ・ and from major group of Kao Corporation from nine and personnel Responsible managers worksites of the dissemination undertake companies and plan and regarding D&I promotion information events. implement related Activity held D&I Awareness 2018, we Up until participants reported on examples Meetings at which shared information about the of best practice and ways examining now are latest D&I-related topics. We can respond so that we to adjust this system issue in line with the appropriately to each organizations. In 2019, circumstances at individual at individual organizations the responsible managers topics. approached in relation to specific were sharing Information Employees I & I. & Conveying opinions Conveying opinions 102-43, 103-2 102-43, I Promotion Office & Responsible personnel in the Employee Welfare Welfare Responsible personnel in the Employee Committee at individual Kao Corporation or human resource managers worksites responsible for human resources or Personnel Welfare in the secretariat of the Employee Committee of group companies D KCMK’s Human Capital Development ・ ・ ・ of information of information Dissemination Dissemination I Awareness Activity Meetings, once annually I Awareness & Employee Welfare Committee, events, etc. Committee, events, Welfare Employee Sharing of implementation content based on the D Sharing of implementation content based on the Provision of information relating to D Provision D Awareness-raising Plan. Awareness-raising Details Hosting organization Members ・ ・ I promotion activities D&I promotion for Framework specialized organization in Kao Group Customer Group Customer organization in Kao specialized Group, and with the Co., Ltd. (KCMK) Marketing capital development for human persons responsible broadly division, we company and in each group opinions, and deliberate, share information and the Human Capital Development through meetings of individual meetings. Committee and other and implement D&I promotion formulate of our companies and divisions within At each Japan, we analysis of the current situation in plans based on an so as to promote the diversification each organization, build organizations that are of human capital and realize aim to we In this way, accepting diversity. continuous improvement.

We are working to promote the recruitment, are working We human capital cultivation and appointment of diverse building a in each of our organizations, while also the fostering of a corporate in which framework culture, that values D&I, can be promoted on multiple levels. among diversity Matters relating to promote for the group management candidates and strategies Capital as a whole are discussed by the Human of executive Committee, which consists Development officers. Kao Corporation has a special-purpose D&I organization to promote and firmly established throughout the group. Collaborating with a Given the rapid pace at which society is diversifying, at which society is diversifying, the rapid pace Given within of views exchange just relying on the internal constitute an adequate the company will not in mind, in regard to activities that this response. With are striving momentum, we are strengthening social in participation attitude toward a proactive to take agree with their where we such activities, in cases of the study participated as a member have goals. We various agencies and groups of government organizations, giving corporate case study and arranging presentations at lectures and seminars etc. when possible. tours of our special subsidiary, Framework Collaboration and engagement and engagement Collaboration with stakeholders diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 164 Reviews of performance Reviews engaged in more in-depth In 2019, we the discussions with top management regarding and the meaning of Kao’s definition of diversity the D&I promotion activities. Through will be summarizing of these discussions, we new formulating a more concrete picture of our have in 2020. In line with this, we D&I initiatives new amended the original plan for rolling out throughout the whole group, including initiatives take so that this will now worksites, overseas place from 2020 onwards. Performance in 2019 Performance Performance and divisions are Individual group companies that address their proceeding with measures issues. respective to address issues implementation of measures Japan, besides the steady Within also have we attributes, relating to employee attributes employee sorted out issues including which segments can determine etc., so that we on strengthening need to focus and content we measures for in the future. discussions with top management regarding the fundamental also implemented several We meaning of D&I promotion within the organization. 103-2, 103-3 103-2, continuity and the enhanced creativity, can be can creativity, and the enhanced continuity expected. Social impacts are value, and we create new It becomes easier to products and services that lead better able to provide and satisfaction. to customer happiness

hiring and employee retention, and higher revenues revenues retention, and higher hiring and employee resulting from the contribution to business implementing measures that include overseas group implementing measures that include overseas companies. competitiveness in the hiring market through in the hiring market competitiveness for. to work company becoming a more attractive employees and the organization as a whole, through and the employees work. in one’s a higher sense of fulfillment and pride • As a result of the above, reduced costs relating to As a result of the above, • • A greater sense of unity throughout the group by • • Improved employee retention and increased retention and increased employee Improved • Anticipated benefits from achieving mid- to achieving Anticipated benefits from long-term targets Business impacts of both individual at the level Enhanced vitality, • Mid- to long-term targets Mid- to long-term D&I is shared by all Responsibility for promoting need to get we where Our aim is to show employees. there in an to get must take to and the actions we that all and ensure manner, easy-to-understand of deriving fully understand the meaning employees able to put this into and are vitality from diversity, are implementing measures we practice. In addition, environment and corporate aimed at creating an to culture that encourage all employees company, role in the an active enthusiastically play disabilities, or whether they regardless of gender, childcare, nursing care or other family have responsibilities. Mid- to long-term targets and targets long-term Mid- to performance diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 165 themselves, but who express understanding and are supportive of understanding and are supportive but who express themselves, LGBT people. * ALLY participants are people who may not necessarily be LGBT participants are people who may ALLY * KCMK Group to promote In 2019, the KCMK Group used e-learning (for around a basic understanding of LGBT issues In 2020, there will be a focus on 8,000 employees). for practical application, with preparations underway practical training in dealing with LGBT providing customers for Kanebo and Sofina beauty advisors. LGBT training understanding of LGBT issues, promote employee To in Japan, for all employees conducted e-learning we sessions and lectures, and held periodic training on our multi-function toilets, signage installed relevant training for cosmetics brand provided etc. In 2019, we training with 32 people participating. Since 2015, staff, across Japan, sites of this kind has been held in seven In total of 425 people participating. with a cumulative issues is addition, basic information regarding LGBT so that on the company intranet, made available need to. they it whenever can check employees recruiting, and also continue to conduct ALLY* we In coordination with the measures outlined above, to made declarations 320 employees approximately an who make date (as of December 2019). Employees declaration are issued with special straps which ALLY to wear. are asked they 404-2 number of women employees, in 2019, as in 2018, we as in 2018, we in 2019, employees, number of women Care Vision AEON Group and HOYA cooperated with the for event networking and planned a cross-industry so that managerial level, below just employees women their outlook through dialog participants could broaden large number of other people. A with a and exchange of event, total of 30 people participated in the networking the KCMK Group. from which 5 were of non-Japanese the recruitment Promoting and Research at Kao Corporation’s employees Development Japan, Kao In relation to recruitment of researchers in actively is Research and Development Corporation’s has set a target recruiting non-Japanese researchers, and to be hired. for the number of non-Japanese researchers with diverse among employees collaboration By developing culture backgrounds, the aim is to both foster a corporate to value creation and help employees to new conducive this end, besides recruiting To personal growth. achieve Japanese from among foreign students studying at Germany GmbH with Kao are also working we universities, universities. to recruit directly from overseas and to foster in English that meeting materials are available are making an effort to ensure Some of our workplaces In addition, English communication in the workplace. English-language lunch meetings for colleagues from helping to different countries are organized by volunteers, relationship. the directly work-related build ties beyond

Our initiatives

KCMK Group At the KCMK Group, which has a particularly large female encourage more limited than for men, we is for women available As the number of role models study groups managers to participate in multiple outside action. In in other industries as a part of our positive and public addition to study groups conducted by NPOs within Kao officers service corporations, female executive in plan and implement study groups voluntarily collaboration with officers from other companies. Screening and development regardless of gender regardless and development Screening attributes and other personal adopted the principle of using thorough have We and recruitment that does implementation of evaluation on personal attributes, so as to not discriminate based participation by the of and active foster the appointment to rapidly need. In order kind of human capital that we for both the eliminate the disparities in gender ratios— managers— and the number of number of employees into the D&I issues regarding gender are incorporated those plans are promotion plans for each department, and for selecting set target values carried out. In addition, we of the core human capital according to the composition selecting are steadily implementing and we workforce, attributes. regardless of personal and development officers Human capital meetings conducted by executive women are that engage in discussions while confirming positions. included among the candidates for senior Promoting Participation by Diverse Human Talent Diverse by Participation Promoting diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 166 disabilities. including 48 with Kao Peony, at work 61 employees As of January 2020, a total of Office Support Department Kao Peony Measures implemented at special subsidiaries implemented at Measures employed has actively a special subsidiary, Kao Peony, disabilities, primarily persons with persons with severe since 2005,intellectual disabilities, and the production as volumes the same production division has achieved disabilities. The those on lines operated by persons without Peony established Office Support Department that Kao new the scope of its to expand in 2017 has been working Kao Peony In 2019, business activities and employment. the digitalization tasks, including took on a number of new and support for the internal newsletter of Kao’s & Lifestyle Checkups, etc. Fat implementation of Visceral held in October 2019, one of the employees working at working employees 2019, one of the held in October about how a presentation the logistics center gave motivation. the employees’ there had boosted working attending the Summit were Many of the leaders felt they comments, which impressed by the employee’s understanding of diversity. had deepened their 405-1 provides for disabled employees before they join the join the before they disabled employees for provides by confirming in advance what support and company, for help to reduce worry we will need, each employee join the company. they after these employees to all employees for other events and subsidiary, of disabilities. In 2019, diversity increase understanding and parasports the Paralympics seminars focused on and Ehime— —Kayabacho locations held at two were with a total of 116 participants. • We periodically hold seminars, tours of our special periodically hold seminars, We • KCMK Group employees training for new KCMK Group provided The employees training aimed to get new with disabilities. The others to communicate with thinking about how needed. It they regarding their disability and the support this through opportunities for practicing also provided also Trainees activities with senior employees. role-playing function needed to acquired the mindset that was by learning adult, for example properly as a working methods, sales techniques and communication effective etc. to build relationships with customers, how Kao (Australia) has formed a partnership with Wallara Kao (Australia) Ltd., a social enterprise which helps people with Australia In 2019, disabilities to participate more fully in society. of companies collaborated on the establishment the two employs logistics center in Melbourne, which a new people with disabilities. Around 30% of Wallara at this logistics center. working are now employees that was At the Leadership Summit of Kao (Australia)

information about the support that the company support communication with employees who have who have support communication with employees hearing impairments. and a Fact Sheet for Understanding Disabilities and and a Fact mutual distributed them on the intranet to promote and with disabilities understanding among employees their colleagues. with Disabilities to worksites nationwide to conduct nationwide with Disabilities to worksites hold We with disabilities. consultations for employees once with Disabilities Support Meeting an Employees their skills to help the consultants upgrade each year for persons support system and strengthen the overall with disabilities. with disabilities, asking about the current status of their with disabilities, asking experiencing be may disability and any problems they where necessary given, Based on the answers at work. and provide Kao personnel coordinate with relevant we problems. the employees’ support to help resolve • For prospective employees with disabilities, we provide provide with disabilities, we employees prospective For • • We introduced UD Talk voice-recognition software to software voice-recognition UD Talk introduced We • • We prepared a Disabled Person Employment Manual Employment a Disabled Person prepared We • • We also assign Vocational Life Consultants for Persons Life Consultants for Persons assign Vocational also We • • Every year, we administer a questionnaire to employees to employees administer a questionnaire we year, Every • Promoting normalization Promoting We position support for people with disabilities as an with disabilities as support for people position We a formulated D&I efforts, and have important part of our for a society where people with basic policy of “Striving create we together, and live work and without disabilities with disabilities for employees environments workplace a sense of pride life easier for them and foster that make work.” in one’s Promoting better understanding of disability and promoting the employment of persons with disabilities with persons of the employment and promoting of disability better understanding Promoting diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 167 Kao Corporation’s 50+ Career Seminar Kao Corporation’s perspectives. These seminars are implemented in implemented in seminars are These perspectives. at career consultation interview conjunction with a the support that older the age of 55, to provide their mindset and need in order to change employees for the future, and so that they to be ready behavior will need of the things they in advance will be aware Kao will need to make. they to learn and preparations and Kanebo Co., Ltd. Group Customer Marketing implement seminars and Cosmetics Inc. also are aiming to roll out these and we interviews, the group. activities throughout the range of will continue to expand In the future, we and we to older employees, styles available working the range of to expand will be working opportunities—both within and outside the to utilize the company—for senior employees have they that and specialist expertise experience make and accumulated at Kao to remain active contribution. positive 404-2, 405-1404-2, Expanding the scope for active participation by participation by active Expanding the scope for senior human capital open Since 2016, Kao Corporation has held are We recruitment for people aged 55 or over. talent with implementing careful matching of human for senior the opportunities positions, expanding expertise specialist citizens to use their experience, positions and other strengths to include not only at NPOs or within our company but also positions etc. NGOs and at intermediary support organizations, our intranet, set up a dedicated page on In 2018, we information and which is used to disseminate relevant individual career consultations. provide development career self-directed Support for (with Kao Corporation organizes three seminars aged 45, 50 participation) for employees voluntary of getting with the aim and 55 respectively, of lifestyle, and kind about “What to think employees in the to have style, do I want what kind of working future?” from both life planning and financial planning Fostering active participation by senior human capital senior human by participation active Fostering to people can expect which more and more In an era in to build an been working to 100, Japan has live that encourages people to environment employment laws through the amendment of relevant longer, work creating a society in which diverse etc., with the aim of As part of the for longer. active human talent can remain systems, the Kao Group in adjustment of our personnel the employment to expand Japan has been working implementing measures that system for senior citizens, areas. key two are focused on the following * (Year) 2.42 2.37 As of June 1, 2019. 2.29 2.27 Kao Group in Japan 2.28 2.08 2.21 2.10 ield Marketing Co., Ltd., Kao Professional Services ield Marketing 2.21 2.12 2015 2016 2017 2018 2019 Kao Corporation

(%) Co., Ltd., Kao Sanitary Products Ehime Co., Ltd., Kao Logistics Co., Co., Ltd., Kao Sanitary Products Ehime Co., Ltd., Inc., Ltd., Kao Business Associe Co., Ltd., Kanebo Cosmetics special Co., Ltd. and Odawara Kao Cosmetic Products e’quipe, LTD., Co., Ltd.). subsidiary Kao Peony Thirteen domestic affiliates that are required to employ people with domestic affiliates that are required to employ Thirteen Co., Marketing disabilities (Kao Corporation, Kao Group Customer Beauty Counseling Ltd., Sofina Beauty Counseling Co., Ltd., Kanebo Co., Ltd., Kao F 1.80 2.00 2.40 2.20 2.60 * Scope: Kao Group employment rate of persons with disabilities with of persons rate employment Kao Group Employment rate of persons with disabilities with disabilities of persons rate Employment (Japan) for 2.42% disabilities account persons with Currently, Kao Group in Japan, of the workforce of the total minimum rate of 2.2% (As of the statutory exceeding June 2019). diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 168 further strengthening our document server usage our document server further strengthening measures. environment and security time vacation to take employees Encouraging continued to implement have Since 2018, we targets: the following activities aimed at achieving rate for vacation time usage 80% or higher average minimum the Kao Group in Japan; 50% or higher individual Each usage rate for individual employees. the raise to efforts its continuing is office and worksite by designating vacation time usage rate, for example Usage Promotion Time as Vacation particular days systems. Leave and organizing Anniversary Days change in the law In addition, in April 2019 a annual made it obligatory for companies to arrange are paid vacation periods. In response, we of planned days five to take encouraging employees who annual basis, with employees on an paid leave receiving individual reminders leave such do not take to do so. 103-2 Proactive utilization of ICT tools, starting with utilization of ICT tools, starting Proactive Enterprise Information Kao Corporation’s Solutions Solutions, for meetings At our Enterprise Information needs to be shared with every where the content workplace member of the division, Microsoft Teams and recording the for relaying is used chat software part in the can take employees meetings. In this way, business trips, on meeting from home or while away are unable to participate at all who and employees date. This the recording content at a later can view of the topics system also facilitates thorough sharing reduces to be addressed at each meeting in advance, and allows the amount of time needed for meetings, part in only that part of the to take employees aim we way, to them. In this meeting that is relevant their time more to use to enable individual employees is being The scope of this initiative efficiently. content on our through sharing of meeting expanded also company intranet, etc., with other departments and use of video-conferencing being able to make chat functions. workplace our information to improve are also working We environment and communications technology (ICT) can connect to each other and so that employees are, by they utilize information systems wherever work styles (Kao Corporation) work p. 172 Main systems for supporting diversified supporting diversified p. 172 Main systems for ➡

Starting from this year, staff at several worksites, worksites, staff at several Starting from this year, will be head office, including our Kayabacho all year casual business clothing permitted to wear to create an atmosphere in which strive round, as we that feels natural to them. in a way people can work Systems to realize diversified work styles work diversified Systems to realize measures to Kao Group in Japan is implementing The options and time and location increase work-related systems that we styles. The work in facilitate diversity system (with no a flextime adopted include have required core hours) and a working-from-home system. With the aim of making it possible for diverse employees to maximize their potential in different workplaces, we are undertaking efforts to develop environments and environments efforts to develop are undertaking we different workplaces, their potential in to maximize employees for diverse of making it possible the aim With work styles. and facilitate more flexible workplaces that will improve personnel systems are disseminating we current personnel systems, and full use of the can make culture where employees that it is important to cultivate a corporate believe We to that end. training and various other programs information and conducting Realization of diversified work styles work of diversified Realization diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 169 Awarding of “Yamagata Child Care and Nursing and Nursing Child Care of “Yamagata Awarding Companies” certification from Lively Support Care Government Prefectural Yamagata Sakata Plant and the In 2019, both Kao Corporation’s Tohoku Branch of Kao Group Office of the Yamagata awarded Co., Ltd. (KCMK) were Customer Marketing Yamagata Child Care and certification as a Diamond level This Companies certification. Nursing Care Support Lively enterprises, to those business awarded certification is to foster implemented measures among firms that have advancement and support the maintenance of women’s child care and balance (particularly in relation to work-life by nursing care) that meet certain criteria specified there are three While Prefectural Government. Yamagata of certification, depending levels on the measures implemented, both of the recipient companies Diamond awarded were certification, the highest level, on this occasion. External evaluation of childcare support measures of childcare evaluation External and certification Kurumin of Platinum Awarding certification Kurumin Platinum Kurumin awarded was In 2016, Kao Corporation workplace for employees a supportive certification for creating of the Act for with the provisions with children, in accordance Generation. the Next of Development Measures to Support the and Kao Group Kanebo Cosmetics Inc. Ltd. (KCMK) Co., Customer Marketing certification in Kurumin awarded were In 2019, Kao 2009 and 2011 respectively. also & Logistics Co., Ltd. was Transport certification. Kurumin awarded 404-2 Kao Corporation Seminars for Employees Returning from Childcare Kao Corporation Seminars for Employees Seminars) in 2019 (Tatsuno-oshigoto Leave Meetings & Mothers) F&M (Fathers in Japan hold Kao Corporation and other group companies employees aimed at bringing together a variety of events in providing or plan to be, engaged who are currently, and can share information childcare, so that they to the best ways communicate with one another regarding & F&M (Fathers balance. With a proper work-life achieve can Mothers) Lunch Meetings at which employees Senior about various pre-set topics, views exchange direct Seminars at which employees’ Mentoring Employee balancing work of experience superiors discuss their own by given and childcare responsibilities, and seminars on an are holding these activities we experts, external different formats. ongoing basis with different targets and in steady increase in there has been a years, the past few Over taking part in these events, the number of male employees by participants has expressed of satisfaction and the level able to listen to were risen, with comments such as “We mothers and fathers.” by working frank opinions expressed to work. We also encouraged supervisors to participate encouraged supervisors also We to work. encouraging male in the seminars. In 2020, besides actively also intend to we and supervisors to participate, employees throughout all branches in Japan. roll out these seminars

In the KCMK Group, these seminars place particular emphasis In the KCMK Group, these seminars place particular from the include a message on raising motivation, and they who already as talks by female employees president as well childcare after taking of returning to work experience have who employees and by managers who are supervising leave In 2019, the after childcare leave. returned to work have with the aim of fostering held on weekdays, seminars were greater understanding among both supervisors and partners back into the mindset of returning and of getting employees partners. In accompanied by their these seminars were attending of the employees In 2019, more than 80% to participation an environment conducive order to provide facilities that arrange childcare partners, we by employees’ will continue with We can be used during the seminar. support so to provide in the future, working these initiatives work-life can realize an appropriate that more employees balance together with their family members. Employees of Kanebo Cosmetics Inc. and other group of Kanebo Cosmetics Inc. and Employees head the seminars held at our Kayabacho companies can attend Japan so throughout office, and these seminars are also relayed them. can benefit from at all worksites that employees cooperative participate in the training with the aim of building partners to Kao Corporation is also encouraging employee’s development. relationships with partners in home life and career Seminars for employees returning from childcare childcare from returning employees for Seminars Seminars) (Tatsuno-oshigoto leave who are for employees conduct seminars we Each year, (Tatsuno- from childcare leave about to return to work Kao group companies in Japan. The oshigoto Seminars) at image of life after returning to seminars present a concrete attitudes and raise prepare their and help employees work reinstatement. regarding their awareness Support for balancing work and childcare or family care responsibilities care family or childcare and work balancing for Support diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 170 next-generation through providing education in providing through next-generation and educational materials the classroom Corporate citizenship activities: Education for the Education for Corporate citizenship activities: ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=77 Association of Technology Executives (JAOTEX) on (JAOTEX) Executives Association of Technology for promoting taken have the measures that we advancement in the workplace. women’s of Health, of the Ministry posted on the website (MHLW). Labour and Welfare family care Productivity Center and reported on our support measures. special needs schools. special needs collaborated have ESG Promotion” & Management, on our special subsidiary, Co., Ltd., Peony with Kao classes for children and holding hand washing disabilities, with Kao students with intellectual support for class providing employees Peony implementation. We have given corporate case study presentations for corporate case study given have We with agencies and other organizations, government of D&I the aim of contributing to the promotion throughout society. a case study presentation at the Japan Gave • Our case study for family care support measures is • Appeared at a lecture held by the Shikoku • • The division of Kao Corporation “Business Planning Kao Corporation “Business division of The • CEO Michitaka Sawada & CEO Michitaka Sawada & CEO Michitaka Sawada 102-12, 102-43, 404-2 102-43, 102-12, understanding of disability and promoting the the of disability and promoting understanding disabilities with of persons employment ➡ better Promoting p. 166 Our initiatives: ➡ design product p. 50 Universal been providing support to help people with support been providing including disabilities secure employment, visits and arranging workplace proactively training opportunities for students from workplace has signed a declaration confirming Kao’s support confirming Kao’s has signed a declaration campaign to raise the share of for the 30% Club, a companies to at officers at major female executive Action by a least 30%, and for the Declaration on a Society in Create Group of Male Leaders who Will organized by the an initiative Shine, Women Which Office. Gender Equality Bureau of the Cabinet declaration of support for the approach signed Kao’s 500, an international Valuable of The and initiatives a playing established to get companies initiative in which leading role in building an environment in actively people with disabilities can participate in general, etc. and the economy business, society, • Kao Peony Co., Ltd., our special subsidiary, has Co., Ltd., our special subsidiary, Kao Peony • Collaboration with stakeholders with Collaboration Empowerment signed the Women’s In 2010, we international guidelines for Principles, which are UN participation in society based on women’s and the UN Global Compact. Women in 2019 presentations Main case study • Kao Corporation President • Kao Corporation President

allowances and services allowances resources personnel support the life-work balance targeting male employees support the life-work reports supervisors using childcare leave and their workplace Seminars) (Tatsuno-oshigoto leave who are working meetings and seminars, etc. for employees mothers and fathers) Management”) General work-life balance measures work-life General systems Individual guidance before using leave • full use of relevant to make Encouraging employees • and Life Balance Guidebook of the Work Provision • Main support for balancing work and family and family balancing work Main support for responsibilities care Holding family care seminars • of family care handbooks Provision • consultation skills by human Reinforcement of family care • service family care consultation Establishment of an external • • Distributing a leaflet with information on systems that Distributing a leaflet with information • interviews leave Conducting pre- and post-childcare • on leave employees between Encouraging communication • returning from childcare Holding seminars for employees • care facility (Merries Garden) of an on-site day Provision • & Mother) Meetings (discussion Holding of F&M (Father • and Life Balance e-learning for managers (“Work • Main support for balancing work and childcare and childcare balancing work Main support for responsibilities

