Delicious Tea Comes from Great Tea Plantations. Oi Ocha Contract Tea Plantation, Oita Prefecture Management Principle

SUSTAINABILITY REPORT 2012 CSR Report 2012 Delicious tea comes from great tea plantations. Oi Ocha Contract Tea Plantation, Oita Prefecture Management Principle “Always Putting the Customer First” The foundation of business management at ITO EN is our commitment to placing importance on each and every customer. At the ITO EN Group, we believe that our commitment to placing importance on each and every customer is the cornerstone of our business management. At the ITO EN Group, we consider consumers, shareholders, retailers, suppliers, financial institutions, and local communities our customers. We have always regarded everyone involved with the ITO EN Group to be our customer, and we earnestly strive to address our customers’ needs through the feedback we have received, and by taking the perspective of our customers as the foundation of our management strategies. Thinking of our directors and employees as Team ITO EN, we will continue to remain true to our long-standing principle of “Always Putting the Customer First” and pursue new possibilities and challenges. Company Overview The ITO EN Group: Main Companies COMPANY NAME: ITO EN, LTD. Main Domestic Companies HEAD OFFICE: 47-10, Honmachi 3-chome, ITO EN SANGYO, LTD. Shibuya-ku, Tokyo OKINAWA ITO EN, LTD. DATE OF ESTABLISHMENT: August 22, 1966 ITO EN KANSAI CHAGYO, LTD. PAID-IN CAPITAL: ¥19,912,300,000 Tully’s Coffee Japan Co., Ltd. NUMBER OF EMPLOYEES: 5,285 ITO EN · ITOCHU MINERAL WATERS CO., LTD. BRANCHES AND SALES OFFICES: 30 districts and 200 bases nationwide GREEN VALUE CO., LTD. GROUP-OWNED STORES Chichiyasu Company (SPECIALTY STORES): 157 stores nationwide Main Overseas Companies PLANTS: Shizuoka Sagara Factory, 21 Mekami, ITO EN (USA) INC. Makinohara, Shizuoka ITO EN AUSTRALIA PTY. LIMITED Hamaoka Factory, 3406-4 Shinno, ITO EN (North America) INC. Omaezaki, Shizuoka Mason Distributors, Inc. Fukushima Factory, 1-2-9 Araikita, Ningbo Shunyi Tea Products Co., Ltd. Fukushima, Fukushima Fujian New Oolong Drink Co., Ltd. Okinawa Nago Factory, 112 Isagawa, Nago, Okinawa RESEARCH FACILITY: Central Research Institute, 21 Mekami, Makinohara, Shizuoka MAIN BUSINESS ACTIVITIES: Manufacture and sales of tea leaf and beverage products (As of April 30, 2012) 1 ITO EN CSR Report 2012 Contents Editorial Policy This report aims to examine the role that the ITO EN Group plays 1 Management Principle/Company Overview vis-à-vis society’s expectations and the fundamental thinking 2 Editorial Policy/Performance/Contents of the ITO EN Group with respect to CSR, while discussing the direction and substance of the Group’s approach to tackling core 3 Top Message CSR issues. Moreover, the report includes many examples of the Group’s CSR policy in action, so as to convey with greater clarity Special Feature the content of the report to everyone involved with the ITO EN Group (i.e., the Group’s stakeholders). 5 Providing Safe, Reliable Products The guidelines referred to in the editing of this report, as well as the organizations and time periods herein addressed, are set 7 “From the Tea Plantation to Used Tea Leaves,” forth below. At the ITO EN Group, we will continue to refine the Consistent Initiatives Aimed at Caring for report’s content selection process to ensure the most rational the Environment methodology going forward. Guidelines Consulted 9 Bonding with Regional Communities GRI Sustainability Reporting Guidelines Version 3.1 Through Tea Environmental Reporting Guidelines (2012 Version), Ministry of the Environment International Standard ISO 26000 and JIS Z 26000 regarding social 11 ITO EN Group CSR responsibility Organizations Addressed in This Report ISO 26000 Activity Report: Core Subjects In principle, this report covers the scope of the ITO EN Group’s CSR activities. In instances where the content refers to organizations other 17 Organizational Governance than the ITO EN Group, such organizations are specified accordingly. Time Period Addressed by This Report 19 Human Rights Focusing on activity in fiscal 2011 (May 1, 2011–April 30, 2012), this report also includes some reporting on activity prior or proximate to this period. 20 Labor Practices Assignments and position titles of concerned parties mentioned here are those held at the time of the activities reported. 