Family care support measures support care Family policies of enabling each with our fundamental In accordance on a assistance based act independently and providing individual to measures to educate are taking support, we spirit of mutual in the workplace and to promote mutual understanding employees the cause of work from leaving employees with the aim of preventing held on topics 2019, internal seminars were family care obligations. In care for persons suffering from dementia, of including the provision the also undertake participating. We etc., with a total of 225 people family care including introduction of of information— provision services where appropriate. consultation handbooks—and provided diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 171 Awards ceremony Awards female workers are motivated and how they are treated they how are motivated and female workers are compiled based on rankings and/or appointed. The to managerial positions, four indicators: promotion balance, and work-life ability, use of women’s active promotion. workstyle diverse for the Prime Minister’s Award Kao received from Shine Women Where Leading Companies of Japan the Cabinet Office Prime the 2019 received In December 2019, Kao Women Companies Where for Leading Award Minister’s a Shine, in recognition of our efforts in building to women’s environment conducive workplace of information advancement and in relation to disclosure regarding related measures and performance. to specific issues and implementation of measures for its analysis of organization- praised Kao was it encouraged employees’ address these issues, the way returning partners to attend seminars for employees approach to and its proactive from childcare leave, publicizing these measures outside the company. Kao was selected by the Ministry of Economy, Trade Trade Ministry of Economy, the selected by Kao was Brand as a Semi-Nadeshiko and Industry (METI) for the Semi- selected was In March 2019, Kao made Brand list as a company that has Nadeshiko women’s in advancing outstanding achievements Brands Semi-Nadeshiko participation in the workplace. almost up to performance was are companies whose Brand standard. A total of 22 companies, Nadeshiko for inclusion in the list. selected from all industries, were and evaluations recognized for undertaking Kao was regardless and ability, based on enthusiasm employment that facilitate systems and for developing of gender, styles. work diverse list of the 100 Woman’s in Nikkei first Kao ranked Part Take Actively Women Best Companies Where ranked announced that Kao was 2019, it was In May 100 (out of 538 companies) in the list of the overall first Take an Actively Play Women Best Companies Where magazine and the Woman compiled by Nikkei Part first in the Project. Kao also ranked Womenomics Nikkei rankings are Promotion section. The Workstyle Diversity participation of the state of women’s based on a survey of how perspectives in each company from the two External Evaluation External

Topic In January 2019, Kao was selected for inclusion in the was In January 2019, Kao GEI (GEI). The Index Bloomberg Gender-Equality that are committed to transparency identifies companies to advancing equality for in gender reporting and a total of 230 In 2019, in the workplace. women for inclusion in the GEI, of selected companies were Japanese companies. which 14 were Kao was selected for inclusion in the 2019 selected for Kao was Index Gender-Equality Bloomberg

diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 172 Content In common Special leave is available for employees who incurred a for employees is available Special leave 40 personal injury or sickness (up to a maximum of either for this is available In principle, a year). or 20 days a year days of at least 8 days. periods of leave who participate in for employees is available Special leave by the company (up to a activities approved volunteering a year). maximum of 5 days or in increments of either one day can be taken leave This half a day. completed 10, who have is granted to employees leave This of service with the company (up to a 20, 30 or 40 years a year). maximum of 5 days Where an employee’s spouse is be on an overseas spouse is be on an overseas an employee’s Where wishes to accompany the assignment and the employee and no more of at least one year spouse, a period of leave can be taken. years than two Annual paid leave can be taken in hourly increments up to a can be taken Annual paid leave period, within any one-year day-equivalents maximum of five regardless of the reason. With the exception of some shift workers, the working-from- of some shift workers, the exception With to all employees. home system is applicable the need to from home include Grounds for applying to work provide family care or nursing care, the need to provide to age of completion of the third childcare (for children up medical the need to receive grade in elementary school), or operational requirements. treatment for injury or illness, can be performed in the employee’s Working-from-home the residence, in the home of the person for whom own family care or nursing care, or in the is providing employee from their family. posted away residence of an employee can be utilized up to twice per week, Working-from-home at home for an can choose either to work and employees or for only part of the day. entire day With the exception of some shift workers, flextime is applied flextime shift workers, of some exception the With of grounds. regardless to all employees, times for the start core time period. The is no required There range of are set within a flextime and end of work of work 07:00–20:00. been set at one-month units. Settlement periods have Main systems Special leave for Special leave personal injury or sickness for Special leave volunteering activities Refreshment leave Family leave for leave Family overseas assignments Ability to take Ability to take annual paid leave in hourly increments Working-from- home system Flextime system Flextime 401-3 Nursing care and family care related care and family care Nursing Special leave is available for employees who need to fulfill for employees is available Special leave a nursing care or family care responsibilities (up to a year). or 20 days a year maximum of either 40 days in increments of either one day, can be taken leave This or one hour. half a day, Employees who have family members requiring nursing who have Employees weeks care or family care for a period of more than two to perform work can request either limits or exemption or work on holidays, hours, work outside normal working late at night either. Along with reduced working hours and staggered working hours and staggered working Along with reduced working to hours, this system can be utilized for a period of up in up this benefit can be taken Alternatively, three years. period. blocks of time within the three-year to two a or work a week, three days can either work Employees week. a days five half day Along with flexible working hours, this system can be working hours, this system Along with flexible this Alternatively, to three years. utilized for a period of up blocks of time within the in up to two benefit can be taken period. three-year by up to working hours can be reduced Either specified work time for starting or the specified hours per day, two work can be adjusted. or finishing Nursing care and family care leave can be taken for a can be taken and family care leave Nursing care year. maximum period of one nursing care and family care During the period in which in a maximum can be taken leave is permitted, such leave of three blocks of time. Content Childcare related Childcare Special leave is available for employees who need to fulfill for employees is available Special leave a nursing care or family care responsibilities (up to a year). or 20 days a year maximum of either 40 days Up until the first April 30 following the child’s enrollment the child’s Up until the first April 30 following can the employee in elementary school as a first grader, outside to perform work request either limits or exemption late at or work on holidays, hours, work normal working night. In principle, this can be implemented, on the request of In principle, this can be implemented, on the request the child’s until the first April 30 following the company, first birthday. a or work a week, three days can either work Employees week. a days five half day These are available until the child completes the third the third until the child completes are available These grade of elementary school. by up to working hours can be reduced Either specified time for starting or the specified hours per day, two work can be adjusted. or finishing work In principle, childcare leave can be taken until the first until can be taken In principle, childcare leave birthday. first the child’s April 30 following days after the first five for the is provided leave Paid leave. commencement of childcare

Main systems Special leave for Special leave nursing care and family care Restriction on working extra hours Flexible working working Flexible hours Reduced working Reduced working hours and staggered hours working Leave Main systems for supporting diversified work styles (Kao Corporation) work styles supporting diversified for Main systems diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 173 4 5 6 10 10 11 11 14 16 16 94 86 73 92 110 6.53.1 6.7 4.1 7.7 4.5 8.0 6.0 8.0 5.7 335 573 648 847 1,006 125 104 93 109 129 54.8 50.627.5 51.310.4 25.4 51.4 13.1 25.1 51.1 14.6 27.3 18.4 29.4 21.2 52.5 49.2 49.4 49.8 49.6 75.2 82.3 78.5 84.4 85.3 1,301 1,700 1,618 1,799 1,991 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 17,340 16,33212,120 16,590 11,130 16,748 11,399 16,657 11,464 11,292 No. of employees (persons) No. of employees (%) Percentage (persons) No. of employees (%) Percentage (persons) No. of employees (%) Percentage (persons) No. of employees (%) Percentage (persons) No. of employees (%) Percentage (persons) No. of employees Percentage (%) Percentage Japan Japan Global Japan Global Global Of which, Number of employees re-employed re-employed Of which, Number of employees after retirement Percentage reemployment after retirement reemployment Female managers Female Female executive officers executive Female Female employees Female Number of employees who reached retirement retirement who reached Number of employees age* * Company officers include executive officers. executive * Company officers include * Number of employees who reached retirement age = Number of retired employees + Number of who reached retirement age = Number of retired employees Number of employees * Number of persons re-employed after retirement (Kao Corporation) retirement after re-employed Number of persons Status of female employees in the Kao Group employees female Status of 102-8, 401-1, 405-1 401-1, 102-8, 3 2 3 3 3 69 69 73 90 88 90 336 381 432 479 0.7 0.5 0.6 0.7 0.9 8.78.8 14.0 15.5 8.8 16.8 8.6 18.2 5.7 8.3 264195 283 214 269 196 304 214 306 218 22.3 22.6 23.241.742.6 23.838.6 41.218.5 42.019.8 24.4 38.5 41.0 14.1 18.3 41.7 19.4 38.6 41.8 14.5 17.4 42.6 18.4 39.4 40.6 13.9 17.8 41.2 19.2 38.8 13.5 17.7 18.7 14.6 6,9705,414 7,1951,556 5,568 7,332 1,627 5,631 7,655 1,701 5,831 7,905 1,824 5,979 1,926 2015 2016 2017 2018 2019 45.6 48.4 49.6 51.1 7,170 3,900 3,270 4,332 2,237 2,095 33,603 16,946 16,657 22,101 10,809 11,292 2019 (excluding Japan) (excluding

Male (persons) (persons) Female Male (persons) (persons) Female Male (persons) (persons) Female Male (persons) (persons) Female Male Female Male Female Male Female Male Female Female employees as percentage of total (%) as percentage employees Female Female employees as percentage of total (%) as percentage employees Female Female employees as percentage of total (%) as percentage employees Female Female employees as percentage of total (%) as percentage employees Female Total (persons) Total Europe and the Americas Europe Japan Asia and Oceania Number of recent graduates hired (persons) hired graduates Number of recent (%) turnover Employee Average length of employment (years) length of employment Average Average age (years) Average Female manager ratio as percentage of total (%) as percentage manager ratio Female (persons) managers Female of total (%) ratio as percentage officers executive Female (persons) officers executive Female Female employee ratio as percentage of total (%) of total as percentage ratio employee Female Regular employees (persons) Regular employees * Company officers include executive officers. executive * Company officers include Status of regular employees (Kao Corporation) (Kao employees Status of regular Number of Kao Group employees in 2019 (regular employees) (regular in 2019 employees Kao Group Number of diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 174 401-3 (%) (Days) (Days) Unit (Hours) (Hours) (Persons) (Persons) (Persons) (Persons) (Persons) (Persons) (Persons) (Persons) (Persons) (Persons) (Persons) (Persons) 308 584 6 87 8 9 30 22 21 2 0 0 1 2 0 0 0 0 0 0 ― 85 102 122 9011 113 12 84 1 0.9 1.9 1.0 101 124 115 19.513.7 18.772.8 15.11.73 17.7 78.8 14.4 3.30 74.6 2.98 2017 2018 2019 Employment system Employment

Total number of employees taking special leave taking special leave number of employees Total activities for volunteering utilizing the working-from- No. of employees home system No. of employees taking family leave for overseas for overseas taking family leave No. of employees assignments (female) for of special leave number of days Average activities taken volunteering No. of employees taking reduced working hours taking reduced working No. of employees hours to meet nursing care or staggered working or family care responsibilities (female) for overseas taking family leave No. of employees assignments (male) No. of employees taking nursing care or family No. of employees (female) care leave hours taking reduced working No. of employees hours to meet nursing care or staggered working or family care responsibilities (male) No. of employees taking nursing care or family taking No. of employees (male) care leave No. of employees taking reduced working hours hours reduced working taking No. of employees hours to meet childcare or staggered working responsibilities (male) hours reduced working taking No. of employees hours to meet childcare or staggered working responsibilities (female) Average hours of leave taken in hourly taken hours of leave Average increments (male) childcare leave taking No. of employees (female) childcare leave taking No. of employees Average days of paid leave taken leave of paid days Average utilization rate paid leave Average Average hours worked outside regular working regular working outside hours worked Average hours (per month) Employment system utilization status (Kao Corporation) system utilization Employment diverse workplaces workplaces & diverse Inclusive Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 175 and minds alongside our customers To spend every day in lively good health To We aim to become a company which inspires aim to become a company which We engagement with the promotion of healthy bodies engagement with the promotion of healthy bodies

while helping to realize healthy and enriched lives through the creation of lively and spirited workplaces The Kao Health Declaration Contributions to the SDGs Policies Opportunities related to realization of our vision by 2030 of our vision by to realization Opportunities related and promotion of Kao Programs for health maintenance use, and are for external are also made available employees maintenance and promotion for health being deployed hope We and in workplaces. activities in local communities influence on a positive at Kao will have that the initiatives and contribute local communities and society as a whole, to increased lifespans and a healthier society.

102-12, 102-15, 103-1, 103-2, 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 103-2, 103-1, 102-15, 102-12, of employees and their families in cooperation with and their families in cooperation of employees aim to improve We Society. the Kao Health Insurance by helping to increase the our corporate activities members, and family employees number of healthy and spirited workplaces. and by creating lively to limit excessive continue to endeavor preventive through We increases in medical expenses including the promotion of lifestyle initiatives implementation of various active and improvements are focusing our health guidance measures. We hours through efforts on the control of long working styles and mental promotion of modulated work of perspective health training for managers from the promoting pleasant workplaces. suffering from chronic respect to employees With in order to disease, or from cancer or other diseases, balance maintain the right help these employees and their work managing their health issues between rather than offer support which, responsibilities, we to the is carefully tailored size fits all,” being “one employee. actual circumstances of each individual 2030 of our vision by to realization Risks related brings age of employees increase in the average The with it a heightened risk of a rise in the number of affected by lifestyle diseases and also by employees diseases such as cancer and musculoskeletal disorders.

Employee wellbeing Employee

Kao’s creating value Kao’s creating to support the health implement initiatives At Kao, we the raising of the statutory retirement age, for older systems With the introduction of re-employment in the number of working growth and the workers, where etc., a situation has emerged women, are of working 30% of cancer patients approximately performing age. It is anticipated that cases of workers will further their jobs while struggling with disease increase in the future. early diagnosis and focus on the need to Besides disease prevention, treatment, there is a growing with health issues support so that workers provide responsibilities. can balance treatment with their work With the global trend toward the aging of the population, the global trend toward With of people there has been an increase in the percentage citizens affected by chronic diseases. Many senior or require support or care because of disease Japan, there deterioration of joints or muscles. Within because of has been a steady rise in medical expenses companies’ this situation, and the financial health of health insurance societies has rapidly worsened. Social issues we are aware of aware are Social issues we Kao’s creating value to address to address value Kao’s creating social issues Efforts involving employee wellbeing and safety are essential to ensure that we carry out our basic activities as well as to accomplish initiatives that will accomplish initiatives as to activities as well out our basic carry to ensure that we are essential safety and wellbeing employee involving Efforts social transformation. bring about activities. to conduct innovative are needed employees motivated skilled and abilities of highly The safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report

176 Occupational health staff health Occupational guidance data collation consultations Health check-ups and post-check-up Health White Paper Health White Health preservation promotion initiatives promotion Implementing health Health Insurance Society Health Insurance D C Collaboration PDCA cycle to realize PDCA Group Health Declaration Group implementation of the Kao Health Seminar staff meetings Health Promotion of health Formulation study sessions Health Guidance Kao Group Health Declaration Kao Group ➡ Medium-term Plan ➡ promotion plans at the and regional workplace levels Health White Paper Health White

P A Company Workplace Health Promotion Management System Health Promotion Framework Promotion visibility of the Health Increase the to increase as part of this initiative Management System 18 health provided since 2009, have, we visibility, with a statistical summary consultation rooms nationwide individually (medical of health data not specified occupations, diseases, etc.). health check-ups, interviews, services plan based on the health implements a health then drafts and Each health consultation room regions. data for their respective in charge of Human employees Health Seminars so that on Paper White held annual have Since 2009, we health resource and General Affairs and occupational the nurses can learn together methods of analyzing measures. various types of health data and of formulating 102-43, 103-2, 404-2, 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 404-2, 103-2, 102-43, Collaboration and engagement Collaboration with stakeholders at Kao are health services developed effective The than Kao, as other to workplaces also made available are being put to as to local communities. These well such as use in tackling social health challenges We syndrome. metabolic syndrome and locomotive bodies. external are also furthering joint research with Education and promotion Education The Kao Group Health Declaration is distributed to all is distributed Health Declaration Kao Group The Health and with announcements on employees also being disseminated. Productivity Management for: directives include President-issued These and productivity management in “Promotion of health as the health employee Kao as a whole, with as “The as well for Kao,” foundation for growth put into practice health targets.” President will set and are encouraged to set their Individual employees and put these into practice. year health targets for the and health on-site campaigns, seminars with the five in line Various promotion activities are deployed core initiatives.

based on health check-up results. based on health check-up just check-up results as needed rather than consulting occupational physicians. as needed. confers with appropriate professionals 2. Consults with private physicians in regard to health with private physicians in regard Consults 2. of their mental health, and Maintains awareness 3. initiatives health promotion Five Rather than merely fulfilling the minimum are that we requirements for health management implement health we required to meet as a company, below. core themes promotion in line with the five Health promotion refers to the independent own of employee’s maintenance and improvement health. 1. Lifestyle diseases 2. Mental health care 3. Smoking cessation 4. Cancer health 5. Women’s 1. Reviews and improves lifestyle independently, lifestyle independently, and improves Reviews 1. Cultivation of employees with high health with high health of employees Cultivation literacy health promotion our to make are working We in Health and visible, engaging activities more cycle to using the PDCA Productivity Management health, with the aim of increasing increase employee with high health literacy. the number of employees high health literacy with employees consider employees: We as the following safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 177 Nursing staff ●

Nursing staff Nursing Occupational physician Union/employee representatives Union/employee ●

Society: 24 persons (12 standing/12 elected committee members) Society: 24 persons (12 standing/12 Governing Board: 8 persons (4 standing/4 elected Governing committee members) [Health Insurance Governing Board/Health Insurance Society] Insurance Board/Health Governing [Health Insurance and (special sessions as needed)/Review In principle, 2 times per year etc. promotion initiatives, resolutions on health insurance budget/health ● ● Employee Health Care Division Health Care Employee Staff of HR section ● Occupational physician

Liaison Company Manager of HR section representative/management/ in charge at worksite/workplace Person HR officer responsible for each HR officer responsible for each occupational health supervisor/occupational physician/nursing staff occupational health supervisor/occupational physician/nursing field/Health Promotion Division/ field/Health Promotion Division/ health insurer/occupational physician/union representatives Employees [Health staff meetings] of measures to foster health staff Annual/Investigation Committee] Welfare Committee/Employee [Health and Safety safety considerations employee of and investigation Monthly/Review and health promotion measures ● ● [Health Promotion Workshop] [Health Promotion 4 times per year ● Staff of HR section Kao Health Insurance Society Kao Health Insurance Workshop/Health Health Promotion Health and Safety Welfare Committee Welfare Insurance Directorate Insurance Committee/Employee Health staff meetings 103-2, 103-3, 403-6 (Occupational health and safety 2018) safety health and (Occupational 403-6 103-3, 103-2, Kao Health Insurance Society Kao Health Insurance Manager of HR section Respective workplaces Respective Health insurance union meetings/Health Promotion Meeting Promotion union meetings/Health Health insurance Internal drafting decision Strategy Strategy (monthly) promotion Health promotion framework Health promotion

Systematization of the health promotion promotion of the health Systematization framework in is implemented strategy planning Health promotion Kao and the Health manner between an integrated with discussions conducted in Insurance Society, Major strategies are regular monthly meetings. Promotion Health finalized at a company-wide after consideration by working Committee meeting members of the Kao groups and, the committee with employee Health Insurance Society is promotional strategy The representatives. and group company by worksite implemented at each of the HR section along with the manager and staff occupational physicians and nursing staff. safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 178 2019 Performance 100％ 94.8％ Male 77.1%, 76.1% Female Male 57.6%, 36.5% Female Male 63.0%, 61.9% Female Male 72.6%, 81.6% Female Male 32.4%, 7.4% Female Male 18.8%, 7.9% Female 72.2％ Item guidance and the rate of providing specific health guidance and the rate of providing of specific health guidance apply to the provision health guidance to persons meeting the criteria to receive in FY2018. examinations Percentage of employees of employees Percentage undergoing periodic health examinations who of employees Percentage examinations follow-up underwent who eat of employees Percentage a breakfast at least three times week who of employees Percentage at least once a week exercise who get of employees Percentage adequate sleep who do of employees Percentage not smoke who are of employees Percentage metabolic at risk of developing syndrome (35 and older) receiving of employees Percentage specific health guidance aged 40 or over) (employees Specific health guidance implementation rate aged 40 or over) (employees * People meeting the criteria to receive specific health meeting the criteria to receive People * Performance in 2019* Performance status health promotion Employee 103-2, 103-3, 403-6 (Occupational health and safety 2018) safety health and (Occupational 403-6 103-3, 103-2, health management to society. country as a whole and on individual communities employees. through the health of the families of Kao products and services to society. long-term absenteeism. receiving of employees to decrease in numbers specific health guidance. motivated employees.

• Provision of exemplary case studies in promotion of of exemplary Provision • burden on the Reduction of the social welfare • Social impacts of improved Enhanced productivity and provision • Anticipated benefits from achieving mid- to achieving benefits from Anticipated long-term targets Business impacts in loss due to decreases of manpower Prevention • due in costs of specific health guidance Reduction • productivity from increase in highly Enhanced • Strengthening health management health Strengthening GENKI employees promotion. health examinations. to ensure safety and peace of mind. Smoking cessation Thorough follow-up after follow-up Thorough Formulation of guidelines Formulation ・ ・ ・ Launching the GENKI project of productivity and Surveys presentism* Mental health control support Weight support health Women’s GENKI Strengthening to the infrastructure support workplaces employees where and safety enjoy peace of mind Kao Health 2020

foundation for foundation

of mental health issues with high health literacy of serious illness by half Cultivating employees Reducing the incidence Building a strong ･Reducing the incidence ・ ・ Coming to work while sick or ill, and having reduced working reduced working while sick or ill, and having Coming to work competency and productivity as a result. health management Aiming to achieve a further enhancement of health management Aiming to achieve who are capable of leading by cultivating healthy employees support change, and strengthening the infrastructure to safety and peace of mind enjoy where employees workplaces Kao Health 2015 Kao Health 2020 * Presentism Mid- to long-term targets (Kao Health 2020) (Kao Health targets Mid- to long-term the Kao Health 2020 mid-term formulated In 2017, we cultivate GENKI plan aims to This health-related plan. by further enhancing health (Healthy) employees management. Mid- to long-term targets and performance and targets long-term Mid- to safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 179 We provide our unique Smart WASHOKU® WASHOKU® Smart our unique provide We without people to eat well lunches, which allow at employee levels, increasing their visceral fat Japan. throughout in 11 worksites cafeterias and Smart also hold special lunch seminars, We cooking classes in which WASHOKU® can participate with their families. employees ● ● accumulating high levels of visceral fat of visceral accumulating high levels Building a healthy eating environment in eating environment Building a healthy We have distributed unique HocoTouch pedometers, which pedometers, distributed unique HocoTouch have We age” based out their “walking to work enable employees day. in a given youthfully walked have they far on how stimulates communication among employees, HocoTouch is who are eager to ask each other “What age today?” walking your also launched walking have We and sales offices. the staff at our factories “competitions” for walking together joyfully and effectively together joyfully walking Building an environment which encourages which encourages Building an environment which people can enjoy delicious food without delicious food which people can enjoy ● ● ● Effective improvement through lifestyle through improvement Effective Kao Action GENKI- We are helping people to We continue with health-conscious lifestyles the gifting of and through use of Kao products. 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 Using unique visceral fat measurement Using unique visceral fat analysis technology and lifestyle hold measurement algorithms, we Japan. throughout sessions at worksites are able to visualize the issues We and individual employees affecting individual worksites. can be achievements Health promotion changes in visceral realized through levels. fat ● ● ● Using Kao products to help Using Kao products people maintain lifestyle changes people maintain lifestyle Visualization (Awareness) Visualization , Smart WASHOKU® and HocoTouch are registered trademarks of Kao Corporation. and HocoTouch , Smart WASHOKU® ® Measurement and analysis of Measurement visceral fat and lifestyle habits and lifestyle fat visceral * NaiBO GENKI-Action Our initiatives

We are promoting the GENKI project to help employees and their family members stay healthy, as part of the implementation of our Mid-term Plan 2020 (K20). as part of the implementation healthy, and their family members stay to help employees are promoting the GENKI project We and products to our technologies, how, healthcare know use of the group’s effective that make of health management solutions provision the GENKI involves and their families. employees Launching the GENKI project Launching GENKI-Action for many years have Care Business, we In our Human Health as the been undertaking research on areas such now and the visceral fat and lifestyle relationship between knowledge and health. The walking relationship between in the obtained from this research is utilized not only the improve products, but also to of new development through our and their families health of our employees call this unique approach to health promotion programs. We Kao makes What health promotion “Kao GENKI-Action.” visualization of it realizes GENKI-Action special is the way to boost health health status and lifestyle habits, which helps effective and encourages people to make awareness lifestyle changes. In order for people through improvements lifestyle without it being too a health-conducive to achieve the long term it up over can keep stressful, and so that they building a healthy support for provide doing it, we and enjoy our company’s environment, and offer assistance through products. can use GENKI- Kao GENKI-Action implementation. People for as a platform also use the GENKI-WEB website We of their lifestyle changes, and it is also a record WEB to keep etc. events, used for implementing health-related special safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 180 8,200 personnel. 57% continued to use the devices, of which 66% 8,200 personnel. 57% continued to use the devices, or more. one day steps and speeds over Rank A walking achieved Gait Measurements were held at six Kao workplaces. 500 people held at six Kao workplaces. Gait Measurements were took part in the gait testing. 394 participants in the event. boxed lunch). bento boxed WASHOKU® at 14 cooking classes for families WASHOKU® held Smart We by ABC Cooking ABC Cooking Studio (administered locations of of 378 participants a total were Ltd.). There Studio Co., and their family members). (employees sites, held at 30 work & Lifestyle Check-ups were Fat Visceral in Japan, with 2,300 participants. branch offices, and stores rented out for use at 67 spot locations by were devices HocoTouch

• • • using Healthya events Health-related to encourage wider participation in sports- and are working We participants are in Japan. Event at workplaces health-related events also held a program to presented with a free bottle of Healthya. We get healthy using Healthya called the Challenge help employees Healthya Program at three of our worksites. • GENKI Workshop WAKU-Work to think up ideas for to help employees getting program involves This GENKI (healthy). These both the company and themselves make effective make cafeteria, and we ideas are shared at the employee use of the ideas when planning future health promotion strategies. Lifestyle Check-ups & Lifestyle Fat Visceral to find out how employees & Lifestyle Check-ups help Fat Visceral help them to make which in turn can have, much visceral fat they to their lifestyle in the future. improvements • Measurement Gait Pedometer HocoTouch employees hold Gait Measurement at which analysis of how We age” and their it possible to gauge their “walking makes walk pedometer also rent out HocoTouch future living functions risk. We can stimulate by Kao, which developed a unique device device, living habits. in daily improvements 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 Smart WASHOKU® Lunch has been provided as a lunch menu at has been provided Lunch Smart WASHOKU® of it and awareness in Japan, cafeterias at 11 worksites employee to 52.8%. has increased among employees Breakfast at our Smart WASHOKU® begun providing have We Tokyo. Office in Kayabacho been attending Occupational physicians and nursing staff have for professionals. A total of 60 master-classes Smart WASHOKU® Master certification, Smart WASHOKU® received personnel have education for healthcare guidance and health and are providing our employees. booklets with Smart WASHOKU® our employees are providing We so that our for dietary education. Activities will be implemented approach. about the Smart WASHOKU® can also learn employees are using the “Golden Shape Up (Comparison) Recipe Book” We for our (published by Bungeishunju Ltd.) in dietary education employees. and at 26 worksites been held seminars have Smart WASHOKU® took part in these branch offices. A total of 2,420 employees a Smart also received seminars (at some seminars, employees

Smart WASHOKU® cooking class Smart WASHOKU® • • • • • • Events and activities Events Smart WASHOKU® for eating by us developed is a dietary method Smart WASHOKU® on Rather than focusing increasing visceral fat levels. without well consumed, the Smart WASHOKU® quantity of food the overall points—(1) the ratio of protein to key approach emphasizes three Omega 3 to (3) the ratio of fiber to sugar, fat, (2) the ratio of dietary people to consume plenty of a diet that enables fat—to provide down. their visceral fat level amount while still keeping “Kao GENKI Project for Everyone” for ➡ “Kao GENKI Project webmember.kao.com/jp/kaoplaza/contents/genki/ (Japanese)

“Kao GENKI Project for Everyone” on the Kao on Everyone” for Project “Kao GENKI PLAZA website have that we promotion activities health The and their family for Kao employees developed shared with society through the members are widely section of the Kao for Everyone” “Kao GENKI Project use to communicate with we which PLAZA website, our customers. safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 181 Survey on productivity and presentism and and presentism on productivity Survey health data analysis of basic up on the factors leading to followed have We impacts on bring negative presenteeism that can considering appropriate response productivity and are strategies. on life rhythms based employees’ By analyzing obtained from HocoTouch, physical activity patterns in combination with medical and by analyzing these are we results and stress check results, interview between on clarifying the relationship working mental health, presenteeism and sleep issues or poor Abnormalities performance. affect daytime which may at an in individuals’ life rhythms can be discovered report is feedback early stage, and an activity level used to notify the individual employee. 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 which 214 (33.2%) lost at least 2kg in weight. which 214 (33.2%) lost e-learning Healthya, making use of Smart WASHOKU® resources and chrono-nutrition knowledge. April, July and October. January, Service. Health Consultation at the Women’s to women Women's health seminars Women's Pre-examination weight-loss challenge (for (for challenge weight-loss Pre-examination specific health who received employees list for and those on a waiting guidance in 2018, specific health guidance) to try to lose campaign encouraged employees This prior to their period 2 months a 42-day over weight annual health examination. 6 times, with 645 participants, of has been implemented This • while drinking fun losing weight able to have were Employees • health support Women’s consultation service, Besides establishing women’s to women’s also disseminate information relating we for women. health issues, and hold health seminars bulletin in News Women’s Distributed the SUKOYAKA • tailored health consultation Occupational physicians provided •

rate of 11.2%). 83%, the was had gotten into the habit of walking that they participating in enjoyed percentage who reported that they 80%, and the percentage who reported that the activity was or helped to enrich their working participating in the event 47%. personal life was participation rate of 8.8%), of which 520 (27.4% of participation rate of 8.8%), combined in losing at least 2kg. The participants) succeeded 1,716.4kg. by all participants was total of visceral fat lost • A total of 2,954 people took part (representing a participation A total of 2,954 people took part (representing • respondents, the percentage who reported Of the 951 survey • This campaign encouraged employees to walk every day day every to walk campaign encouraged employees This the over day and drink a bottle of our Healthya every 30. October 1 and November period between 61-day Walking Challenge Walking • A total of 1,900 employees took part (representing a took of 1,900 employees A total • Weight-loss challenge Weight-loss to try to lose campaign encouraged employees This between period the 42-day over 2kg in weight with a employees 1 and March 14 (except February BMI of less than 19). Campaigns and promotional activities and promotional Campaigns ethos. workplace of a healthy at fostering the development campaigns aimed health-related company-wide implement We Toyosu Walking Challenge Walking Toyosu safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 182 No smoking during work hour No smoking during work campaign poster was provided for 3 people. provided was implemented. the Kao Group Smoking-Cessation Campaign. participated (of which 33 In January: A total of 112 employees succeeded in stopping smoking). participated (of which 39 In October: A total of 93 employees succeeded in stopping smoking). Online smoking cessation program in spring: 52 employees participated. participated. Online smoking cessation program in spring: 52 employees participated. Online smoking cessation program in autumn: 33 employees Kao Health Insurance Society-subsidized smoking cessation treatment smoking Kao Health Insurance Society-subsidized led by Kao Health Insurance Society Online smoking cessation program We are helping employees to quit smoking through implementation of are helping employees We • • Strengthening the infrastructure to the infrastructure Strengthening employees where workplaces support mind and peace of safety enjoy promotion Smoking cessation prohibition been promoting have we Since January 2018, hours. of smoking during work are making a concerted 2020, we Promotion Act in April of the amended Health complete enforcement With with managers and using effort—by building consensus —to promote to notify employees the company intranet in line with our responsibilities the prohibition of smoking of smoking indoors, and the in relation to the prohibition due consideration to smokers. need to give • Performance in 2019 Performance 1.4% improvement 1.4% improvement 15 sessions with 676 participants 19 sessions with 2,346 participants 198 telephone consultations + 1,510 e-mail consultations / 710 = 6.5% employees 12,514 consultees 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 Item Stress checks participation ratioHigh stress rate for managers Training 97.7％ Self-care training External EAP usage rate (number of usage/number of target employees) Consultations with internal counselors (focused on career interviews) Mental health care projects implemented in 2019 implemented projects Mental health care for our guidelines overhauled have after long we In addition, smooth return to work helping to ensure a use of are making effective we and periods of leave, activities to help people avoid them. By implementing and to address them at an mental health problems of at the level them, experience do early stage if they as a and the organization both individual employees filled with vitality are creating workplaces whole, we and higher productivity.

By 2019, our system for implementing statutory statutory our system for implementing By 2019, had been in use in Japan stress checks for employees use of stress made effective have We for four years. mental health implement check results to proactively care. who are assessed on employees up physicians and nursing staff Occupational promptly follow treatment in light of their as requiring emergency stress tests, and individual follow- responses to these who are judged to to employees up e-mails are sent slightly high stress levels. display hold briefings based also As an organization, we on stress check group analysis at company, and we and branch levels, department, worksite and needing priority attention identify workplaces the working implement measures to improve in the case example, environment at these sites. For in business where a rapid increase of workplaces stress, has been accompanied by increased volume to gauge the performed in-depth analysis have we supporting reasons for the increase in stress besides to begun have and we individual employees, the organizational implement measures to improve structure and the communication methods. also aim to enhance the ability of each mental health to treat their own We individual employee are We of information. through training and provision in which continuing to foster a corporate culture including the colleagues at our at Kao, everyone to pay acquires the ability individual worksites, attention to small but significant changes that they address problems at an lives, in their own can make early stage, and help each other out in times of difficulty. Mental health care Mental safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 183 of approximately 7,200 participants. of approximately 8 times externally, nurses, nutritionists and other professionals: Held with 220 participants. Prefecture), with 49 participants. (Iwate twice externally cafeterias: Implemented at 5 locations. organized in collaboration with the Japan Obesity Prevention Society) Prevention organized in collaboration with the Japan Obesity 2,500 participants. with approximately Held 8 times externally, participants. HocoTouch: Held at 80 worksites, with approximately 2,800 external participants. external 2,800 approximately with worksites, 80 at Held HocoTouch: Lifestyle diagnostic meetings: External: Held 111 times, with a total Lifestyle diagnostic meetings: External: for public health as workshops master-classes Smart WASHOKU® cooking classes at ABC Cooking Studio: Held Smart WASHOKU® Lunch in other companies’ employee Serving of Smart WASHOKU® with 620 Sessions: Held 7 times externally, Capabilities Testing Basic Walking Visceral fat visualization station (visceral fat measurement sessions fat visualization station (visceral Visceral • of Smart WASHOKU® Awareness of the to spread awareness also been working have We eating well dietary method for Smart WASHOKU® without increasing visceral fat. • • • program Get walking and enjoyable As part of a program to create an effective local communities, and in environment in workplaces walking pedometer been distributing our unique HocoTouch have we Capabilities Testing and holding Basic Walking devices “quality.” detailed analysis of walking Sessions to provide • • Collaboration with stakeholders with Collaboration we and services that promotion measures health The for company are also provided promote within the including consumers. stakeholders external of Kao’s health services on local influence The society as a whole communities and check-ups fat Visceral services and visceral fat measurement provide We advice in local related lifestyle improvement workplaces. communities and at • Performance in 2019 Performance Performance in 2019 Performance 1,900 participants 205participants 2,954 participants reaching a year, Twice around 27,000 people Held 100 times, with a total of 13,874 participants Held 9 times, with a total of 688 participants Held 6 times, with a total of 1,861 participants Held 33 times, with a total of 3,022 participants Held 24 times, with a total of 11,470 participants 102-43, 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 102-43, Content Content 42-day Weight-loss Challenge Weight-loss 42-day Challenge Weight-loss Pre-examination Smoking-Cessation Campaign 645 participants Challenge Healthya Walking of health information by such Provision means as bulletins and posters Smoking cessation health seminars, Women’s Female: change-of-life seminars, etc. Health lectures, etc. Lifestyle disease-related: exercise and nutrition Lifestyle disease-related: exercise seminars, strength tests, health fairs, lectures by occupational health practitioners, etc. Mental: Mental health courses, mental health training seminars for beauty advisors, new promoted employees and newly employees Annual health staff meetings are held to build Annual health staff meetings are held facilitate consensus with regard to strategies and staff of HR sharing of information. Managers and and sections, along with occupational physicians attend the meetings. nursing staff, on Health Seminars Paper implemented White to an opportunity to learn about how We to provide understand health data and the formulation of as holding Health occupational health plans, as well Sessions aimed at Insurance Instruction Feedback health instruction by nursing staff. improving Deployment of company-wide health promotion activities promotion health of company-wide Deployment activities at all of health promotion Deployment (planning of events/seminars/campaigns) worksites of health staff Cultivation Company-wide deployment of of deployment Company-wide activities promotion health Performance in 2019 Performance Scope: Employees logging over 80 hours 80 hours logging over Scope: Employees hours per outside normal working work month 153. No. of No. of eligible employees: attending consultations: 153 employees (Implementation rate: 100%) Scope: 80 of over logging an average (1) Employees hours outside normal working hours of work a period of 2 to 6 months per month over 29. No. of No. of eligible employees: attending consultations: 29 employees (Implementation rate: 100%) 60 of over logging an average (2) Employees hours outside normal working hours of work a period of 2 to 6 months per month over responding to online No. of employees 1,136 medical interviews: deemed eligible Of whom, no. of employees by occupational physicians: 185. No. of attending consultations: 185 employees (Implementation rate: 100%)

Content

Online health checks (simple diagnostics) Meetings with occupational physicians Health checks for employees working long hours long hours working employees Health checks for in 2019 Performance While we are promoting reductions in long working working are promoting reductions in long we While still find themselves employees hours at Kao, some address during busy periods. To long hours working with by employees experienced the fatigue and stress to undertaken have we hours, long working health checks as detailed implement more intensive detection of will facilitate early These below. of potential distress symptoms and identification signals from such individuals. Expansion of health checks for for checks of health Expansion hours long working employees safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 184 Details diverse workplaces diverse & the right path ＞ Inclusive Walking p. 162 ➡ Employees and their spouses/partners Employees financial support (If both partners are Kao employees, for only one person) will be provided for one round of treatment (up 60% of the co-payment to 120,000 yen). from co-payment, the (for couple per yen million 1 to Up has which all assistance including public support etc. been deducted). Item Scope Subsidy Content of support for specified fertility treatment specified Content of support for Support for specified fertility treatment specified fertility for Support support for been providing have we Since 2009, financial assistance Initially, specified fertility treatment. but Kao Health Insurance society, by the provided was transferred to the Kao task was responsibility for this In (a mutual aid association) in 2013. Association Family for male fertility treatment also 2017, financial assistance in 2019, the scope of applicability, In became available. included, Group companies were terms of which Kao for employees support is available changed, and this was in Japan from 2020. of all Kao Group companies which 135 (all female), this support in 2019 was who made use of total number of employees The decreased by 42 compared to 2018. to maintain an appropriate balance can seek employees also put in place an environment in which have We and treatment, by making responsibilities work between working various flexible use of the effective system, flextime offer (including a arrangements that we to take system, and the ability a working-from-home in hourly increments). leave 102-43, 403-6 (Occupational health and safety 2018) and safety health (Occupational 403-6 102-43, with local government authorities (7 locations). with local government not undergo health examinations by distributing individualized by distributing health examinations not undergo by 61%). advice sheets (improved becoming severe and by encouraging people to undergo and by encouraging people to undergo becoming severe and exercise). in diet (78.6% improvement health examinations conditions from existing by preventing Improvements out of health promotion programs in collaboration Rolling • Aging with Center of Healthy Joint research University (COI), Hirosaki Innovation Center of are participating in planning at the We University, (COI), Hirosaki Health Aging Innovation life the lowest located in Aomori Prefecture which has are conducting social in Japan. We expectancy services for our health implementation examinations at companies as support for daily health promotion with health management. involved Hokusei Kotsu systems to the Hirosaki City taxi company support introduced the Kao walking In 2018, we results obtained in this project (an increase Co., Ltd. The and an accompanying in the number of steps walked of metabolic syndrome) prevention in the improvement of the presented at the 78th Annual Meeting were 2019. Japanese Society of Public Health in October conducting “social is currently Hirosaki University (QOL) health implementation testing” of quality of life results are (in which the examination examinations and on the same day, to the examinee given to to encourage examinees education is provided of past based on the results change their behavior) is considering University research in this area. The adopting our visceral fat measurement and health solutions for this program. Outcomes achieved through collaboration with collaboration through achieved Outcomes health insurers five citizens who do among senior awareness A change in health • •

Developing consortium projects focused on focused projects consortium Developing with local in collaboration senior citizens authorities government activities are implementing awareness-raising We health targeting people who do not undergo risk of and people who are at high examinations through medical conditions, severe developing insurers that are health projects with five collaborative the Japan Soap with companies belonging to working our health and Detergent Association, as part of senior citizens’ to connect the promotion of initiatives age group health (focusing on members of the 63–74 who are receiving care) with local government authorities. gained the aim of utilizing the knowledge With of areas, we from each project across a wide range at various are introducing this knowledge measures to symposiums etc., and also considering health initiatives the scope of senior-oriented expand Association for in the General Incorporated Payer’s the Study Better Healthcare (25 health insurers of Group on Senior Citizens’ Health). Health insurer information exchange with other exchange information Health insurer corporations and at meetings information exchange implement We Incorporated Payer’s hosted by the General seminars includes This Healthcare (PAB). Association for Better issues relating to health identifying and discussing presentation of case studies of insurance, and the through results achieved efforts. The improvement information are presented and of these exchanges Conference. Annual reported on at PAB’s safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 185 Collaboration and engagement Collaboration with stakeholders of subcontractors who ensure safety of employees To hold we together with us, at our worksites work in collaboration events safety and disaster prevention also promote collaborative with subcontractors. We safe and safety activities with the aim of building such as secure enterprises, sharing safety information occupational accident case studies and countermeasures within the group with subcontractors on a monthly basis. Education and promotion Education and draft we be carried out safely, can ensure that work To to occupational safety and educational plans related and and temporary workers, health for employees personnel at hires or reassigned new conduct training for identify Furthermore, we the location of deployment. special education, and ensure that operations that require who need it. to all employees this education is provided in the workplace, information relating to safety and health are able to share we By implementing education, activities aimed at achievement and are able to undertake of safety and health targets. of time, by by the passage of past drills is not weakened to ensure that the efficacy are also endeavoring We accidents when on days designating a Safety Day occurred in the past.

102-12, 102-15, 102-43, 103-1, 103-2, 404-2 103-2, 103-1, 102-43, 102-15, 102-12, Kao Responsible Care Policy ➡ Kao Responsible Care Policy www.kao.com/content/dam/sites/kao/www-kao-com/ global/en/sustainability/pdf/responsible-care-policy.pdf Opportunities related to realization of our vision by 2030 of our vision by to realization Opportunities related risk by means of thorough work, actively We the factors which threaten assessments, to eradicate and safety of all employees, the occupational health in can work where they thereby creating workplaces and peace of mind. health safety, SDGs Contributions to the Policies and health are Activities to ensure occupational safety Care Policy. clearly stipulated in the Kao Responsible is a policy to “eradicate occupational accidents and This comfortable as provide reduce potential risks, as well environments and promoting employee working occupational accidents when Accordingly, health.” the accident or disaster, carefully investigate we occur, results Policies and identify and analyze the causes. The group to help of the analysis are shared throughout the again in the similar accidents from occurring prevent while future, thereby protecting our employees maintaining safe and stable operations.