23 The Environment The content of this report and related information are published on the 33 Fair Operating Practices ITO EN website: http://www.itoen.co.jp/csr/ Period of Issue: ‌Published September 2012; next issue scheduled for 35 Consumer Issues publication: September 2013 Previous publication: S-book Social/Environmental Report 2011 39 Community Involvement and Development Disclaimers 44 Main Initiatives of Group Companies This report contains statements of plans and strategies, as well as performance estimates and forecasts, regarding the future of the ITO EN Group. These statements 46 Third-Party Opinions/Response to Third- are forward-looking statements based on Group assumptions and beliefs that reflect information available at the time. Party Opinions Performance Net Sales (Consolidated) Operating Income (Consolidated) Ordinary Income (Millions of yen) (Millions of yen) (Millions of yen) 500,000 24,000 24,000 19,236 18,907 369,284 18,215 351,692 17,679 16,526 17,985 375,000 328,071 332,847 332,984 18,000 18,000 12,453 11,679 250,000 12,000 10,613 12,000 10,376 125,000 6,000 6,000 0 0 0 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 ’08 ’09 ’10 ’11 ’12 (April 30) (April 30) (April 30) Sales by Region (Non-Consolidated) Sales by Product (Non-Consolidated) Number of Employees (Non-Consolidated) Tea leaves: 8.8% (Employees) Japanese tea beverages: 48.8% 5,346 6,000 Chinese tea beverages: 4.7% 5,223 5,237 5,278 5,285 Hokkaido/Tohoku: 10.4% Vegetable beverages: 12.9% Kanto: 54.2% 4,500 Fruit beverages: 3.9% Chubu: 9.6% Coffee beverages: 6.9% Kansai: 12.6% 3,000 Black tea beverages: 5.1% Chugoku/Shikoku: 5.8% Functional beverages: 1.8% Kyushu: 7.4% 1,500 Mineral water: 2.6% Other beverages: 3.7% 0 Supplements and other: 0.9% ’08 ’09 ’10 ’11 ’12 (As of April 30, 2012) (As of April 30) ITO EN CSR Report 2012 2 Top Message Through CSR management we aim to contribute to the sustainable development of society in our quest to become a “Global Tea Company” Bringing the appeal and culture of green To fully realize our principle of “Always tea to the world through distinctive Putting the Customer First,” we are ITO EN initiatives moving forward with CSR by using the international standard ISO 26000 Recently, social conditions surrounding the business world Since our establishment in 1966, ITO EN has adopted the core have undergone rapid changes. Just as the recession management principle of “Always Putting the Customer First” following the financial crisis of 2008 was showing signs and a corporate credo stating that “in putting the customer first, of abating, the Great East Japan Earthquake and nuclear we shall make it our policy to sell with sincerity, never neglect our accident that occurred in March 2011 had a major impact on efforts, and earn the trust of our customers.” Additionally, our Japan’s economy and industry. entire staff continually seeks to implement our core management Furthermore, the historic appreciation of the yen and principle by conscientiously identifying, and addressing through instability in the European financial system dealt a severe our products and services, the opinions and expectations of blow not only to Japan but to the global economy as a whole, consumers. This attitude is also reflected in our current CSR making 2011 a year in which the business environment was initiatives, and the philosophy represented by the fundamental severely impacted. In the midst of these circumstances, CSR principles of the ITO EN Group since it was first founded. the ITO EN Group devised medium-term and long-term In order to realize our medium-term and long-term management management plans commencing in fiscal 2011. Based on our plans begun in fiscal 2011, we are prioritizing and promoting a management principle of “Always Putting the Customer First,” further strengthening of CSR as an important strategy. In fiscal our medium-term plan calls for a sales target of over ¥400 2011, a system was created that included the establishment of a billion and an operating profit target of ¥23 billion by April CSR Promotion Committee, with myself as chairperson, for the 2014. At the same time, we have adopted a long-term vision purpose of using the international social responsibility standard of aiming to become a comprehensive beverage manufacturer ISO 26000, published in November 2010, and the domestic as well as a “Global Tea Company.” Tea, the Group’s core standard JIS Z 26000, subsequently enacted in March 2012. product, is natural in origin, healthy for the body, and makes a To assume responsibility for these programs, the Management wonderful addition to any meal. Whether conveying the appeal Planning Department’s CSR Promotion Office was established in of Japanese tea and its tea culture as enjoyed in Japan, such fiscal 2011, and in fiscal 2012 the CSR Promotion Department as seasonal shincha (newly harvested tea) throughout the was created with the added responsibility for Environmental year, or by providing quality black or Chinese tea varieties to Initiatives. It was our aim to promote CSR activities so as to the people around the world, it is our ongoing aim to become systemize our efforts to date, resulting in increased employee a “Global Tea Company.” awareness and communication with stakeholders. 3 ITO EN CSR Report 2012 ITO EN CSR Report 2012 Through conversation with our stakeholders, community involvement and development. Processes such we can respond to expectations from as this formulation of policy by incorporating input from our society in three key areas of emphasis stakeholders and the review of activities of PDCA protocol are most essential in our view to promote CSR.

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