Employee’s safety Employee’s

the above. illness resulting from critical disasters or illness resulting from critical disasters compromised operating environments. • Risk of loss of societal trust in the company due to Risk of loss of societal trust • Risks related to realization of our vision by 2030 of our vision by to realization Risks related Risk of stoppages to operations due to occupational • job which provide workplaces will deliver the employees satisfaction and peace of mind both for We their families, by creating safe, and for themselves environments. healthy and pleasant working Kao’s creating value Kao’s creating occupational Kao has defined an activities policy for Care safety and health as part of the Kao Responsible the safety and to ensure and is endeavoring Policy this achieve of the group. We health of all employees in the by focusing on and implementing activities areas of risk assessment for operations/machinery consistent and chemical substances, and by the check-ups, for health follow-up and implementation of as mental health measures. as well Social issues we are aware of aware are Social issues we its process large-scale plants, several have As we are increasingly needs prevention safety and disaster of accidents at chemical heightened in the context natural disasters that have plants and the many occurred recently. Kao’s creating value to address to address value Kao’s creating social issues safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 186 (Occupational health and safety 2018), and safety 2018), health (Occupational , 403-4 (Occupational health and safety 2018) health (Occupational , 403-2 (Occupational health and safety 2018) health (Occupational (Occupational health and safety 2018) health 403-10 (Occupational safety 2018), health and (Occupational 2018), 403-9 health and safety 403-5 (Occupational 103-2, 103-3, 403-1 403-1 103-3, 103-2,

Mid- to long-term targets Mid- to long-term meets top-level aim to become a company which We health and safety by 2020. global standards for the complete set a target of achieving have We and serious lost time accidents, elimination of deaths the lost time accident and a target for reducing also aim to 0.10), and we frequency rate (to below 100% negligence accidents completely eliminate traffic in relation to work-related causing bodily injury and accidents by 2020, for both employees subcontractors. mid- to achieving Anticipated benefits from long-term targets Business impacts reductions in and Mitigation of unnecessary expenses with the costs, leading to higher revenues overall achieved sound implementation of business activities in good health. working all employees by having Social impacts of products with sound Stable provision all by having implementation of business activities this in good health. Moreover, working employees prices. can facilitate the stabilization of product Mid- to long-term targets and targets long-term Mid- to performance ➡ Responsible care activities www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/sus-db-2020-e-all. pdf#page=17

The Kao Responsible Care (RC) Policy and the and the Policy Care (RC) Kao Responsible The and activities can be found on promotion framework page. the following Framework safety safety & wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 187 el 5 or higher). ed (including only accidents Lost time accident frequency rate: Number of persons ‌Lost time accident frequency rate: Number of persons per dead or seriously injured in occupational accidents million hours work Serious lost time accidents: Accidents in which there ‌ Serious lost time accidents: is a continued loss of physical function after treatment for the injury has been completed (with a loss of physical function of Lev  and also the loss of day at least one lost work involving a part of the body or a bodily function). *1 *2 0 0 0 0 0 0 0 0 0 0 ― ― 0.78 0.67 0.25 3.21 3.30 0.66 0.06 0.00 4.18 0.24 environment, ensuring effective implementation and implementation ensuring effective environment, undertaking health of health check-ups, follow-up stress checks, and implementing promotion activities, substances. risk assessment for chemical regularly held at each workplace, meetings which are and Safety Committee In addition, at the Health as giving as well report on activity plans we and disseminate this information performance reports to employees. 2019 0 ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― 0 0 0 0 0 0 0 0 0 0 0.77 0.16 or less 0.52 0.54 0.19 4.18 4.66 0.31 0.55 0.11 0.00 7.06 0.40 0.14 or less 1 0 0 0 0 0 0 0 0 1 0.55 0.49 0.36 0.34 3.57 2.79 0.36 0.55 0.10 0.00 4.21 0.41 103-1, 103-2, 103-3, 403-9 (Occupational health and safety 2018) safety and health (Occupational 403-9 103-3, 103-2, 103-1, 2017 2018 Results Results Target Results newly-installed equipment, and equipment safety equipment, and equipment newly-installed equipment-related of measures and the prevention of and thorough awareness incidents by ensuring also focused on Activities have compliance with rules. accidents involving slip and fall measures to prevent traffic accidents, etc. stairs, etc., and work-related have health, we employee environment and improving working In the area of creating a pleasant of the working strengthened management ✓ □ Scope ✓ □ Asia Americas Europe Asia Americas Europe Japan Japan Japan Japan Asia Americas Europe Asia Americas Europe

Breakdown Breakdown Breakdown Breakdown Including both regular employees and temporary Including both regular employees (Reference: Member companies of Japan workers Chemical Industry Association) Subcontractors (Kao Group) Subcontractors (Kao Group) Subcontractors (Reference: Member companies of Japan Chemical Industry Association) Including both regular employees and temporary Including both regular employees (Kao Group) workers Including both regular employees and temporary Including both regular employees (Kao Group) workers 2 1 Indicator Lost time accidents frequency rate* (persons) Death and serious lost time accidents* Item

Occupational accidents 2019 Targets and performance (Kao Group) (Kao and performance 2019 Targets We implemented activities from the two perspectives perspectives two activities from the implemented We accidents” and of “Eradication of occupational environment and working “Creating a pleasant Specific activities to health.” employees’ improving focused on accidents have eradicate occupational risk assessment for existing equipment and operational using also promoted improvements have facilities. We proposals, risk assessment and incident near-miss in advance of operation of incoming safety inspections Performance in 2019 Performance

safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 188 ehicles in fleet × 100. ys) per million hours worked. verity rate: Number of lost days/total working hours working rate: Number of lost days/total verity here has been a global target for the number of here has been a global target Total accident frequency rate: Number of persons rate: Number of persons accident frequency ‌Total accidents accidents (including injured in occupational da without lost work ‌Se ‌T negligence accidents per 100 ‌Accidents other than 0% than 0% Number of traffic accidents other vehicles: negligence / No. of v × 1,000. due to days lost work who experienced employees 2018. occupational diseases since  *3 *4 *5 *6 0 0 0 0 5 0 ― ― 2.33 6.48 0.01 0.01 0.01 0.02 0.04 0.01 0.00 0.03 0.01 2.47 0.49 6.02 5.78 0.75 1.87 0.18 0.00 0.05 16.70 2019 0 0 ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― ― 0 0 0 0 0 16 0.07 6.43 4.4 or less 2.43 0.83 or less 0.03 0.01 0.14 0.06 0.07 0.01 0.00 0.19 0.03 0.01 2.20 1.37 8.36 6.86 1.212.11 0.68 or less 0.40 0.00 0.05 ― ― ― ― ― 11 0.18 7.64 1.87 0.04 0.01 0.01 0.08 0.04 0.00 0.00 0.06 0.13 0.02 0.10 1.70 1.02 5.95 6.15 1.18 1.18 0.71 0.00 12.62 10.59 103-1, 103-2, 103-3, 403-9 (Occupational health and safety 2018), 2018), safety and health (Occupational 403-9 103-3, 103-2, 103-1, 2018) and safety health (Occupational 403-10 2017 2018 Results Results Target Results Scope ✓ □ Asia Americas Europe Asia Americas Europe Japan Japan Japan Sales and logistics (Japan) Japan Asia Americas Europe Japan Asia Americas Europe Asia Americas Europe

Breakdown Breakdown Breakdown Breakdown Breakdown Subcontractors (Kao Group) Including both regular employees and temporary Including both regular employees (Reference: Member companies of Japan workers Chemical Industry Association) Subcontractors (Reference: Member companies of Japan Chemical Industry Association) and temporary Including both regular employees (Kao Group) workers Including both regular employees and temporary Including both regular employees (Kao Group) workers Subcontractors (Kao Group) Including both regular employees and temporary Including both regular employees (Kao Group) workers 3 4 5 * 6 Indicator Severity rate* Severity Accidents other than 0% negligence accidents per 100 vehicles* 100% negligence accidents causing bodily injury (no. of accidents) Number of who employees lost work experienced due to days diseases occupational (persons) Total accident accident Total frequency rate*

Item

Traffic Traffic accidents Occupational accidents 2019 Targets and performance (Kao Group) and performance 2019 Targets

safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 189 el 5 or higher). ehicles: Number of traffic accidents other than 0% ehicles: Number of traffic orked (including only accidents involving at least one lost work day and also the loss of a part of day at least one lost work (including only accidents involving orked otal accident frequency rate: Number of persons injured in occupational accidents (including accidents without Number of persons injured in occupational accidents otal accident frequency rate: Serious lost time accidents: Accidents in which there is a continued loss of physical function after treatment for Accidents in which there is a continued loss of ‌Serious lost time accidents: (with a loss of physical function of Lev the injury has been completed in occupational accidents per rate: Number of persons dead or seriously injured ‌Lost time accident frequency million hours w ‌T negligence accidents per 100 v ‌Accidents other than 0% the body or a bodily function). hours worked. per million days) lost work negligence / No. of vehicles in fleet × 100. negligence / No. of vehicles *3 *4 *1 *2 103-1, 103-2, 103-3 103-2, 103-1, 0 0 0 0 3.8 or less 0.10 or less 0.56 or less 0.10 or less 0.56 or less 2020 targets (persons) (persons) 1 1 2 2 3 3 Indicator 4 Lost time accidents frequency rate* Lost time accidents frequency Lost time accidents frequency rate* Lost time accidents frequency Death and serious lost time accidents* Death and serious lost time work lost who experienced Number of employees due to occupational diseases (persons) days Total accident frequency rate* accident Total frequency rate* accident Total 100% negligence accidents causing bodily injury (no. of accidents) Accidents other than 0% negligence accidents per 100 vehicles* Death and serious lost time accidents* Death and serious lost time Scope temporary workers Subcontractor employees Regular employees Sales and logistics Regular employees Regular employees and

Item

Traffic Traffic accidents Occupational accidents 2020 Targets (Kao Group) 2020 Targets In 2020 we will continue to make efforts with the prevention of accidents and disasters as our target. Note that traffic accident targets are for Japan only. targets are for that traffic accident as our target. Note and disasters of accidents prevention efforts with the will continue to make In 2020 we Targets for 2020 for Targets safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 190 China: The award for completion of Stage 2 presented to Kao Chemical Corporation for completion of Stage 2 presented to Kao Chemical award China: The for completion of Stage 3 presented to Kao (Hefei). Shanghai and the award for completion of Stage 1 presented to award United Kingdom: The Molton Brown. The award for completion of Stage 3 presented to Kao’s Fuji Plant. for completion of Stage 3 presented to Kao’s award The Stage Stage 1 (3 years) Stage 1 (3 years) Stage 1 (3 years) Stage 3 (7 years) Stage 2 (5 years) Stage 3 (7 years) Stage 1 (3 years) Award criteria Award 403-2 (Occupational health and safety 2018), 403-4 (Occupational health and safety 2018) and health (Occupational 403-4 safety 2018), and health (Occupational 403-2 Company / Plant Company 3 years or 5.4 million hours 5 years or 8.1 million hours 7 years hours or 12.2 million 10 years hours or 18.3 million 15 years Sakata Plant Kashima Plant Plant Toyohashi Fuji Plant Kao Chemical Corporation Shanghai Kao (Hefei) Co., Ltd. CorporationKao (Taiwan) Stage 1 (3 years) 1 2 3 4 5 Stage Region Japan China Taiwan VietnamUnited Kingdom Molton Brown Co., Ltd. Kao Vietnam 1 (3 years) Stage Expansion of the “no accidents Expansion of system” award days with lost work awareness safety improving days accidents with lost work Since 2016, the “no to been limited which had previously system,” award to include plants expanded plants in Japan, was safety outside Japan, in order to further improve awareness. plants awards. and five In 2019, four plants in Japan outside Japan received (2019) award” days “No accidents with lost work criteria Award Our initiatives

As many kinds of chemical substances are handled at our As many kinds of chemical substances are manufacturing locations, the risk of environmental evaluate this in mind, we pollution is not negligible. With and make the impacts on people and the environment conduct a we to reduce these risks. In addition, provisions the of impacts on people and priori evaluations facilities. and reconstructing environment when expanding Strategic Approach to International to the U.N.’s been implemented in response measures have These Chemicals Management (SAICM) initiative. In 2019, a total of 181 regular employees and temporary regular employees In 2019, a total of 181 in occupational accidents, of which involved were workers as a result, with no occupational days 61 persons lost work For recorded. days work illnesses resulting in lost the subcontractors, involving occupational accidents 34, of which 11 suffered number of persons affected was days. injuries resulting in lost work slip and fall were workers and temporary employees most common types of accidents among regular The confirmation accidents due to carelessness and insufficient reactional action (29 involving accidents (53 employees), Measures are (19 employees). and collisions employees) and fall accidents, being promoted with an emphasis on slip incidence rate. the highest due to such accidents having Status of occupational accident Status of occupational occurrences Risk assessments of chemical substances Risk assessments of chemical safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 191 Learning how to cross a pedestrian crossing safely. Learning how participating children. from the Letters received suddenly from side streets where there is limited visibility, etc. there is limited visibility, side streets where suddenly from to actually experience elementary school children By getting helps to cultivate safety this program things for themselves, encouraging the while at the same time awareness, mindset. to maintain a safe driving participating drivers blind spots. truck’s Experiencing a delivery 102-43, 403-2 (Occupational health and safety 2018), 403-4 (Occupational health and safety 2018) health and (Occupational 2018), 403-4 and safety health 403-2 (Occupational 102-43, Safety Message Grand Prize awarded to Kao Chemical Corporation Shanghai. awarded Safety Message Grand Prize a pleasant working Creating employees for environment environment in to create a pleasant working strive We conduct periodic working and all workplaces, environment measurement and implement maintenance to ensure compliance and improvement environment standards. workplace with each country’s Road Implementation of the Children’s Class as a local contribution activity Safety & Logistics Co., Ltd. is engaged in delivering As Kao Transport to road close attention products by truck, and has to pay holding events safety on a daily basis, the company has been that are related to road safety. Road Safety Class for implementing Children’s proactively & Logistics has been Kao Transport In recent years, of its seven elementary school children in the vicinity of worksites. see where the they cab so that sitting in the vehicle experience visit the schools, where children drivers vehicle Delivery crossings to cross pedestrian blind spots are, are taught how coming out to be alert to vehicles and are warned safely,

With the aim of raising safety awareness worldwide, worldwide, awareness of raising safety the aim With been translated into local safety messages have safety posters featuring the languages since 2017, in been shared deployed have company president Japan and outside Japan and both within worksites been shared worldwide. safety messages have put out a call for messages worldwide have created a safety poster with We we since 2018. In 2019 Kao Chemical Corporation the message from the Grand Prize. Shanghai, which awarded The safety poster featuring the company president were deployed in deployed were safety poster featuring the company president The Japanese, 11 different local languages (Clockwise from top left: English, Chinese (simplified), German) Sharing safety messages globally messages safety Sharing safety & safety wellbeing Employee Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 192 Risks related to realization of our vision by 2030 of our vision by to realization Risks related can they If chemicals are not properly managed, health and effects on human possibly cause adverse difficult to it the environment, which could make continue our business. of our vision to realization Opportunities related 2030 by By promoting responsible chemicals management, will contribute to realization of a sustainable we the trust of society and secure opportunities to earn advantage. and obtain competitive society, Contributions to the SDGs Contributions to the 102-11, 102-12, 102-15, 103-1 102-15, 102-12, 102-11,

World Summit on Sustainable Development Summit on World Strategic Approach to International Chemicals Management Strategic Approach to International United Nations II (UNEP, Global Chemicals Outlook From 2019) Environment Programme, *1 WSSD *2 SAICM value Kao’s creating rigorous more In line with the global trend toward set medium-term chemicals management, we of sound implementation including “active objectives with SAICM” chemicals management in accordance in 2009. in the Kao Environmental Statement released been company-wide established the have In 2012, we SAICM Promotion Committee, and we management, to further enhance chemicals working including the strengthening of the foundations Management Comprehensive by our own provided we System for Chemical Substances, which operations. to apply to our own ourselves developed will contribute to realization of we Going forward, Lifestyle Plan, a sustainable society based on the Kirei responsible chemicals which raised our ESG Strategy, management as a priority topic. *3 *3 *3 ) held in 2002 *1 ) was formulated in 2006 and ) was *2

approved by the United Nations Environment by the United Nations Environment approved Programme (UNEP). not be that this goal may however, are aware, by despite efforts around the world We achieved greater individual countries and regions, and even been called for in the lead-up to 2030. actions have Social issues we are aware of aware are Social issues we fulfilling lifestyles and are Chemicals foster our and enrichment of the essential for the satisfaction other hand, chemical On the of people globally. lives on human and impact negative substances can have the environment. Summit on (WSSD World Member countries at the Sustainable Development Kao’s creating value to address social issues to address value Kao’s creating

We appropriately manage chemicals using science-based risk assessment and risk management procedures across the entire product lifecycle from from lifecycle product the entire across procedures risk management assessment and risk using science-based manage chemicals appropriately We We environment. health and the on human effects adverse their significant to minimize and disposal, aiming to use through and production development Plan. the Kirei Lifestyle based on sustainability of society to the and contribute chemicals management responsible will promote Responsible chemicals management management chemicals Responsible adopted the international goals of “aiming to achieve, to achieve, adopted the international goals of “aiming produced in by 2020, that chemicals are used and that lead to the minimization of significant ways the effects on human health and adverse risk environment, using transparent, science-based assessment procedures and risk management account the procedures [for chemicals], taking into are known objectives These precautionary approach.” the this goal, as the WSSD 2020 Goals. Toward Strategic Approach to International Chemicals Management (SAICM Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 193 stakeholders Framework aimed at initiatives implementation of accelerate To established the we objectives, realizing the SAICM Committee in 2012 under the SAICM Promotion the ESG Committee) (now Sustainability Committee and CEO. chaired by the President Promotion Committee, which reports SAICM The CEO, is chaired by the Managing to the President and the overseeing for Officer responsible Executive Division, and it is Product Quality Management management in the Product comprised of top-level Division, Chemical Business Quality Management Division, R&D Division, SCM Division, and ESG Division. by SAICM promotion activities undertaken The Kao include: 1. Risk assessment of chemical substances 2. Lifecycle management of chemicals Risk communication about chemicals with 3. established and are implementing have We projects for each activities. Besides project-specific meets meetings, the SAICM Promotion Committee implementation reports on to receive 3–4 times a year and experts by outside status, listen to lectures given for chemicals discuss measures to realize our vision period. management in the post-2020 102-20, 102-43, 103-2, 404-2 103-2, 102-43, 102-20, Collaboration and engagement and engagement Collaboration with stakeholders chemical information relating to product provide We promote safety to customers and consumers and with responsible chemicals management along by collaborating and communicating stakeholders outside experts, bodies, administrative with industry, on the outside professionals, and others depending subject. Education and promotion Education provide we of our chemicals management, As a part on an by outside experts lessons and lectures handle who for workers ongoing basis, mainly proper understanding of chemicals, to reinforce chemicals management. velopment of Manufacturing velopment SAICM Promotion Policy SAICM Promotion ➡ www.kao.com/content/dam/sites/kao/www-kao- com/global/en/sustainability/pdf/saicm-policy.pdf oluntary Standards, and the Promotion of

International Cooperation and Collaboration  Processes with Less Environmental Impact   Compliance with Laws and Regulations on Chemicals ‌Compliance with Laws and V ‌Promotion of Risk Communications with Stakeholders Chemicals Management throughout the Entire Life ‌Chemicals Management throughout the Entire Cycle of Chemicals based on Scientific Risk Assessment Development and Use of Safer and More Valuable and Use of Safer and More Valuable ‌ Development Chemicals, and the De 4. 2. SAICM Promotion Policy SAICM Promotion 1.

3. Kao handles a wide range of chemicals from industrial chemicals from industrial a wide range of Kao handles products, and has always products to consumer chemicals management. In engaged in thorough and strengthening are promoting addition, we based on the internationally chemicals management established SAICM. in our SAICM Promotion Policy formulated management We company-wide 2013. It defines our and forms the basis of our policy for chemicals chemicals management. will promote responsible we Going forward, under the chemicals management as a priority topic ESG Strategy announced in April 2019. Policies Responsible chemicals management management chemicals Responsible Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 194 103-2 * As of December 2019. ESG Committee Product Quality Management Division Product Quality Management Product Quality Management Division Product Quality Management Chemical Business Division Chemical

Risk communication about chemicals with stakeholders Risk assessment of chemical substances Lifecycle management of chemicals Consumer Communication Center Communication Consumer

SAICM Promotion Committee

Executive Officer in charge of Chairperson Executive Officer in charge Members Management Product Quality R&D Division SCM Division Secretariat ESG Division Chemical Business Division ESG Division Division Communications Corporate

Information Technology Division Technology Information

Procurement Division Procurement

ESG Division ESG SCM Division SCM

Board of Directors

& D Division D R

Management Committee

Chemical Business Division Business Chemical Product Quality Management Division Management Quality Product Internal Control Committee Internal Control

SAICM Promotion Framework SAICM Promotion Responsible chemicals management management chemicals Responsible Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 195 , etc. 2 of 1 Delivery products (COA) documents regulatory compliance chemSHERPA* Product specifications SDS* Certificate of Analysis Product safety Certificate of Users/customers ● ● ● ● ● ● As required: Management Product Product Quality information Safety data Safety information Kao Group Raw materials Raw Toxic and deleterious substances 102-11, 102-15, 103-1, 103-2, 103-3 103-2, 103-1, 102-15, 102-11, quality management, legal compliance) quality management, Volatile organic compounds (VOCs), etc. Regulatory data of quality, safety, and the environment of quality, safety, and Product development in consideration Product development Chemical substances database (Master Index) Chemical substances Substance Substances subject to the Japanese PRTR system information Environmental and safety data aggregation (Material selection, formulation design, production/ (Material selection, formulation Procurement R&D Production Comprehensive Management System for Chemical Substances Comprehensive Management , etc. 2 1 (purchases) w scheme that facilitates sharing information on chemical substances in products across the entire supply chain to address broadening w scheme that facilitates sharing information on Raw materials Specification (CPS) (COA) regulatory compliance Certificate of Product SDS* Certificate of Analysis Certificate of chemSHERPA* regulations and appropriately manage chemical substances contained in products on an ongoing basis. contained in products on an ongoing basis. regulations and appropriately manage chemical substances https://chemsherpa.net/english website: ➡ chemSHERPA Safety Data Sheet. Document providing information to ensure safe and appropriate handling of chemicals, such as names of substances information to ensure safe and Safety Data Sheet. Document providing hazards and handling precautions. contained in the product, information about potential A ne ● ● ● ● ● As required: Raw materials suppliers materials Raw *1 SDS *2 chemSHERPA Kao Comprehensive Management System for Chemical Substances System for Management Kao Comprehensive

In addition to reinforcing responsible chemicals chemicals to reinforcing responsible In addition of the under the framework management mainly and use developed Committee, we SAICM Promotion Management System for the Kao Comprehensive an advanced IT support Chemical Substances, system. been use the consistent Kao Group that have we In this system, Master Index codes named as the materials products and raw assigned to individual chemical information for since 2001 to manage for industrial to for consumers. various products from a database which breaks system provides ingredients. materials by their constituent raw The down immediately it possible As a result, this system makes anti- safety, materials’ quality, the raw to verify for bacterial grade, regulatory and other information material arises, each product. If a problem with a raw emerges, substance of concern or if risk from a new identified of the effect can be immediately the extent Based on so that appropriate action can be taken. with specialized integrated management by personnel data collected in the Comprehensive expertise, are Management System for Chemical Substances are actively shared among Kao Group divisions. We on a engaged in sound chemicals management basis. company-wide the functions of the are enhancing for Chemical Management System In addition, we Comprehensive in regulatory Substances to cope with global changes into new requirements and our business expansion business fields and regions. Comprehensive Management System for Chemical Substances Chemical for System Management Comprehensive Responsible chemicals management management chemicals Responsible Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 196 stakeholders corresponding measures at workplaces where at workplaces corresponding measures by 2020, and continue to chemicals are handled chemicals and for new conduct risk assessments measures. implement corresponding this assessment substances by 2020 and continue activity after 2020. after products by 2020 and continue this activity 2020. A document providing a summary of chemical substance safety A document providing Besides information as a reference for the general public. this document information about physical and chemical properties, risk addresses the use and process conditions for sound It is also management and outlines risk management measures. users. used to disseminate information to downstream * GPS Safety Summary * 2. Lifecycle management of chemicals management 2. Lifecycle targets at workplaces following set the have We adverse handled to prevent where chemicals are health effects on workers. risk assessments and implement Conduct • about chemicals with Risk communication 3. communicating targets for set the following have We and selling safety information on our manufacturing and for chemicals throughout the supply chain, the ability to take sound use and ensuring safety, necessary action pertaining to chemicals. Release the safety summaries of 20 Kao priority risk • Release GPS Safety Summaries* of 150 chemical • 102-11, 103-2, 103-3 103-2, 102-11, surfactants): Widely used in everyday consumer consumer used in everyday surfactants): Widely detergents, dishwashing products such as laundry cleaners, shampoos, bleaches, liquids, household etc. used in everyday anionic surfactants): Widely consumer products such as laundry detergents, liquids, etc. dishwashing as binder in toner) Widely used in everyday consumer products such consumer products used in everyday Widely body liquids, household cleaners, as dishwashing etc. soaps, shampoos, • Polyoxyalkylene alkyl ethers (a class of non-ionic alkyl Polyoxyalkylene • sulfonate (a class of Sodium linear-alkylbenzene • resin used resin for use in toner (polyester Polyester • Examples of the 19 categories Examples of the 19 glycosides (a class of non-ionic surfactants): Alkyl • risk assessment chemical.kao.com/global/sustainability/saicm/ article_05/ Kao’s Safety Summary of chemicals for priority Summary of chemicals for Kao’s Safety ➡ Risk assessment policy ➡ chemical.kao.com/global/sustainability/saicm/ article_03/

assessment substances (19 categories) by 2020. assessment substances (19 categories) Risk assessment of chemical substances is conducted Risk assessment of chemical substances objectives. with the following Conduct risk assessments of the Kao priority • 2020 mid-term targets 2020 mid-term of chemical substances 1. Risk assessment taking select Kao priority assessment substances We such as production and use into consideration factors and the for humans level the exposure volume, in our corporate activities. environment, and priorities the assess those substances considering We the environment in accordance impact on expected and implement policy, with our risk assessment on the basis of the appropriate management assessments. Mid- to long-term targets and performance and targets long-term Mid- to Responsible chemicals management management chemicals Responsible Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 197 103-2, 103-3 103-2, assessment substances (three categories) assessment substances Substances System for Chemical where chemicals are handled Japan implementation at production sites outside 18 GPS safety summaries of Kao priority assessment substances and Three Safety Summaries for chemical products consumers bodies, customers, Industries, administrative Stakeholders: Globally Harmonized System of Classification and Labelling of Chemicals Globally Harmonized System of Classification and In our initiatives on chemicals, we achieved our objectives in all projects. our objectives achieved on chemicals, we In our initiatives into our 2020 action are incorporated SAICM Promotion Committee, and they were shared in the identified through the initiatives that were issues New plan. our mid- to long-term vision for 2030. are also discussing to achieve We Targets for 2019 for Targets of chemical substances 1. Risk assessment assessment reports for Kao priority risk assessments and compile risk Conduct 1. at academic conferences experts risk assessment results with outside Discuss 2. and methods papers on risk assessment techniques Publish 3. Management the Comprehensive the global roll-out of and enhance Continue 4. management of chemicals 2. Lifecycle measures based on risk assessments at workplaces Implement risk reduction 1. labeling at ten production sites in Japan and continue Complete GHS* hazard 2. * GHS with stakeholders 3. Risk communication about chemicals promotion activities results Public disclosure of SAICM 1. our mutual communication with stakeholders review Continue to conduct and 2. of performance Reviews Performance in 2019 Performance for 2019 and project targets the following Committee set SAICM Promotion The be found in Our Initiatives. Details on results can accordingly. conducted activities

velopment, manufacturing, velopment,

w materials, de w materials, manufacturing, distribution and disposal). w materials, manufacturing, distribution erse values and lifestyles in mind.

Facilitate sustainable product development through collaboration across whole through collaboration across sustainable product development Facilitate product life cycle (procurement of ra Effectively communicate with people around the world to earn more trust to earn more the world communicate with people around Effectively Improve assessment methods through collaboration with the government, methods through collaboration with the government, assessment Improve sound chemicals management and academia, and related industries for the and the environment in society as a minimization of risks for human health whole. in an available and safety on chemicals’ benefits information Make way accessible and easy to understand in society. and safety with stakeholders Share information on chemicals’ benefits Optimize risk assessment methods for efficient chemicals management methods for risk assessment Optimize distribution, sales, use, disposal/ recycling). through whole product life cycle Strengthen chemical risk management (procurement of ra Facilitate effective communication with people around the world by keeping their by keeping communication with people around the world effective Facilitate div

Five-part approach Five-part lifecycle product the impact throughout environmental Minimize 1. Kao’s vision the benefits can enjoy around the world in a safe society where people believe We with peace of mind. by chemicals provided should be properly managed. the risks associated with chemicals that end, in responsible chemicals the lead to take Kao wants its ESG initiatives, To Through actualize such a society by 2030. management to help Discussion in the lead-up to 2030 in the lead-up Discussion as a company future up to 2030 and approach to the defined our vision have We to consumer industrial products of chemicals from a wide range which handles with management in accordance chemicals promote responsible as we products, to discuss specific targets and actions. continue We our ESG Strategy. Responsible chemicals management management chemicals Responsible 4. 5. 2. Foster a sense of trust by having zero chemical accidents zero having a sense of trust by Foster 2. 3. Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 198 2. Collaboration with administrative bodies with administrative 2. Collaboration continued cooperation with administrative have We in chemicals management, bodies in Japan involved SAICM promotion regarding Kao’s opinions exchanging of chemicals the framework activities and discussing exchanged after 2020. In 2019, we management in and agencies four times. with government views participated in study panels in also actively agencies through industry We administrative order to use opinions in organizations to exchange methods for more precise environmental assessment Substances chemical regulations such as Chemical Control Law. and customers with distributors 3. Collaboration on chemicals in products information Providing in comply with increasingly stringent regulations To as with industry various countries and regions as well chemical manage the proactively standards, we products substances contained in our chemical products) and (management chemical substances in information to our customers. provide information on chemical regard to providing adopted With we substances in products to our customers, 2017), which is a new (September chemSHERPA information communication scheme for chemical under the initiative substances in products developed 102-13, 102-43, 404-2, 413-1 404-2, 102-43, 102-13, , which is a *1 , which is promoted by the Japan *2 Japan Initiative of Product Stewardship. of Product Stewardship. Japan Initiative based on Global Product Strategy (GPS) initiative A voluntary promoted principles for enhancing global chemicals management in (ICCA) by the International Council of Chemical Associations response to the adoption of SAICM. LRI Long-Range Research Initiative support to long-term An international program that provides human health researches on the potential impact of chemicals on and the environment. Chemical Industry Association with chemical Chemical Industry Association with chemical and industries in Europe and the United States, supported researches. Communication about chemicals with stakeholders about chemicals Communication in accordance activities on the following worked We Policy. with our SAICM Promotion with industry organizations 1. Collaboration to contribute participated in various activities have We in industries. to chemicals management in JIPS involved are actively We *1 JIPS *2 voluntary initiative by chemical industry in Japan to by chemical industry initiative voluntary order to strengthen chemicals management in to support contribute to SAICM, and discussed ways after 2020 chemicals management in and voluntary under the Chemicals Management Committee. our positive continued In addition, we participation in LRI Our initiatives

programs for current and new employees and employees programs for current and new by field of internal transfers, which are structured The of experience. specialization and level risks and curriculum included information on the hazards of chemicals organizing three internal briefings and lectures by organizing three internal and on chemicals management, outside experts persons attended. 350 approximately • The SCM Division has developed educational Division has developed SCM The • We worked on the following activities in 2019. activities on the following worked We Quality Management and R&D divisions led Product • Internal education on chemicals Internal education Responsible chemicals management management chemicals Responsible Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 199 risk assessment Kao’s Safety Summary of chemicals for priority Summary of chemicals for Kao’s Safety ➡ chemical.kao.com/global/sustainability/saicm/ article_05/ Summaries GPS Safety ➡ chemical.kao.com/global/sustainability/saicm/ article_06/ assessment reports for Kao priority assessment assessment reports substances (3 categories). Performance in 2019 in 2019 Performance targets mid-term concerning the performance in 2019 toward Details concerning as follows. were 2020 mid-term targets of chemical substances 1. Risk assessment risk assessments and compile risk Conduct 1. total of completed risk assessments (cumulative We and compiled the results in 21 categories) as planned, Risk for human health and risk assessment reports. for all three acceptable level the environment was categories. summaries of Kao released 3 safety In 2019, we risk priority risk assessment substances whose conducted in 2017. assessments were also prepared 18 GPS Safety Summaries in We and Japanese and English for chemical products Kao Group has published publicly released them. The globally. a total of 159 GPS Safety Summaries Released in 2019 Benzalkonium acid based polymer, Polycarboxylic chloride, Mono alkyl cation 102-43, 103-2, 103-3, 413-1 103-3, 103-2, 102-43, The representative activities in 2019 are as follows. representative The Collaboration and communication with consumers Collaboration transfer chemical risk information in ways that are transfer chemical risk information in ways easy to understand. chemicals management for business persons Chemical Daily) for better (Publisher: The understanding of chemicals management in society. plants and local governments at ten plants in Japan at ten plants plants and local governments close and analysis in order to implement more activities aligned with regional characteristics. • Discussion with medical students about how to Discussion with medical students about how • wrote and issued a book on Kao employees • Kao Corporation continuously engages in Kao Corporation continuously engages near communication with consumers and residents of our business sites to deepen understanding chemical risks and its proper usage. Communication sessions with residents near our • Collaboration with distributors with Collaboration such information Business Division shares Chemical via a private network chemSHERPA-CI as SDS and to Kao to linking sales distributors (Extranet) chemicals management promote collaboratively chain. throughout the supply posted updated information and we In 2019, on chemical regulations and up-to-date information and requested our customers controls, import/export to deal with them. our chemicals explained sales we In addition, at a training for new management activities in Complex at the Wakayama distributor employees also visited 11 selected sales distributors We October. knowledge December to exchange and in November on recent trends including chemical regulations and our actions. around the world 4.

*4 in *3

Japanese Industrial Standards Data entry support tool and output format for communicating Data entry support tool and chemical substances. information on specified *4 JIS *4 with a Management System for Chemical Substances are enhancing the Comprehensive We system is planned to The target of 2020, as well. functions smooth preparation and management provide the latest of SDS and product label compliant with of GHS in each country around the world. version and regions in countries applied GHS labeling prepared and products marketed In 2019, we for new GHS (Japan, Europe, the U.S. introduced that have also Asia. We and Asia) from our plants in Japan and and regions monitored regulatory trends in countries updated SDS GHS, and we implemented that have and labels as necessary. started implementation of amended JIS have We GHS-compliant SDS and product labeling and product GHS-compliant SDS relating to our the latest chemical information provide To SDS issue GHS-compliant products to customers, we for our and promote GHS-compliant product labeling introduced chemical products in countries that have GHS. *3 chemSHERPA-CI

of the Japanese Ministry of Economy, Trade and and Trade Ministry of Economy, of the Japanese continuously We the industry. in advance to Industry, chemSHERPA-CI of latest versions release the Responsible chemicals management management chemicals Responsible in Japan by June 2022. Japanese, English and Chinese on the Kao website. English and Chinese Japanese, of chemSHERPA-CI the latest version released We products in March and for our major chemical voluntarily In Japan, we September of 2019. our customers in cooperation with distributed them to our sales distributors. Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 200 GHS labeling at raw materials intake ports materials intake GHS labeling at raw (example) priority risk assessment / GPS Safety Summaries priority risk assessment / GPS Safety stakeholders p. 199 Kao’s Safety Summary of chemicals for Summary of chemicals for p. 199 Kao’s Safety ➡ p. 198 Communication about chemicals with ➡ stakeholders results Continue to conduct and review our mutual Continue to conduct and review communication with stakeholders GHS labeling at raw materials sampling ports (example) GHS labeling at raw about chemicals with Risk communication 3. Public disclosure of SAICM promotion activities 1. 2. GHS labeling on a storage tank (example) and work areas for sampling, filling and so on where filling and so on areas for sampling, and work In 2019, we are handled in plants. chemicals in Japan. labeling at 10 plants completed outside Of the 22 plants of group companies complete at 12 plants in Asia. Japan, labeling is nearly O) for *1 orkplaces. 103-2, 103-3 103-2, and CREATE and CREATE *2 as necessary. *3 and continue implementation at production sites and continue implementation at production outside Japan A method of assessing the risks of health hazards associated with A method of assessing the risks of health hazards is a method for managing chemical chemical substances. This Organization (IL substances designed by the International Labour that incorporates simple and practical risk assessment methods. It that incorporates simple and practical risk assessment in small- and medium- is intended to protect the health of workers countries from hazardous sized companies in developing that requires handling of hazardous each process chemicals. For according to three into four levels chemicals, risks are ranked its form component elements: the hazard of the chemical, of becoming airborne), and the amount being (volatility/risk items to be handled. In addition to indicating general management it possible to this tool also makes implemented in each category, with regard to indicate more specific items to be implemented tasks. other general work Risk Assessment) Chemicals Targeted the EU system for A risk assessment tool used in REACH, management registering chemical substances. Able to obtain risk the risk determination. as direction as well Edited for Tool, (Chemical Risk Easy Assessment CREATE-SIMPLE Service Industry and MultiPLE workplaces) designed for use A simple chemical substance risk assessment tool including service sector w in a wide range of workplaces, Ministry of Health, Labour and Welfare released by Japan’s It was in 2018. risk assessment so that it can be easily used at so that it can risk assessment to the control banding sites. In addition production of more precise also promoted the use method, we TRA ECETOC risk assessments using production area for small quantity/large variety production area for products such as cosmetics. throughout Asia. implemented in Japan SIMPLE Ver2.0 • We implemented risk reduction measures for each implemented risk reduction We • of chemical risk assessment Expansion • 2. Complete GHS labeling at production sites in Japan 2. can check the hazards of ensure that workers To have chemicals before handling them, since 2016 we GHS labels on storage tanks to display been working *1 Control banding method *1 where chemicals are handled were as follows. were are handled where chemicals method the control banding Systemization of • *2 ECETOC TRA (European Centre for Ecotoxicology and Toxicology of and Toxicology TRA (European Centre for Ecotoxicology ECETOC *2 *3

onment, onment,

methods Implement risk reduction measures based on risk where chemicals are handled assessments at workplaces Discuss risk assessment results with outside experts results with outside risk assessment Discuss Continue the global roll-out of and enhance the Continue the global roll-out of and enhance for Chemical Management System Comprehensive Substances

vol. 42, pp. 79-89 (2019) vol. vol. 15, pp. 750-759 (2019) vol. Management, Journal of Japan Society on Water Envir Journal of Japan Society on Water vol. 42, pp. 201-206 (2019) vol. The representative measures that we implemented in measures that we representative The at workplaces 2019 to protect the safety of workers 2. Lifecycle management of chemicals 2. Lifecycle 1. We continued registration of new raw materials on the raw continued registration of new We launched a current system in 2019. In addition, we social measures to globally accelerating project to take regulations and environmental changes such as tighter and the business areas as our expanding as well to and worked conduct business, countries where we in 2020. enhance systems, targeting to go live

• • Environment, Journal of Japan Society on Water 3. Publish papers on risk assessment techniques and papers on risk assessment techniques Publish 3. on three papers published the following We assessment techniques and environmental risk methods in 2019. • Assessment and Environmental Integrated 2. Japanese at The presentation following made We our and deepen (JSOT) Toxicology Society of with experts. through discussions understanding environmental risk assessment of “Human health and Safety assessment of fatty acid chemicals in daily use: in consideration of using dimethylamines amidopropyl consumer product” 4. Responsible chemicals management management chemicals Responsible Kao Kirei Lifestyle Plan Progress Report 2020 Making my everyday Making thoughtful Making the world Kirei Lifestyle Plan Walking the right path more beautiful choices for society healthier & cleaner

Contents Editorial Policy CEO Message Kirei Lifestyle Plan KPI definitions Independent assurance report 201 Awards ceremony Awards Kao Corporation’s Chemical Chemical Kao Corporation’s JIPS Division receives Business Prize Grand Award Topic In February 2019, Kao Corporation’s Chemical 2019, Kao Corporation’s In February Grand the JIPS Award Business Division received that the year the third consecutive was Prize. This award. division has won Committee of the Japan Chemicals Management established by the was JIPS Award The (JCIA) in 2017 to Chemical Industry Association demonstrated that have recognize companies for GPS/JIPS activities in voluntary excellence throughout the supply chemicals management chain. released a large number of GPS Safety Summaries, in recognition of having this award received We pursuit of chemicals and of our proactive management. 103-2, 103-3 103-2, , which started in *2

Toxic Substances Control Act Toxic that regulates chemical substances that poses A U.S. law unreasonable risks to human health and the environment. K-REACH Chemicals of South Korea. Act on the Registration and Evaluation of The *1 TSCA *2 up-to-date information regarding local subsidiaries to acquire organizations and also collaborated with industry We to be chemicals that are expected ordinances on hazardous for Environmental Administration Measures tightened, new and Regulations Concerning Chemical Substances of New Cosmetics that are expected over the Hygiene Supervision on Environmental Risk to be amended, and Regulation of Chemical Substances that are Assessment, and Control adopted. to be newly expected 4. South Korea under In response to the requirement for pre-registration Chemicals Act (K-REACH) the revised 5. Other countries in collaboration with local subsidiaries in countries Working East and and regions in Europe, North America (Canada), chemical introduced Southeast Asia and Oceania that have submitted surely substance management systems, we necessary notifications and undertook management gathered necessary for manufacture and import, and information on the latest regulatory trends. Environmental Administration of New Chemical New Administration of Environmental Substances. 2019, we completed the advanced selection of subject completed the advanced selection 2019, we by the substances and submitted registration applications are participating in consortiums We deadline without delay. concerning chemical substances and are proceeding steadily with registration work. , which was , which was *1

amended in 2016. 3. China completed In cooperation with local Kao companies, we registration before manufacturing or import of new chemical substances in our products and annual volume Measures for reporting in accordance with the new In 2019, we improved the Comprehensive Management the Comprehensive improved In 2019, we updating System for Chemical Substances and completed existing operation of the data in response to the new chemical substance list under the U.S. TSCA 2. United States We investigated use information of existing chemicals use information of existing investigated We reported that throughout the supply chain and certainly the Evaluation of information in accordance with the Act on Manufacture, Chemical Substances and Regulation of Their etc. (Chemical Substances Control Law). Quality of New electric system for Confirmation of Small notification by means of an conducted In addition, we the release into Chemical Substances, taking into account in fiscal 2019. the environment, whose operation began 1. Japan Kao registers and manages chemical substances contained substances contained and manages chemical Kao registers or directly or indirectly in our products manufactured, the quantities and hazard levels, according to exported countries regulations of the relevant based on the chemical with our SAICM promotion or regions and in accordance policy. to our affiliates of import and export regulations at the time been introducing systems that can check have We are business since 2017, and we related to the Chemical legal compliance. taking measures to ensure Global compliance with chemical regulations with chemical compliance Global Responsible chemicals management management chemicals Responsible Kao Kirei Lifestyle Plan Progress Report 2020 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan KPI definitions 103-1, 103-2, 103-3 Editorial Policy Regarding the mid- to long-term targets of the Kirei Lifestyle Plan that are noted on page 20 and 21, the formulas and factors that each indicator is comprised of, and the scope of each indicator, are as shown below. CEO Message

Making my everyday more beautiful Making my everyday

Target Target Base more beautiful Indicator Kao Actions value year year Formula Factor Scope

Making my everyday more beautiful Kirei Lifestyle Plan KPI definitions The number of people empowered to enjoy more beautiful lives—greater cleanliness, easier aging, better health and confidence in self expression 1 billion 2030 ― Commitment Plan to disclose in 2021 choices for society

% of new or improved products which contribute to a comfortable, beautiful, healthy life and touch the heart of people 100% 2030 ― Making thoughtful Improved quality of life Plan to disclose in 2021

Coverage of enlightening activities that stimulate habits for cleanliness, beauty & health using Kao products and services 100% 2030 ― Habits for cleanliness, Scope: Targeted brands/categories beauty & health Plan to disclose in 2021

% of new or improved products that meet Kao’s Universal Design Guidelines 100% 2030 ― Universal product design Independent assurance report • A: The number of products that meet the conformance criteria (pcs) • Consumer products of the Kao Group A / B × 100 (%) • B: Total number of products (pcs) • New or improved products healthier % of targeted ingredients of concern on which views are disclosed 100% 2030 ― Making the world Safer healthier products • A: The number of ingredients of concern on which views are disclosed (ingredients) A / B × 100 (%) • Kao Group • B: Total number of established ingredients of concern (ingredients) & cleaner Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 202 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan KPI definitions 103-1, 103-2, 103-3 Editorial Policy Making thoughtful choices for society

Target Target Base Indicator Kao Actions value year year Formula Factor Scope CEO Message Making thoughtful choices for society Making my everyday more beautiful

% of Kao brands that make it easy for people to make small but meaningful choices that, together, shape a more resilient and compassionate society 100% 2030 ― Commitment Plan to disclose in 2021

Coverage of distribution of information, information tools, and enlightening or communication activities for sustainable lifestyle

100% 2030 ― Kirei Lifestyle Plan KPI definitions Sustainable lifestyle Scope: Targeted brands/categories promotion Plan to disclose in 2021

% of Kao brands that make a contribution to solving social issues and that make people feel and sympathize with the brand’s social usefulness 100% 2030 ― choices for society Purpose driven brands Making thoughtful • A: The number of brands that meet the conformance criteria (brands) A / B × 100 (%) • Consumer Products Business of the Kao Group • B: Total number of brands (brands) 10 or Cumulative number of transformative sustainable product innovations launched 2030 ― more • A: The cumulative number from 2019 of launched products and services with transformative A (innovations) • Consumer products of the Kao Group innovations for lifestyles, society or the environment (launches)

Transformative product % of new or improved products which meet Kao sustainability guidelines 100% 2030 ― innovation • A: The number of new or improved products that introduce new, original technology that satisfy Independent assurance report following conditions for achieving the Kirei Lifestyle (pcs): • Consumer products and industrial-use products of A / B × 100 (%) ① Technology that makes the environment change for the better the Kao Group Technology that makes lifestyles and society change for the better healthier ② Making the world • B: The number of new or improved products launched in the year (pcs) % of certified paper products and pulp for consumer products 100% 2025 ―

• A: The weight of certified paper products and pulp (FSC, PEFC, SFI) for consumer products of the • Paper products and pulp for consumer products of & A / B × 100 (%) Kao Group (t) the Kao Group cleaner Responsibly sourced raw • B: The weight of paper products and pulp for consumer products of the Kao Group (t) • Office paper and other paper used in the Kao Group materials Confirm traceability to small oil palm farm Finish 2030 ―

A (farms) • A: The number of small oil palm farms for which traceability is confirmed (farms) • Small oil palm farms Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 203 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan KPI definitions 103-1, 103-2, 103-3 Editorial Policy Making the world healthier & cleaner

Target Target Base Indicator Kao Actions value year year Formula Factor Scope CEO Message Making the world healthier & cleaner Making my everyday more beautiful % of Kao products that leave a full lifecycle environmental footprint that science says our natural world can safely absorb 100% 2030 ― Commitment Plan to disclose in 2021 Highest Every Kao recognition or achievement level by external ratings firms evaluation ― Kirei Lifestyle Plan KPI definitions year level ― • Obtain A rankings in CDP for Climate Change, Water Security and Forest simultaneously • Kao Group

% reduction in absolute full lifecycle CO2 emissions 22% 2030 2017 choices for society Making thoughtful • Entire life cycle process for consumer products of • A: Annual lifecycle CO2 emissions for the year in question (t-CO2) the Kao Group ( 1 - A / B ) × 100 (%) • B: Annual lifecycle CO2 emissions for the base year (t-CO2) • Raw materials procurement, manufacturing and * Base year: 2017 Decarbonization distribution of industrial-use products of the Kao Group

% reduction in absolute scope 1 + 2 CO2 emissions 22% 2030 2017

• A: Annual scope 1+2 CO2 emissions of the year in question (t-CO2) • Factories, offices, logistics centers and company ( 1 - A / B ) × 100 (%) • B: Annual scope 1+2 CO2 emissions of the base year (t-CO2)

cars owned by the Kao Group Independent assurance report * Base year: 2017 300 Quantity of innovative film-based packaging penetration for Kao and others per annum 2030 ― million healthier • A: Sales quantity of innovative film based packaging (Kao Group) (pcs) Making the world A + B (pcs) • B: Sales quantity of innovative film based packaging using and applying Kao technologies (other • Kao Group and other companies companies) (pcs) Zero waste

Quantity of waste not for recycling from factories and offices Zero 2030 ― & cleaner • A: Weight of recycled waste (t) • Factories, offices, logistics centers owned by the Kao ( 1 - A / B ) × 100 (%) • B: Weight of waste (t) Group • This indicator is defined as zero when it is less than 1%. • Waste that cannot legally be recycled is excluded % reduction in full lifecycle water use per unit of sales 10% 2030 2017

3 • A 1: Annual lifecycle water use for the year in question (million m )

• Entire life cycle process for consumer products of Walking the right path • A 2: Sales for the year in question (hundred million yen) 3 the Kao Group [ 1 - (A1/A2) / (B1/ B2) ] × 100 (%) • B 1: Annual lifecycle water use for the base year (million m ) • Raw materials procurement, manufacturing and Water conservation * Base year: 2017 distribution of industrial-use products of the Kao Group • B 2: Sales for the base year (hundred million yen) % reduction in full lifecycle water use per unit of sales in regions with water scarcity 40% 2030 2017

Plan to disclose in 2021

% of factories which disclose VOC and COD emissions 100% 2025 ― Air & water pollution prevention • A: The number of factories which disclose VOC and COD emissions (factories) A / B × 100 (%) • Factories owned by the Kao Group • B: Total number of factories (factories)

Kao Kirei Lifestyle Plan Progress Report 2020 204 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan KPI definitions 103-1, 103-2, 103-3 Editorial Policy Walking the right path

Target Target Base Indicator Kao Actions value year year Formula Factor Scope CEO Message Walking the right path Making my everyday more beautiful Highest Kao recognition or achievement level by external ratings firms evaluation Every year ― level Selected Listed as one of the “World’s Most Ethical Companies®” by Ethisphere Institute • Kao Group

Effective corporate Kirei Lifestyle Plan KPI definitions governance Number of serious compliance violations per annum Zero Every year ― • Compliance violations that have a significant impact on management and significantly damage corporate value A (cases) • These violations are decided through deliberations by the Compliance Committee and the • Kao Group choices for society Management Committee considering the maliciousness of the violation and its impacts inside Making thoughtful and outside our company, and are reported to the Board of Directors % of consumer product brands for which people can easily access complete ingredients information 100% 2030 ― • A: The number of brands that satisfy the following conditions (brands): Full transparency • The brands disclose information on chemical substances contained in more than the A / B × 100 (%) • Consumer products of the Kao Group prescribed amount (their names and formulation purposes) • B: The number of all brands owned and marketed by the Kao Group (brands) % response rate to human rights due diligence (internal risk assessment) 100% 2030 ― Independent assurance report • A: The number of factories (factories) and companies (companies) that conduct due diligence A / B × 100 (%) assessments • Factories and offices owned by the Kao Group healthier

• B: The total number of factories (factories) and companies (companies) of the Kao Group Making the world % response rate to human rights due diligence (supplier risk assessment) 100% 2030 ― Respecting human rights • A: The number of suppliers that have conducted due diligence assessments in the last three

A / B × 100 (%) years from the applicable year (suppliers) • Direct materials suppliers of the Kao Group & • B: The number of suppliers that Kao does business with in the applicable year (suppliers) cleaner % response rate to human rights due diligence (contractor risk assessment) 100% 2030 ― • A: The number of contractors that have conducted due diligence assessments in the last three • Contractors in factories and offices owned by the A / B × 100 (%) years from the applicable year (contractors) Kao Group • B: The number of contractors that Kao has contracted in the applicable year (contractors) Walking the right path Affirmative answer rate to a question on “Inclusion and Diversity” on Find, our employee survey with voice of employees 75% 2030 ― • A: The number of affirmative answers to a question on “Inclusion and Diversity” on Find, our employee survey with voice of employees (answers) A / B × 100 (%) • Employees of the Kao Group • B: The total number of answers to a question on “Inclusion and Diversity” on Find, our employee Inclusive & diverse survey with voice of employees (answers) workplaces Same as % % of female managers of female 2030 ― employees • A: The number of female managers (persons) • Employees of the Kao Group A / B × 100 (%) • B: The total number of managers (persons) • All managers

Kao Kirei Lifestyle Plan Progress Report 2020 205 Contents Kirei Lifestyle Plan Kirei Lifestyle Plan KPI definitions 103-1, 103-2, 103-3 Editorial Policy Target Target Base Indicator Kao Actions value year year Formula Factor Scope

Walking the right path

Lost time accident frequency rate (per million hours worked) 0.1 2030 CEO Message

― Making my everyday

• A: The number of dead and injured (persons who were absent 1 or more days from work and lost more beautiful A / B×1,000,000 a part of body or function) (persons) • Employees of the Kao Group (persons / million hours) • B: Total number of actual working hours (hours)

Average number of lost long-term work days (days/people) * Starting from Japan 105 2030 ― • A: The number of days of leave that satisfy following conditions (days): Kirei Lifestyle Plan KPI definitions ① Extended leave of absence of 30 or more consecutive calendar days ( A1 + A2 + …+ AB) / B ② Personal illness or injury leave, absence from work or leave of absence, except for leave with • Employees of the Kao Group in Japan Employee wellbeing & (days / person) pay * To expand to all employees of the Kao Group safety ③ Applicable illness: Personal illness or injury choices for society • B: Total number of employees who took leaves of absence from work (persons) Making thoughtful

Ratio of employees who have lost long-term work days per one thousand employees * Starting from Japan 0.12 2030 ― • A: The number of employees who took extended leaves of absence, satisfying the following conditions (persons): ① Extended leave of absence of 30 or more consecutive calendar days • Employees of the Kao Group in Japan A / B × 1000 (%) ② Personal illness or injury leave, absence from or leave of absence, except for leave with pay * To expand to all employees of the Kao Group ③ Applicable illness: Personal illness or injury • B: Total number of employees (persons) Independent assurance report Affirmative answer rate to a question on “Development Opportunities& Climate” on Find, our employee survey with voice of employees 75% 2030 ― • A: The number of affirmative answers to a question on “Development Opportunities & Climate” healthier on Find, our employee survey with voice of employees (answers) Making the world A / B × 100 (%) • Employees of the Kao Group • B: The number of answers to a question on “Development Opportunities & Climate” on Find, our Human capital employee survey with voice of employees (answers)

development & Affirmative answer rate to a question on “Engagement/Employer of Choice” onFind , our employee survey with voice of employees 75% 2030 ― cleaner • A: The number of affirmative answers to a question on “Engagement/Employer of Choice” on Find, our employee survey with voice of employees (answers) A / B × 100 (%) • Employees of the Kao Group • B: The number of answers to a question on “Engagement/Employer of Choice” on Find, our employee survey with voice of employees (answers)

% of chemical products and raw materials with disclosed information of benefit and safety to ensure safe usage for our customers 100% 2030 ― Walking the right path • A: The number of chemical substances for which risk assessments are done and safety assessment documents are made, and are disclosed on the website (substances) A / B × 100 (%) • Substances handled by the Kao Group • B: The number of Kao prioritized chemical substances selected from 2020 to 2030 according to production amounts, emissions amounts and public concern (substances) Responsible chemicals % of areas where impacts on health, environment and safety from chemicals are managed responsibly and sustainably considering their stages from raw management 100% 2030 ― materials procurements to disposal • A: The number of items assessed by risk assessments for chemical substances (items) ( A1 + A2 + …+ AC)1 ( A1 + A2 + …+ AC)D • B: The number of target items of risk assessments for chemical substances (items) + …+ × 100 (%) ( B1 + B2 + …+ BC)1 ( B1 + B2 + …+ BC)D • C: The number of factories (factories) • Factories owned by the Kao Group D • D: The number of target items of risk assessments (① Display of GHG at workplaces, ② Maintenance of SDS, ③ Qualitative assessment, ④ Measures to reduce risks)

Kao Kirei Lifestyle Plan Progress Report 2020 206 Contents Kirei Lifestyle Plan External recognition Editorial Policy Kao’s various initiatives which aim to contribute to the realization of a sustainable society have earned high recognition.

SRI indexes and evaluations Commitment to Society The latest status of our SRI indexes can be found on our website. CEO Message Making my everyday ➡ Support for The United Nations Global Compact more beautiful www.kao.com/global/en/sustainability/our-approach-to-klp/globalcompact/ ➡ SRI indexes and evaluations (updated as needed) www.kao.com/global/en/sustainability/recognition/ Kirei Lifestyle Plan KPI definitions Environment

Date of Group Sponsoring Date of Group Sponsoring Awards/details Awards/details award recognized organization award recognized organization choices for society Responsible Kao won the Prime Minister’s Award, the grand prize at the Making thoughtful Kao Industrial (Thailand) submits an annual report to Thailand’s Kao Care 2019 3Rs (reduce, reuse and recycle) Promotion Merit Awards. Reduce, Reuse Responsible Care Management Committee. These efforts were 2019/02 Industrial Management This award recognizes efforts made toward the 3Rs, for the and Recycle recognized and the company received the Responsible Care (Thailand) Committee Kao purpose of promoting the formation of a recycling-based Promotion Gold Award in 2019. 2019/11 (Thailand) Corporation society, in acknowledgement of companies that have achieved Council (3R The Kawasaki Plant was awarded with the Kawasaki City remarkable results through continuous activity. This time, the Promotion Distinguished Environmental Merit Award. This award is given company received an award in the Business Establishments Council) to companies and citizens who have made remarkable Kawasaki City, and Local Public Organizations field. Kao 2019/06 achievements toward improving the local environment and so Kanagawa Kao won an award in the response strategy implementation Corporation on, during Environmental Month held every June, and the Prefecture and diffusion section of the 2019 Environment Minister’s Independent assurance report Kawasaki Plant was recognized for its commitment for Award for Global Warming Prevention Activity, which Kao Ministry of the promoting global warming measures. 2019/12 recognizes individuals or organizations that have made Corporation Environment significant achievements in the prevention of global warming. Kao was selected to receive the Wakayama Environmental healthier Award Grand Prize at the 18th Wakayama Environmental The Kao Eco-Lab Museum located at the Wakayama Plant was Making the world Kao Wakayama 2019/06 Awards Ceremony. This award recognizes companies for their recognized for its efforts. Corporation Prefecture outstanding performance in environmental conservation Kao was given the Executive Committee Chairman’s Award at activities within Wakayama Prefecture. the 2nd EcoPro Awards. The EcoPro Awards is an award institution highly recognized by businesses, consumers, Japan &

Kao received the Minister of the Environment’s Award in the cleaner Innovation section of the Umigomi (marine waste) Zero investors and market participants in Japan, in consideration of Environmental The Nippon Kao Awards. Regarding refill packs that are already commonly used 2019/12 socio-economic environmental changes, including global Management Kao Foundation Corporation 2019/06 in Japan, Kao developed and popularized the innovative economization, the Paris Agreement and SDGs. It commends Association for Corporation Ministry of the Raku-raku Eco Pack Refill and in addition to adopting the Smart products, services, technology and solution business models Industry Environment Holder design for easy bathroom or washroom sink storage, it that have demonstrated exceptional consideration for the was praised for cutting out the need for refills. environment. Kao was recognized for its RecyCreation efforts. The company was awarded the Blue Level company of Kao received the Ministry of Economy, Trade and Industry Award at Japan Indonesia Walking the right path PT Kao Environment Evaluation Performance Program in Kao the 18th Green Sustainable Chemistry (GSC) Awards. Kao’s Association for Ministry of 2019/06 2019/12 Indonesia Environmental Management. It was recognized for achieving a Corporation development of Lunajet, a VOC-free water-based inkjet ink, proposed Chemical Environment Chemicals standard value in meeting all regulations and environmental for its new value from an ESG perspective, received high praise. Innovation and Forestry targets. For its new wash process TRUpath™, aimed at WSI commercial U.S. laundry companies, the company won the Green Chemistry Environmental Challenge Award (GCCA) in 2019. This award, with its 23-year history, Protection Washing 2019/06 serves to connect potential environmental issues with business Agency (EPA) Systems opportunities, and is bestowed to companies, organizations and American individuals who have developed breakthroughs in green chemical Chemical technology promoting innovation and economic development. Society (ACS)

Kao Kirei Lifestyle Plan Progress Report 2020 207 Contents Kirei Lifestyle Plan External recognition Editorial Policy Society Date of Group Sponsoring Awards/details award recognized organization Date of Group Sponsoring Received the CSR Award. The company received this Awards/details PT Kao award recognized organization award for participation in the Citarum-Harum Program 2019/11 Indonesia West Java, Indonesia Recognized as a model enterprise for work safety for flood prevention and cleaning up major rivers mostly Kao Emergency Chemicals standardization in the Minhang District, Shanghai, the located in West Java. 2019/01 Corporation Management Bureau CEO Message company received the Award of Excellent in Safety Kao Received the Sustainable Performance Award at the Taiwan Institute for Making my everyday Shanghai of Minhang District 2019/11 Management and Safety Activities. (Taiwan) Taiwan Corporate Sustainability Awards (TCSA). Sustainable Energy more beautiful The company received the Thailand Labor Management Kao Kao Chimigraf’s ink was awarded the Flexo Star 2019 Excellence Award, given to factories that meet the Thailand Ministry of 2019/02 Industrial Kao Gold Award. This award is presented by ATF (French ATF (French Technical standard criteria of the Ministry of Labour Occupational Labour 2019/12 (Thailand) Chimigraf Technical Flexo Association) in recognition of special Flexo Association) Safety & Health Management. printing technology. Kao Recognized for its innovation of Flexible LED inks for 2019/02 RemaDays Warsaw Kao received the Prime Minister’s Award for Leading Chimigraf LFP, Cyclone ink received the bronze medal.

Companies Where Women Shine from the Cabinet Office Kirei Lifestyle Plan KPI definitions Kao of Japan. This organization awards companies that have Gender Equality Hirosaki University’s COI (Center of Innovation) received 2019/12 the Prime Minister’s Award, the grand prize at the 1st Corporation made significant achievements in disclosing information Bureau Cabinet Office Japan Open Innovation Awards. This was based on the in regards to policies, initiatives and achievements Kao 2019/03 evaluation of its “Using Super Multi-Item Big Health Data Cabinet Office toward promoting women as officers and managers. Corporation to Realize Healthy Future Innovation Project,” an industrial- choices for society academia collaboration project with Hirosaki University’s Making thoughtful COI that had continued from its implementation in 2016. Governance The KCMK Yamagata Office and Kao Corporation’s Sakata Kao Group Plant were certified as Excellent (Diamond) Companies Date of Group Sponsoring Customer Awards/details by Yamagata’s Iki Iki Child Care Support Businesses. The award recognized organization 2019/03 Marketing Yamagata Prefecture company was highly praised for creating a workplace Kao Kao received the JIPS for its third consecutive year for where both men and women can work easily and actively Kao publishing a number of GSS. The company first received the Japan Chemical Corporation 2019/02 promoting a healthy work-life balance. Corporation highest JIPS Award, Grand Prize, followed by the Excellence Industry Association Kao The company was awarded as an Enterprise for Harmonious Award the second, and then again the Grand Prize in 2019. Shanghai Municipal (Shanghai) Labor Relations in Shanghai. It included evaluations on Independent assurance report 2019/05 Human Resources and Kao’s SCM Division received the RC Grand Prize as the top Chemical internal labor rule development, good employee welfare, and Social Security Bureau honor of the 13th Responsible Care (RC) Awards for its Industries various other social responsibility activities. disaster prevention activities through evaluation of process

Kao was ranked first overall by the Nikkei’s 100 Best safety. The SCM Division was highly regarded for significant healthier Companies Where Women Play Active Part as well as first reduction of fire and explosion accidents through its original Making the world Kao Japan Chemical in diversity promotion. In addition to recognition for its 2019/05 enhanced disaster prevention activities, which were Corporation Industry Association large number of female managers and employees who conducted throughout the entire company by collecting, Kao 2019/05 continue to work after marriage or childbirth, it was also Nikkei Inc. analyzing and systematizing information about fire and

Corporation & recognized for its support for balancing work and childcare explosion accidents within and outside the company, and responsibilities regardless of gender, efforts to promote for its attitude to broadly disclose information about its cleaner LGBT understanding, and creating an easy to work original safety and disaster prevention technologies. environment for diverse employees, including women. Kao was ranked first within the toiletries and cosmetics Received the Award of Excellence in Corporate Social category as part of the 2019 Award for Excellence in Kao The Securities Analysts Kao Responsibility. The company was recognized for its CommonWealth 2019/10 Corporate Disclosure. The company won this award 2019/08 Corporation Association of Japan (Taiwan) corporate social responsibility (CRS) awareness-raising Magazine during the first year the toiletries and cosmetics category activities among Taiwanese companies. was added to its industry evaluation in 2019. Walking the right path The Award of Good Factory was given in recognition of Industrial Development Kao The company received a Certificate of Appreciation for good reform and improvement activities with management Japan Management Kao Bureau, Ministry of 2019/10 Corporation 2019/11 Risk Management Technical Coaching during its work framework: localization, production, safety, environment as Association (JMA) (Taiwan) Economic Affairs of Shanghai with the government to promote ISO 45001. the core, serving as a good example of other companies. Taiwan At the Shizuoka Prefecture Fire Prevention Summit in 2019, The Kao Corporation was awarded the IR Excellence Award Kao Paper Manufacturing Fuji’s self-defense fire brigade was during the IR Award 2019 hosted by the Japan Investor Kao Paper awarded with the Shizuoka Prefecture Crisis Management Kao Relations Association. This organization awards companies Japan Investor 2019/10 Manufacturing Shizuoka Prefecture 2019/12 Director’s Award for Prevention (Group). This award was given Corporation chosen with a deep understanding of the purpose of IR, Relations Association Fuji by the Shizuoka Prefecture Fire Department upon examination who make active efforts which include gaining top support based on the Fuji City Fire Department’s recommendation. from market players, and have achieved great results.

Kao Kirei Lifestyle Plan Progress Report 2020 208 Contents Kirei Lifestyle Plan Independent assurance report 102-56 Editorial Policy With the aim of ensuring more transparent disclosure of data relating to environmental protection and data relating to health and safety, KPMG AZSA Sustainability Co., Ltd. provides independent assurance for this data book. Indicators on which assurance is provided are marked with a check □✓. CEO Message Assured data Making my everyday more beautiful Category Data Pages Ratio of certified paper/pulp materials (paper/pulp used in Kao products Responsibly P75 sourced raw [excludes some products]) materials Certified palm oil purchases (Kao Group) P76 Energy consumption (all sites) P88 Kirei Lifestyle Plan KPI definitions

CO2 emissions across the entire product lifecycle (Kao Group) P88

CO2 emissions across the entire product lifecycle (Kao Group in Japan) P88 GHG emissions (all sites) P88 Decarbonization Scope 1 CO2 emissions P89 choices for society Making thoughtful

Scope 2 CO2 emissions P89

Scope 3 CO2 emissions *1,4,11,12 P89

CO2 emission during distribution (Japan) P94 Amount of waste reused or recycled (all sites) P109 Zero waste Amount of generated waste and other unwanted materials (all sites) P109 Water consumption across the entire product lifecycle (Kao Group) P121 Water consumption during product use (Kao Group in Japan) P121 Water Independent assurance report Water consumption (withdrawal) (all sites) P121 conservation Water withdrawal amount by source P121 healthier

Wastewater discharge by destination P121 Making the world Air & water NOx emissions (all production sites) P127 pollution Volatile organic compound (VOC) emissions (Kao Group in Japan) P127 prevention COD pollution load (all production sites) P127 & cleaner Output: Material procurement: CO2 emissions Output: Development/Manufacturing: GHG emissions Product lifecycle Output: Distribution/Sales (facilities and company cars): GHG emissions and environmen- P130 Output: Distribution (transportation): CO2 emissions tal impact Output: Use: CO2 emissions Output: Disposal/Recycling: CO2 emissions

Lost time accidents frequency rate: Including both regular employees and Walking the right path P187 Employee temporary workers (Kao Group) wellbeing & Lost time accidents frequency rate: Subcontractors (Kao Group) P187 safety Number of employees who experienced lost work days due to occupational diseases: P188 Including both regular employees and temporary workers (Kao Group)

Scope of Assurance In general, we report the activities of the Kao Group (Kao Corporation and its subsidiaries). Exceptions to this scope have been clearly stated as graph’s annotations and in the text.

Kao Kirei Lifestyle Plan Progress Report 2020 209 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy This data book has been compiled with reference to the GRI Sustainability Reporting Standards.

General disclosures

100: Universal Standards CEO Message Making my everyday GRI 102: General Disclosures 2016 more beautiful 1. Organizational profile Relevant Sections in Data Book (★ denotes an appendix) 102-1 Name of the organization ● Kao Group Overview (external link) ― 102-2 Activities, brands, products, and services ● Kao Group Fields of Business (external link) ― 102-3 Location of headquarters ● Kao Group Overview (external link) ― 102-4 ― Location of operations ● Kao Group Overview (external link) Kirei Lifestyle Plan KPI definitions 102-5 Ownership and legal form ● Kao Group Overview (external link) ― 102-6 Markets served ● Global Locations (external link) ― 102-7 Scale of the organization ● Kao Group Overview (external link) ― ●Human capital development: Framework P154 choices for society 102-8 Information on employees and other workers Making thoughtful ●Inclusive & diverse workplaces: Human capital data P173 102-9 Supply chain ― ― Significant changes to the organization and its supply 102-10 ― ― chain ●Responsible chemicals management: Kao’s creating value to address social issues P192 ●Responsible chemicals management: Comprehensive Management System for Chemical Substances P195 ●Responsible chemicals management: Mid- to long-term targets and performance P196 ★Information security: Kao’s creating value to address social issues ★ 102-11 Precautionary Principle or approach

★Process Safety and Disaster Prevention: Policies ★ Independent assurance report ★Process Safety and Disaster Prevention: Framework/Mid- to long-term targets and performance ★ ★Process safety and disaster prevention: Emergency response drills to prepare for large-scale disasters ★

★ Process safety and disaster prevention: Disaster prevention audits/Strengthening process safety and disaster prevention ★ healthier Making the world ●Kirei Lifestyle Plan—Kao’s ESG Strategy P24 ●“Contributions to the SDGs” in each section ●Responsibly sourced raw materials: Kao vendor summits P79 Decarbonization: Efforts in raw materials procurement P90

● &

●Decarbonization: Examples of major collaboration projects with stakeholders P96 cleaner 102-12 External initiatives ●Water conservation: Efforts in raw materials procurement P122 ●Water conservation: Implementing education and activities based on “eco together” P124 ●Inclusive & diverse workplaces: Collaboration with stakeholders P170 ★Information security: Fourth Quarter: Improvement activities ★ ★Biodiversity: Kao’s creating value to address social issues ★ ★Biodiversity: Compliance with international agreements ★ Walking the right path ● Safer healthier products: Industry association activities/communication (the Japan Cosmetic Industry Association, the P58 Japan Soap and Detergent Association and the Japan Chemical Industry Association) ● Responsibly sourced raw materials: Initiatives toward sustainable procurement of palm oil and palm kernel oil (RSPO, P76 102-13 Membership of associations SUSTAIN, JaSPON) ● Responsible chemicals management: Communication about chemicals with stakeholders (JIPS, LRI) P198 ★Tax strategies: Collaboration with the Japan Chemical Industry Association (JCIA) ★ ★Biodiversity: Compliance with international agreements (JaSPON) ★

Kao Kirei Lifestyle Plan Progress Report 2020 210 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 100: Universal Standards GRI 102: General Disclosures 2016 2. Strategy Relevant Sections in Data Book (★ denotes an appendix) ●CEO Message P4 102-14 Statement from senior decision-maker ●Message by Dave Muenz P6 ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Business growth through the realization of the Kirei Lifestyle P10 CEO Message ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Kao’s vision for society and what Kao aims to be by 2030 P11 Making my everyday

●Kirei Lifestyle Plan—Kao’s ESG Strategy: Performance in 2019 P22 more beautiful ●Kirei Lifestyle Plan—Kao’s ESG Strategy: Focus on global mega-trends P23 ●Kirei Lifestyle Plan—Kao’s ESG Strategy: Kao’s ESG Commitments P26 ●“Kao’s creating value to address social issues” in each section ●Decarbonization: Scenario Analysis P97 102-15 Key impacts, risks, and opportunities ●Responsible chemicals management: Comprehensive Management System for Chemical Substances P195 ★Risk and crisis management: Kao’s creating value to address social issues ★ Kirei Lifestyle Plan KPI definitions ★Risk and crisis management: Framework ★ ★Risk and crisis management: Mid- to long-term targets and performance ★ ★Intellectual property: Our initiatives ★ ★Process safety and disaster prevention: Emergency response drills to prepare for large-scale disasters ★ choices for society ★Process safety and disaster prevention: Disaster prevention audits/Strengthening process safety and disaster prevention ★ Making thoughtful 3. Ethics and integrity ●Kao’s Corporate Philosophy P5 ●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 102-16 Values, principles, standards, and norms of behavior ●Realization of the Kao Corporate Philosophy P36 ● Effective corporate governance: Kao’s creating value to address social issues/Policies P134 102-17 Mechanisms for advice and concerns about ethics ●Effective corporate governance: Compliance Hotlines P142 4. Governance

●Kirei Lifestyle Plan—Kao’s ESG Strategy: ESG promotion structure P14 Independent assurance report 102-18 Governance structure ★Corporate governance: Corporate governance structure ★ ★Corporate governance: Board of Directors and Audit & Supervisory Board ★ healthier

102-19 Delegating authority ●Kirei Lifestyle Plan—Kao’s ESG Strategy: ESG promotion structure P14 Making the world ●Kirei Lifestyle Plan—Kao’s ESG Strategy: ESG promotion structure P14 ●Responsibly sourced raw materials: Framework P73 ●Decarbonization: Framework P86

●Zero waste: Framework P107 & ●Water conservation: Framework P120 cleaner ●Effective corporate governance: Framework P135 ●Respecting human rights: Framework P147 Executive-level responsibility for economic, ●Human capital development: Framework P154 102-20 environmental, and social topics ●Responsible chemicals management: Framework P193 ★Risk and crisis management: Framework ★

★Responsible care activities: Framework ★ Walking the right path ★Product quality management: Framework ★ ★Information security: Framework ★ ★Advanced Digital Technology Strategy: Framework ★ ★Intellectual property: Framework ★ ★Process Safety and Disaster Prevention: Framework ★ Consulting stakeholders on economic, environmental, 102-21 ●Kirei Lifestyle Plan—Kao’s ESG Strategy: ESG promotion structure P14 and social topics

Kao Kirei Lifestyle Plan Progress Report 2020 211 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 100: Universal Standards GRI 102: General Disclosures 2016 4. Governance Relevant Sections in Data Book (★ denotes an appendix) ★ Corporate governance: Corporate governance reform ★ Composition of the highest governance body and its Corporate governance: Corporate governance structure ★ 102-22 ★ committees ★Corporate governance: Board of Directors and Audit & Supervisory Board ★ CEO Message ★Corporate governance: Committee for the Examination of Nominees for Directors and Compensation Advisory Committee ★ Making my everyday

★Corporate governance: Corporate governance reform ★ more beautiful 102-23 Chair of the highest governance body ★Corporate governance: Committee for the Examination of Nominees for Directors and Compensation Advisory Committee ★ ★Corporate governance: Corporate governance structure ★ 102-24 Nominating and selecting the highest governance body ★Corporate governance: Committee for the Examination of Nominees for Directors and Compensation Advisory Committee ★ 102-25 Conflicts of interest ★Corporate governance: Board of Directors and Audit & Supervisory Board ★

●Kirei Lifestyle Plan—Kao’s ESG Strategy: ESG promotion structure P14 Kirei Lifestyle Plan KPI definitions Role of highest governance body in setting purpose, ★Corporate governance: Basic Approach to Corporate Governance ★ 102-26 values, and strategy ★Corporate governance: Corporate governance structure ★ ★Corporate governance: Board of Directors and Audit & Supervisory Board ★ 102-27 Collective knowledge of highest governance body ― ― choices for society 102-28 Evaluating the highest governance body’s performance ★Corporate governance: Evaluation of the effectiveness of the Board of Directors ★ Making thoughtful ●Kirei Lifestyle Plan—Kao’s ESG Strategy: ESG promotion structure P14 Identifying and managing economic, environmental, 102-29 ★Risk and crisis management: Policies ★ and social impacts ★Risk and crisis management: Framework ★ ★Risk and crisis management: Policies ★ 102-30 Effectiveness of risk management processes ★Risk and crisis management: Framework ★ ★Risk and crisis management: Performance in 2019 ★ 102-31 Review of economic, environmental, and social topics ●Kirei Lifestyle Plan—Kao’s ESG Strategy: ESG promotion structure P14

Highest governance body’s role in sustainability Independent assurance report 102-32 ― ― reporting 102-33 Communicating critical concerns ★Risk and crisis management: Framework ★ healthier

102-34 Nature and total number of critical concerns ★Process safety and disaster prevention: Disaster prevention audits ★ Making the world 102-35 Remuneration policies ★Corporate governance: Compensation system for Directors, Audit & Supervisory Board Members and Executive Officers ★ 102-36 Process for determining remuneration ★Corporate governance: Compensation system for Directors, Audit & Supervisory Board Members and Executive Officers ★ 102-37 Stakeholders’ involvement in remuneration ★Corporate governance: Compensation system for Directors, Audit & Supervisory Board Members and Executive Officers ★ &

102-38 Annual total compensation ratio ― ― cleaner 102-39 Percentage increase in annual total compensation ratio ― ― Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 212 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 100: Universal Standards GRI 102: General Disclosures 2016 5. Stakeholder engagement Relevant Sections in Data Book (★ denotes an appendix) 102-40 List of stakeholder groups ●Stakeholder Engagement P34 102-41 Collective bargaining agreements ― ―

102-42 Identifying and selecting stakeholders ― ― CEO Message Making my everyday ●Kirei Lifestyle Plan—Kao’s ESG Strategy: Employee engagement P19 more beautiful ●Stakeholder Engagement P34 ●“Collaboration and engagement with stakeholders” in each section ● Habits for cleanliness, beauty & health: Educational program to cultivate habits for cleanliness, beauty & health P49 ●Universal product design: Principal collaboration with government in 2019 P55 ●Safer healthier products: Industry association activities/communication P58 ● Sustainable lifestyle promotion: Disseminating information related to sustainable living P63 Kirei Lifestyle Plan KPI definitions ●Sustainable lifestyle promotion: Offering opportunities for hands-on learning P64 ● Sustainable lifestyle promotion: Awareness-raising activities carried out with society, organizations and public institutions P64 ●Responsibly sourced raw materials: Initiatives toward sustainable procurement of palm oil and palm kernel oil P76 ●Responsibly sourced raw materials: Kao vendor summits P79 ●Responsibly sourced raw materials: Surveying supplier satisfaction P80 choices for society ●Decarbonization: Education and promotion P85 Making thoughtful ●Decarbonization: Efforts in raw materials procurement P90 ●Decarbonization: Examples of major collaboration projects with stakeholders P96 102-43 Approach to stakeholder engagement ●Zero waste: Our initiatives P111 ●Water conservation: Education and promotion P119 ●Water conservation: Our initiatives P122 ●Air & water pollution prevention: Measures relating to wastewater after product use P129 ● Effective corporate governance: Evaluation activities/Sharing our insights on compliance with outside groups P143 ●Human capital development: Implementation of the employee survey Find, and drafting of action plans P160 ●Inclusive & diverse workplaces: Collaboration with stakeholders P170 Independent assurance report ●Employee wellbeing & safety: Collaboration with stakeholders P183 ●Employee wellbeing & safety: Implementation of the Children’s Road Safety Class as a local contribution activity P191 healthier

● Responsible chemicals management: Communication about chemicals with stakeholders P198 Making the world ★ Responsible care activities: Publishing a PR magazine to deepen communication with society (Wakayama Plant) ★ ★Information security: Collaboration with stakeholders ★ ★Biodiversity: Collaboration with other organization ★

★Communication with consumers: Our initiatives ★ & ★Corporate citizenship activities: Support for cancer education through the Pink Ribbon Campaign ★ cleaner ★Process Safety and Disaster Prevention: National Forum for Disaster Cooperation Ideas ★ Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 213 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 100: Universal Standards GRI 102: General Disclosures 2016 ●Kirei Lifestyle Plan—Kao’s ESG Strategy: Main deliberated items (2019) P15 ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Message from the ESG External Advisory Board P16 ●Universal product design: Message from External Expert P56 102-44 Key topics and concerns raised ●Responsibly sourced raw materials: Message from External Expert P81 CEO Message ●Zero waste: Message from External Expert P116 Making my everyday ●Human capital development: Dialogue with employees P157 more beautiful 6. Reporting practice Relevant Sections in Data Book (★ denotes an appendix) Entities included in the consolidated financial 102-45 ― ― statements 102-46 Defining report content and topic Boundaries ― ― 102-47 List of material topics ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Kao’s ESG Commitments and Actions P9 Kirei Lifestyle Plan KPI definitions ●Decarbonization: Performance in 2019: Energy consumption (all sites) P88 ●Decarbonization: Performance in 2019: GHG emissions (all sites) P88 102-48 Restatements of information ●Decarbonization: Performance in 2019: Scope 2 CO2 emissions P89 ●Zero waste: Performance in 2019: Usage and reduction volume of plastic in refill and replacement categories P110 choices for society 102-49 Changes in reporting ― ― Making thoughtful 102-50 Reporting period ●Editorial Policy P3 102-51 Date of most recent report ●Editorial Policy P3 102-52 Reporting cycle ●Editorial Policy P3 102-53 Contact point for questions regarding the report Back cover Claims of reporting in accordance with the GRI ― (This data book has been compiled with reference to the GRI Standards 2016, GRI 207: 2019 taxes, GRI 303: Water and 102-54 ― Standards Effluents 2018 and GRI 403: Occupational Health and Safety 2018) 102-55 GRI content index ●GRI standards table P210 ●Editorial Policy P3 Independent assurance report 102-56 External assurance ● Independent assurance report P209 GRI 103: Management Approach 2016 healthier ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Mid- to long-term targets P20 Making the world ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Impacts on society through the value chain P25 103-1 Explanation of the material topic and its Boundary ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Kao’s ESG Commitments and Actions P9 ●The Management part in each section ●Kirei Lifestyle Plan KPI definitions P202 & cleaner ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Selection process for the Kao Actions as material themes P12 ●Kirei Lifestyle Plan—Kao’s ESG Strategy: Mid- to long-term targets P20 ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Kao’s ESG Commitments and Actions P9 103-2 The management approach and its components ●Kirei Lifestyle Plan KPI definitions P202 ●The Management part in each section ★Major sustainability indicators ★ Walking the right path ● Kirei Lifestyle Plan—Kao’s ESG Strategy: Selection process for the Kao Actions as material themes P12 ●Kirei Lifestyle Plan—Kao’s ESG Strategy: Mid- to long-term targets P20 103-3 Evaluation of the management approach ●Kirei Lifestyle Plan KPI definitions P202 ●The Management part in each section ★Major sustainability indicators ★

Kao Kirei Lifestyle Plan Progress Report 2020 214 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy Materials

200: Economic topics Indicators on which third-party Economic Performance Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) GRI 201: Economic Performance 2016 201-1 Direct economic value generated and distributed ― ― CEO Message Financial implications and other risks and opportunities due to Making my everyday 201-2 ●Decarbonization: Scenario Analysis P97

climate change more beautiful 201-3 Defined benefit plan obligations and other retirement plans ― ― 201-4 Financial assistance received from government ― ― Market Presence GRI 202: Market Presence 2016 202-1 Ratios of standard entry level wage by gender compared to local minimum wage ― ―

202-2 Proportion of senior management hired from the local community ― ― Kirei Lifestyle Plan KPI definitions Indirect Economic Impacts ★Corporate citizenship activities: Mid- to long-term targets and performance ★ GRI 203: Indirect 203-1 Infrastructure investments and services supported ★Corporate citizenship activities: Making my everyday more beautiful ★ Economic Impacts 2016 ★Corporate citizenship activities: The China water conservation campaign ★ choices for society 203-2 Significant indirect economic impacts ― ― Making thoughtful Procurement Practices GRI 204: Procurement 204-1 Proportion of spending on local suppliers ― ― Practices 2016 Anti-corruption GRI 205: Anti-corruption 205-1 Operations assessed for risks related to corruption ― ― 2016 ●Effective corporate governance: Education and promotion P135 ● Effective corporate governance: Activities to reduce compliance risks/ P140 Independent assurance report Communication and training about anti-corruption policies and Amending the Kao Business Conduct Guidelines (BCG) 205-2 procedures ● Effective corporate governance: Deployment of the BCG Casebook and other P141 healthier compliance-related rules/Compliance education/Compliance Awareness Making the world Month ー(P142 Response to compliance violations, and legal violations in 2019: No 205-3 Confirmed incidents of corruption and actions taken ― applicable incidents) &

Anti-competitive Behavior cleaner GRI 206: Anti-competitive Legal actions for anti-competitive behavior, anti-trust, and ー(P142 Response to compliance violations, and legal violations in 2019: No 206-1 ― Behavior 2016 monopoly practices applicable incidents) Tax GRI 207: Tax 2019 207-1 Approach to tax ― ― 207-2 Tax governance, control, and risk management ― ― Walking the right path 207-3 Stakeholder engagement and management of concerns related to tax ― ― 207-4 Country-by-country reporting ●Tax strategies: Performance report and tax payment record ★

300: Environmental topics Indicators on which third-party Materials Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) GRI 301: Materials 2016 301-1 Materials used by weight or volume ●Product lifecycle and environmental impact P130 ●Zero waste: Performance in 2019 P109 301-2 Recycled input materials used ●Zero waste: Measures taken in relation to our products P111 ●Zero waste: Initiatives targeting and packaging P111 301-3 Reclaimed products and their packaging materials ●Zero waste: Measures taken in relation to our products/Initiatives targeting and packaging P111

Kao Kirei Lifestyle Plan Progress Report 2020 215 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 300: Environmental topics Indicators on which third-party Energy Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) ●Decarbonization: Mid- to long-term targets and performance P87 GRI 302: Energy 2016 302-1 Energy consumption within the organization ●Decarbonization: Performance in 2019 P88 ●Product lifecycle and environmental impact P130 CEO Message 302-2 Energy consumption outside of the organization ― ― Making my everyday

●Decarbonization: Mid- to long-term targets and performance P87 more beautiful 302-3 Energy intensity ●Decarbonization: Performance in 2019 P88 ●Decarbonization: Mid- to long-term targets and performance P87 302-4 Reduction of energy consumption ●Decarbonization: Performance in 2019 P88 ●Decarbonization: Efforts in manufacturing (plants, offices, logistics centers) P92 ●Decarbonization: Mid- to long-term targets and performance P87 302-5 Reductions in energy requirements of products and services Kirei Lifestyle Plan KPI definitions ●Decarbonization: Performance in 2019 P88 Water ●Water conservation: Kao’s creating value to address social issues P117 GRI 303: Water and ●Water conservation: Policies P119 303-1 Interactions with water as a shared resource choices for society Effluents 2018 ●Water conservation: Mid- to long-term targets and performance P120 Making thoughtful ●Water conservation: Performance in 2019 P121 ●Water conservation: Policies P119 ●Water conservation: Mid- to long-term targets and performance P120 ●Water conservation: Performance in 2019 P121 303-2 Management of water discharge-related impacts ●Air & water pollution prevention: Policies P126 ●Air & water pollution prevention: Performance in 2019 P127 ●Air & water pollution prevention: Our initiatives P128 ●Water conservation: Mid- to long-term targets and performance P120 303-3 Water withdrawal ●Water conservation: Performance in 2019 P121 □✓ Independent assurance report ●Product lifecycle and environmental impact P130 ●Water conservation: Mid- to long-term targets and performance P120 healthier ●Water conservation: Performance in 2019 P121 □✓ Making the world 303-4 Water discharge ●Air & water pollution prevention: Performance in 2019 P127 ●Product lifecycle and environmental impact P130 ●Water conservation: Mid- to long-term targets and performance P120 303-5 Water consumption ●Water conservation: Performance in 2019 P121 □✓ & cleaner ●Product lifecycle and environmental impact P130 Biodiversity Operational sites owned, leased, managed in, or adjacent to, GRI 304: Biodiversity 2016 304-1 protected areas and areas of high biodiversity value outside ★Biodiversity: Business activities with consideration for the local ecosystem ★ protected areas Significant impacts of activities, products, and services on ★Biodiversity: Understanding relationships between business and biodiversity ★ 304-2 Walking the right path biodiversity ★Biodiversity: Business activities with consideration for the local ecosystem ★ ★Biodiversity: Business activities with consideration for the local ecosystem ★ ★Corporate citizenship activities: FURUSATO Environment Conservation Project ★ 304-3 Habitats protected or restored in Northern Thailand ★Corporate citizenship activities: Kao Creating Forests for Everyone program ★ IUCN Red List species and national conservation list species with 304-4 ― ― habitats in areas affected by operations

Kao Kirei Lifestyle Plan Progress Report 2020 216 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 300: Environmental topics Indicators on which third-party Emissions Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) ●Decarbonization: Mid- to long-term targets and performance P87 GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions ●Decarbonization: Performance in 2019 P88 □✓ ●Product lifecycle and environmental impact P130 □✓ CEO Message ●Decarbonization: Mid- to long-term targets and performance P87 Making my everyday

305-2 Energy indirect (Scope 2) GHG emissions ●Decarbonization: Performance in 2019 P88 □✓ more beautiful ●Product lifecycle and environmental impact P130 □✓ ●Decarbonization: Mid- to long-term targets and performance P87 ●Decarbonization: Performance in 2019 P88 □✓（1, 4, 11, 12） ●Decarbonization: Efforts in distribution P94 305-3 Other indirect (Scope 3) GHG emissions ●Decarbonization: Efforts during use P95 ●Decarbonization: Efforts in disposal and recycling P96 Kirei Lifestyle Plan KPI definitions ●Product lifecycle and environmental impact P130 □✓ ●Decarbonization: Mid- to long-term targets and performance P87 305-4 GHG emissions intensity ●Decarbonization: Performance in 2019 P88 ●Decarbonization: Mid- to long-term targets and performance P87 choices for society 305-5 Reduction of GHG emissions Making thoughtful ●Decarbonization: Performance in 2019 P88 □✓ ● Decarbonization: 3. Reducing the volume of leaked refrigerants and other P93 305-6 Emissions of ozone-depleting substances (ODS) greenhouse gases

Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air ●Air & water pollution prevention: Performance in 2019 P127 □✓ 305-7 emissions ●Product lifecycle and environmental impact P130 Effluents and Waste GRI 306: Effluents and ●Water conservation: Mid- to long-term targets and performance P120 306-1 Water discharge by quality and destination Waste 2016 ●Water conservation: Performance in 2019 P121 □✓ Independent assurance report ●Zero waste: Performance in 2019 Waste P109 □✓ 306-2 Waste by type and disposal method ●Product lifecycle and environmental impact P130 306-3 Significant spills ー(P127 Compliance with environmental legislation: No applicable incidents) ― healthier 306-4 Transport of hazardous waste ― ― Making the world 306-5 Water bodies affected by water discharges and/or runoff ― ― Environmental Compliance

GRI 307: Environmental & 307-1 Non-compliance with environmental laws and regulations ー(P127 Compliance with environmental legislation: No applicable incidents) ― cleaner Compliance 2016 Supplier Environmental Assessment GRI 308: Supplier Environmental 308-1 New suppliers that were screened using environmental criteria ― ― Assessment 2016 ●Responsibly sourced raw materials: Initiatives toward sustainable procurement P76 of palm oil and palm kernel oil Negative environmental impacts in the supply chain and actions ● Responsibly sourced raw materials: Using Sedex in supplier monitoring P78 Walking the right path 308-2 taken ●Decarbonization: Efforts in raw materials procurement P90 ●Zero waste: Assessment of environmental impact on society P114 ●Water conservation: Efforts in raw materials procurement P122

Kao Kirei Lifestyle Plan Progress Report 2020 217 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 400: Social topics Indicators on which third-party Employment Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) GRI 401: Employment 401-1 New employee hires and employee turnover ●Inclusive & diverse workplaces: Human capital data P173 2016 Benefits provided to full-time employees that are not provided to 401-2 ― ― CEO Message temporary or part-time employees Making my everyday

401-3 Parental leave ●Inclusive & diverse workplaces: Human capital data P173 more beautiful Labor/Management Relations GRI 402: Labor/Management 402-1 Minimum notice periods regarding operational changes ― ― Relations 2016 Occupational Health and Safety

●Employee wellbeing & safety: Framework P186 Kirei Lifestyle Plan KPI definitions GRI 403: Occupational ★Responsible care activities: Utilization of environmental and safety database ★ 403-1 Occupational health and safety management system Health and Safety 2018 ★Responsible care activities: Status of international management system certification ★ ★Process Safety and Disaster Prevention: Framework ★ ●Employee wellbeing & safety: Mid- to long-term targets and performance P186 choices for society ●Employee wellbeing & safety: Status of occupational accident occurrences/Risk P190 Making thoughtful assessments of chemical substances ●Employee wellbeing & safety: Creating a pleasant working environment for P191 employees ★ Responsible care activities: Implementation status of the RC Promotion ★ 403-2 Hazard identification, risk assessment, and incident investigation Committee Secretariat Audit ★Responsible care activities: Implementation of Safety Awareness Survey ★ ★ Process Safety and Disaster Prevention: Disaster prevention audits/ ★ Strengthening process safety and disaster prevention Process Safety and Disaster Prevention: High-pressure gas safety inspection, ★ ★ Independent assurance report auditing, and verification 403-3 Occupational health services ― ― healthier

●Employee wellbeing & safety: Mid- to long-term targets and performance P186 Making the world ●Employee wellbeing & safety: Expansion of the “no accidents with lost work P190 Worker participation, consultation, and communication on 403-4 days award system” improving safety awareness occupational health and safety ●Employee wellbeing & safety: Sharing safety messages globally P191

★Responsible care activities: Implementation of Safety Awareness Survey ★ & ●Employee wellbeing & safety: Education and promotion P185 cleaner ★Responsible care activities: Education and promotion ★ ★Responsible care activities: Standardization of RC activities ★ 403-5 Worker training on occupational health and safety ★Process Safety and Disaster Prevention: Education and promotion ★ ★Process Safety and Disaster Prevention: Emergency response drills to prepare for ★ large-scale disasters

403-6 Promotion of worker health ●Employee wellbeing & safety: Employee wellbeing P175 Walking the right path Prevention and mitigation of occupational health and safety 403-7 ― ― impacts directly linked by business relationships Workers covered by an occupational health and safety 403-8 ― ― management system ●Employee wellbeing & safety: Mid- to long-term targets and performance P186 403-9 Work-related injuries ●Employee wellbeing & safety: Performance in 2019 P187 □✓ (Partial data) ★Process safety and disaster prevention: Performance in 2019 ★ ●Employee wellbeing & safety: Mid- to long-term targets and performance P186 403-10 Work-related ill health ●Employee wellbeing & safety: Performance in 2019 P187 □✓ (Partial data)

Kao Kirei Lifestyle Plan Progress Report 2020 218 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 400: Social topics Indicators on which third-party Training and Education Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) GRI 404: Training and 404-1 Average hours of training per year per employee ● Human capital development: Performance in 2019 P157 Education 2016 ●Kirei Lifestyle Plan—Kao’s ESG Strategy: Employee engagement P19 CEO Message ●“Education and promotion” in each section Making my everyday

●Realization of the Kao Corporate Philosophy: Education and promotion P37 more beautiful ●Universal product design: Promoting employee UD understanding P55 ●Responsibly sourced raw materials: Examples of education and promotion P80 ●Zero waste: Spreading internal awareness of zero waste P114 ●Effective corporate governance: Performance in 2019 P138 ●Effective corporate governance: Compliance education P141

●Human capital development P151 Kirei Lifestyle Plan KPI definitions ●Inclusive & diverse workplaces: LGBT training P165 Programs for upgrading employee skills and transition assistance 404-2 ●Inclusive & diverse workplaces: Support for self-directed career development P167 programs ●Inclusive & diverse workplaces: Seminars for employees returning from P169 childcare leave/F&M (Fathers & Mothers) Meetings Inclusive & diverse workplaces: Main support for balancing work and childcare P170 ● choices for society Making thoughtful responsibilities ●Responsible chemicals management: Internal education on chemicals P198 ★ Product quality management: Strengthening of Quality Management ★ Education Programs ★Information security: Holding of the 26th TS & Personal Information Protection ★ Promotion Meeting ★ Communication with consumers: Internal education for deeper understanding of consumers ★ Percentage of employees receiving regular performance and 404-3 ― ―

career development reviews Independent assurance report Diversity and Equal Opportunity ●Inclusive & diverse workplaces: Promoting better understanding of disability P166

GRI 405: Diversity and and promoting the employment of persons with disabilities healthier 405-1 Diversity of governance bodies and employees Making the world Equal Opportunity 2016 ●Inclusive & diverse workplaces: Fostering active participation by senior human capital P167 ●Inclusive & diverse workplaces: Human capital data P173 405-2 Ratio of basic salary and remuneration of women to men ― ―

Non-discrimination & cleaner GRI 406: Non-discrimination 406-1 Incidents of discrimination and corrective actions taken ― ― 2016 Freedom of Association and Collective Bargaining GRI 407: Freedom of Operations and suppliers in which the right to freedom of Association and Collective 407-1 ― ― association and collective bargaining may be at risk Bargaining 2016 Walking the right path Child Labor Operations and suppliers at significant risk for incidents of child GRI 408: Child Labor 2016 408-1 ― ― labor Forced or Compulsory Labor GRI 409: Forced or Operations and suppliers at significant risk for incidents of forced 409-1 ― ― Compulsory Labor 2016 or compulsory labor Security Practices GRI 410: Security Practices 410-1 Security personnel trained in human rights policies or procedures ― ― 2016 Rights of Indigenous Peoples GRI 411: Rights of 411-1 Incidents of violations involving rights of indigenous peoples ― ― Indigenous Peoples 2016

Kao Kirei Lifestyle Plan Progress Report 2020 219 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 400: Social topics Indicators on which third-party Human Rights Assessment Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) ●Respecting human rights: Mid- to long-term targets and performance P148 GRI 412: Human Rights Operations that have been subject to human rights reviews or 412-1 ●Respecting human rights: Performance in 2019 P149 Assessment 2016 impact assessments ●Respecting human rights: Human rights due diligence process P150 CEO Message ●Respecting human rights: Mid- to long-term targets and performance P148 Making my everyday

●Respecting human rights: Performance in 2019 P149 more beautiful 412-2 Employee training on human rights policies or procedures ● Respecting human rights: Human rights due diligence process and Internal P150 human rights education ●Respecting human rights: Mid- to long-term targets and performance P148 Significant investment agreements and contracts that include 412-3 ●Respecting human rights: Performance in 2019 P149 human rights clauses or that underwent human rights screening ●Respecting human rights: Human rights due diligence process P150 Local Communities Kirei Lifestyle Plan KPI definitions ● Responsible chemicals management: Communication about chemicals with P198 stakeholders ★ Corporate citizenship activities: Education for the next-generation through ★ providing education in the classroom and educational materials choices for society GRI 413: Local Operations with local community engagement, impact Making thoughtful 413-1 ★ Corporate citizenship activities: Support for school education through plant ★ Communities 2016 assessments, and development programs and museum tours ★ Corporate citizenship activities: Environmental education and awareness- ★ raising activities through direct communication ★Corporate citizenship activities: The China water conservation campaign ★ Operations with significant actual and potential negative impacts 413-2 ― ― on local communities Supplier Social Assessment GRI 414: Supplier Social 414-1 New suppliers that were screened using social criteria ●Respecting human rights: Human rights due diligence process P150 Independent assurance report Assessment 2016 ●Responsibly sourced raw materials: Initiatives toward sustainable procurement P76 of palm oil and palm kernel oil healthier

414-2 Negative social impacts in the supply chain and actions taken Making the world ● Responsibly sourced raw materials: Using Sedex in supplier monitoring P78 ●Respecting human rights: Human rights due diligence process P150 Public Policy (P142 Response to compliance violations, and legal violations in 2019: Report GRI 415: Public Policy ー & 415-1 Political contributions ― 2016 confirming that no political donations have been made) cleaner Customer Health and Safety ●Universal product design: Mid- to long-term targets and performance P52 ●Universal product design: Performance in 2019 P53 ●Safer healthier products: Safe and reliable ingredient use and information P58 disclosure

● Sustainable lifestyle promotion: Solving problems through manufacturing and P62 Walking the right path GRI 416: Customer Health Assessment of the health and safety impacts of product and products themselves 416-1 and Safety 2016 service categories ●Purpose driven brands: Recently developed products and technology P67 ★ Product quality management: Company-wide consumer- and customer-driven ★ quality management activities ★ Product quality management: Verifying quality management activities through ★ audits and self-checks ★Product quality management: Safety management across the product lifecycle ★ ー(“Product recall over the last 4 years” section of the Product quality ★ Incidents of non-compliance concerning the health and safety 416-2 management appendix: Report noting that no product recalls have been made impacts of products and services within the past four years)

Kao Kirei Lifestyle Plan Progress Report 2020 220 Contents Kirei Lifestyle Plan GRI Standards table 102-55 Editorial Policy 400: Social topics Indicators on which third-party Marketing and Labeling Relevant Sections in Data Book (★ denotes an appendix) assurance is provided (□✓) ●Universal product design: Mid- to long-term targets and performance P52 ●Universal product design: Performance in 2019 P53 ● Universal product design: Our products launched in 2019 incorporated UD P54 CEO Message considerations Making my everyday ● Universal product design: Initiatives to prevent ingestion accidents among the P55 more beautiful elderly ● Safer healthier products: Safe and reliable ingredient use and information P58 disclosure ● Product lifecycle and environmental impact: Expansion of the range of P131 GRI 417: Marketing and products that display the “eco together” logo 417-1 Requirements for product and service information and labeling Full transparency: Considerations in the product catalog website and P145 Labeling 2016 ● Kirei Lifestyle Plan KPI definitions individual product websites ★Communication with consumers: Framework ★ ★Communication with consumers: Mid- to long-term targets and performance ★ ★Communication with consumers: Performance in 2019 ★ ★ Communication with consumers: The Kao Plaza community site for loyal Kao ★ choices for society users Making thoughtful ★ Communication with consumers: Support for raising children by expanding ★ diaper vending machines in the Welcome Baby Project ★Corporate citizenship activities: Barrier-free access to information ★ Incidents of non-compliance concerning product and service 417-2 ― ― information and labeling Incidents of non-compliance concerning marketing 417-3 ― ― communications Customer Privacy Independent assurance report GRI 418: Customer Privacy Substantiated complaints concerning breaches of customer 418-1 ― ― 2016 privacy and losses of customer data

Socioeconomic Compliance healthier Making the world GRI 419: Socioeconomic Non-compliance with laws and regulations in the social and ● Effective corporate governance: Response to compliance violations, and legal 419-1 P142 Compliance 2016 economic area violations in 2019 & cleaner Walking the right path

Kao Kirei Lifestyle Plan Progress Report 2020 221 Contents Kirei Lifestyle Plan ISO 26000 table Editorial Policy

Core subjects and issues Relevant Sections in Data Book (★ denotes an appendix) Core subjects and issues Relevant Sections in Data Book (★ denotes an appendix)

●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 6.4.4 Conditions of work and 6.2 Organizational governance ●Human capital development P151 ★Corporate governance ★ social protection CEO Message ●Respecting human rights P146 Making my everyday 6.3 Human rights 6.4.5 Social dialogue ●Human capital development P151 ●Kao Business Conduct Guidelines (external link) ― more beautiful

●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 ●Employee wellbeing & safety P175 ●Responsibly sourced raw materials P72 6.4.6 Health and safety at work ★Responsible care activities ★ 6.3.3 Due diligence ●Effective corporate governance P134 ★Process Safety and Disaster Prevention ★

●Respecting human rights P146 Kirei Lifestyle Plan KPI definitions ●Employee wellbeing & safety P175 6.4.7 Human development and ●Human capital development P151 training in the workplaces 6.3.4 Human rights risk ●Respecting human rights P146 situations ●Inclusive & diverse workplaces P162 choices for society 6.5 The environment Making thoughtful ●Responsibly sourced raw materials P72 6.3.5 Avoidance of complicity ●Respecting human rights P146 ●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 ●Employee wellbeing & safety P175 6.5.3 Prevention of pollution ●Making the world healthier & cleaner P82 Responsible chemicals management P192 ●Effective corporate governance P134 ● 6.3.6 Resolving grievances ★Communication with consumers ★ ●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 6.5.4 Sustainable resource use ●Responsibly sourced raw materials P72 Independent assurance report ●Making the world healthier & cleaner P82 6.3.7 Discrimination and vulner- ●Employee wellbeing & safety P175 able group ★Corporate citizenship activities ★ ●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 6.5.5 Climate change mitigation healthier Making the world and adaptation ●Making the world healthier & cleaner P82 ●Effective corporate governance P134 6.3.8 Civil and political rights ●Human capital development P151 6.5.6 Protection of the ●Kirei Lifestyle Plan—Kao’s ESG Strategy P7

environment, biodiversity ●Responsibly sourced raw materials P72 & ●Effective corporate governance P134 and restoration of natural ●Making the world healthier & cleaner P82 cleaner 6.3.9 Economic, social, and ●Employee wellbeing & safety P175 habitats Biodiversity cultural rights ★ ★ ★Corporate citizenship activities ★

6.6 Fair operating practices 6.3.10 Fundamental principles ●Effective corporate governance P134 and rights at work ●Human capital development P151 Walking the right path ●Effective corporate governance P134 6.6.3 Anti-corruption ★Corporate governance ★ 6.4 Labour practices

6.6.4 Responsible political ●Effective corporate governance P134 ●Effective corporate governance P134 involvement 6.4.3 Employment and ●Human capital development P151 employment relationships ●Inclusive & diverse workplaces P162 ●Employee wellbeing & safety P175

Kao Kirei Lifestyle Plan Progress Report 2020 222 Contents Kirei Lifestyle Plan ISO 26000 table Editorial Policy

Core subjects and issues Relevant Sections in Data Book (★ denotes an appendix) Core subjects and issues Relevant Sections in Data Book (★ denotes an appendix)

●Effective corporate governance P134 6.8 Community involvement 6.6.5 Fair competition ★Corporate governance ★ and development

●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 ●Kirei Lifestyle Plan—Kao’s ESG Strategy P7 CEO Message Making my everyday ●Responsibly sourced raw materials P72 ●Making my everyday more beautiful P41

6.6.6 Promoting social more beautiful responsibility in the value ●Effective corporate governance P134 6.8.3 Community involvement ●Making thoughtful choices for society P59 chain ★Corporate governance ★ ●Making the world healthier & cleaner P82 ★Communication with consumers ★ ★Biodiversity ★ ●Making my everyday more beautiful P41 6.6.7 Respect for property ●Effective corporate governance P134

●Habits for cleanliness, beauty & health P47 Kirei Lifestyle Plan KPI definitions rights ★Intellectual property ★ 6.8.4 Education and culture ●Sustainable lifestyle promotion P60 ★Biodiversity ★ ★Corporate citizenship activities ★ 6.7 Consumer issues choices for society 6.8.5 Employment creation and Making thoughtful ★Corporate citizenship activities ★ 6.7.3 Fair marketing, factual skills development and unbiased information ●Responsibly sourced raw materials P72 and fair contractual ★Communication with consumers ★ ●Making my everyday more beautiful P41 practices 6.8.6 Technology development ●Making thoughtful choices for society P59 and access ●Making the world healthier & cleaner P82 6.7.4 Protecting consumers’ ★Product quality management ★ health and safety ★Communication with consumers ★ ●Making my everyday more beautiful P41 6.8.7 Wealth and income

●Making thoughtful choices for society P59 Independent assurance report creation ●Making the world healthier & cleaner P82 ●Walking the right path P133 6.7.5 Sustainable consumption ●Zero waste P103

★Communication with consumers ★ Employee wellbeing safety P175 healthier ● & Making the world 6.8.8 Health ★Corporate citizenship activities ★ 6.7.6 Consumer service, ★Product quality management ★ support, and complaint ★Communication with consumers ★ ●Making my everyday more beautiful P41 and dispute resolution ●Making thoughtful choices for society P59 & 6.8.9 Social investment cleaner ●Making the world healthier & cleaner P82 6.7.7 Consumer data protection ●Effective corporate governance P134 ●Walking the right path P133 and privacy ★Information security ★

6.7.8 Access to essential ★Communication with consumers ★

services Walking the right path

●Universal product design P50 ●Making the world healthier & cleaner P82 6.7.9 Education and awareness ★Product quality management ★ ★Communication with consumers ★ ★Corporate citizenship activities ★

Kao Kirei Lifestyle Plan Progress Report 2020 223 Contents Kirei Lifestyle Plan TCFD Index Editorial Policy This report has been compiled with reference to the recommendations for disclosure given by the Task Force on Climate-related Financial Disclosures (TCFD).

Governance Risk management

Disclose the organization's governance pertaining to climate-related risks and opportunities. Recommendation: Disclose how the organization is identifying, evaluating, and controlling climate- CEO Message Making my everyday Recommended disclosure content Relevant Sections in Data Book (★ denotes an appendix) related risks. Recommended disclosure content Relevant Sections in Data Book (★ denotes an appendix) more beautiful Framework of the Board of ●Decarbonization: Framework P86 Directors’ oversight of ●Decarbonization: Framework P86 a) ●Water conservation: Framework P120 climate-related risks and ●Decarbonization: Scenario Analysis P97 ★Risk and crisis management: Framework ★ Organization’s processes opportunities for identifying and ●Water conservation: Framework P120 a) assessing climate-related ★Risk and crisis management: Policy ★ The role of management in Decarbonization: Framework P86 ● risks assessing and managing ★Risk and crisis management: Framework ★ Kirei Lifestyle Plan KPI definitions b) ●Water conservation: Framework P120 climate-related risks and ★Risk and crisis management: Performance in 2019 ★ opportunities ★Risk and crisis management: Framework ★ ●Decarbonization: Framework P86 Organization’s processes ●Water conservation: Framework P120 Strategy b) for managing climate- ★Risk and crisis management: Policy ★ choices for society related risks ★Risk and crisis management: Framework ★ Making thoughtful Recommendation: Disclose the actual or latent impact on the business, strategy, and financial ★Risk and crisis management: Performance in 2019 ★ planning of climate-related risks and opportunities if such information is important. How processes for ●Decarbonization: Framework P86 Recommended disclosure content Relevant Sections in Data Book (★ denotes an appendix) identifying, assessing, and managing climate-related ●Water conservation: Framework P120 c) Climate-related risks and ● Decarbonization: Risks and opportunities related to P84 risks are integrated into the ★Risk and crisis management: Policy ★ opportunities the realization of our vision by 2030 organization’s overall risk ★Risk and crisis management: Framework ★ a) organization has identified ● Water conservation: Risks and opportunities related to P118 management over the short-, mid- and realization of our vision by 2030 long-term ★Risk and crisis management: Performance in 2019 ★ Metrics and targets Independent assurance report ● Decarbonization: Risks and opportunities related to P84 Impact of climate-related realization of our vision by 2030 Recommendation: Disclose indicators and targets used in the evaluation and control of climate- risks and opportunities on ●Decarbonization: Mid- to long-term targets and performance P87

related risks and opportunities if such information is important. healthier b) the organization’s ● Water conservation: Risks and opportunities related to P118 Making the world Recommended disclosure content Relevant Sections in Data Book (★ denotes an appendix) business, strategy and realization of our vision by 2030 financial planning ●Water conservation: Mid- to long-term targets and performance P120 Metrics used by the ● Kirei Lifestyle Plan—Kao’s ESG strategy: Mid- to long-term P21 ★Risk and crisis management: Performance in 2019 ★ organization to assess

climate-related risks and targets-Making the world healthier & cleaner & a) Resilience of the ● Decarbonization: Risks and opportunities related to P84 opportunities in line with ●Decarbonization: Mid- to long-term targets and performance P87 cleaner organization’s strategy, realization of our vision by 2030 its strategy and risk ●Water conservation: Mid- to long-term targets and performance P120 taking into consideration c) ●Decarbonization: Scenario Analysis P97 management process different climate-related scenarios, including a 2°C ● Water conservation: Risks and opportunities related to P118 Scope 1, Scope 2, and if ● Kirei Lifestyle Plan—Kao’s ESG strategy: Mid- to long-term P21 realization of our vision by 2030 appropriate, Scope 3 targets-Making the world healthier & cleaner or lower scenario b) greenhouse gas (GHG) ●Decarbonization: Performance in 2019—Scope 1, 2, and 3 P89 emissions and related risks CO2 emissions Walking the right path Targets used by the organization to manage climate-related risks and ●Decarbonization: Mid- to long-term targets and performance P87 c) opportunities and ●Water conservation: Mid- to long-term targets and performance P120 performance against targets

Kao Kirei Lifestyle Plan Progress Report 2020 224 14-10, Nihonbashi Kayabacho 1-chome, Chuo-ku, Tokyo 103-8210, Japan

Published in June 2020