Aeon Report Report 20172017 Creating a future where communities flourish trees grow and AEON Report 2017 1 Aeon Basic Principles Pursuing peace, respecting humanity, and contributing to local communities, always with the customer’s point of view as its core. Peace The Customer People Community The word (Aeon) has its origins in a Latin root meaning “eternity.” The customers’ beliefs and desires comprise the central core of our philosophy. At Aeon, our eternal mission as a corporate group is to benefit our customers, and our operations are thus customer-focused to the highest degree. “Peace” Aeon is a corporate group whose operations are dedicated to the pursuit of peace through prosperity. “People” Aeon is a corporate group that respects human dignity and values personal relationships. “Community” Aeon is a corporate group rooted in local community life and dedicated to making a continuing contribution to the community. On the basis of the Aeon Basic Principles, Aeon practices its “Customer-First” philosophy with its everlasting innovative spirit. Editorial Policy Aeon Co., Ltd. believes its business activities contribute to a from the aspects of the environment and society. In addition, sustainable society. To further deepen its stakeholders’ with regard to its seven priority issues, including the four understanding of its business activities, from the current society-related priority issues newly specified in a materiality fiscal year Aeon has decided to publish an Integrated Report assessment conducted during fiscal 2016, this section reports that incorporates the Aeon Environmental and Social Report. in detail on management approaches, progress toward key The first half of the Report introduces the orientation of performance indicators and individual activities. management, its strategies and various initiatives, and also This Integrated Report is produced with reference to the covers Aeon’s management itself from a variety of International Integrated Reporting Framework of the perspectives. In addition, it comprehensively addresses non- International Integrated Reporting Council (IIRC), and the financial information such as social contribution activities. knowledge of interdivisional project members within the The second half of the Report deals with sustainability Aeon Group and external experts is incorporated throughout. initiatives by Aeon Group companies, mainly Aeon Co., Ltd., Note: For the purposes of this Report, “Aeon” is used to refer to Aeon Co., Ltd. and the approximately 300 companies that make up the Aeon Group. which is a pure holding company, and the General Merchandise Store Business and the Supermarket Business, 2 Aeon Report 2017 Contents Introduction 4 Information Security 53 Snapshot 4 Compliance (Corporate Ethics) 54 Value Creation Model 6 Value Creation Overview 8 Our Sustainability 56 Celebrated 25th Anniversary of Our Strengths 10 Aeon’s Tree Planting Activity 58 Business Overview 14 Feature 1: Dialogue with Stakeholders 60 Global Expansion 16 Feature 2: Promotion of CSR in the Value Chain 66 Highlights 18 Aeon Group CSR 70 Financial Highlights Environmental Management 76 Non-Financial Highlights FY2016 Activities 82 Our Strategies 22 Environmental Activities Comments from the Group CEO 24 Realization of a Low-Carbon Society 84 Comments from the CFO 26 Conservation of Biodiversity 92 Aeon Group Medium-term Management Plan Better Use of Resources 102 (FY2017-FY2019) 28 Medium-term Management Plan: Year One Social Activities Completion of Earnings Structure Reforms at Responding to Diverse Consumer Issues 110 Aeon Retail and Daiei 32 Carry out Fair Business Practices 122 Aeon Retail Reforms Create Workplaces that Emphasize Daiei Reforms Human Rights and Diversity 130 Aeon’s Product Mindset 38 Collaborate with the Community 140 Corporate Governance 40 Support After the 2016 Kumamoto Earthquakes 148 Features of Aeon’s Corporate Governance 40 Activities that Widen the Circle of Tohoku Creation 150 Comments from the Chairman of the Board 42 External Awards List (FY2016) 153 Comments from the Chairperson of the Initiatives by Aeon Public Interest Audit Committee 44 Incorporated Foundations 154 Comments from the Chairpersons of the GRI Guidelines Indicators 160 Nomination and Compensation Committees 45 Board of Directors and Executive Offi cers 46 Financial Section 166 Status of Corporate Governance 48 Risk Management 52 Corporate Data 222 ● Report Period ● Target Audience Fiscal 2016 (March 1, 2016 – February 28, 2017)* Our customers, shareholders, investors, students, local residents * For operating companies with different fiscal years and certain initiatives, of neighborhoods with Group stores, business partners, NPOs, the relevant time periods are indicated in each report section. NGOs, governments and Aeon People (Aeon employees) ● Scope of Report ● Reference Guidelines This Report covers the pure holding company Aeon Co., Ltd. • International Integrated Reporting Framework, International and its 296 consolidated subsidiaries and 32 equity-method Integrated Reporting Council (IIRC) affi liates (as of the end of February 2017). • Global Reporting Initiative (GRI) Sustainability Reporting When information applies only to certain operating companies, Guidelines (G4) • Environmental Reporting Guidelines (2012 Version), Ministry of it is indicated as such. This Report also features information on the Environment of Japan the Aeon 1% Club Foundation, whose activities are funded by • Environmental Accounting Guidelines 2005, Ministry of the donations made by major Aeon Group companies totaling 1% Environment of Japan of their pre-tax profi ts, and the Aeon Environmental Foundation, • ISO 26000: Guidance on Social Responsibility which takes part in activities to protect the Earth’s environment. Disclaimer This Report contains plans and strategies for the future of Aeon, as well as predictions and prospects regarding its performance. Such information is based on our determinations and beliefs in accordance with facts and information currently available to us. Aeon Report 2017 3 SNAPSHOT (As of February 28, 2017) Years in Business Okadaya, an Aeon predecessor, started business in Yokkaichi, Mie Prefecture in 1758. Since then, Aeon has innovated constantly under the Aeon Basic Principles of “Pursuing peace, respecting years humanity, and contributing to local communities, always with 259 the customer’s point of view as its core.” 8,210 billion Operating Revenues A highly competitive company that creates synergy among its businesses, Aeon has achieved the highest operating revenue in Japan’s retailing industry for six consecutive fi scal years. In fi scal 2015, its operating revenues exceeded ¥8 trillion. thousand 520 people 1 countries Number of Group Employees Asian3 Countries We Serve Uniting over 300 Group companies in Japan and Since the launch of business in Malaysia in 1984, Aeon has overseas as one, Aeon focuses on creating an begun operations in Thailand, Hong Kong and other environment in which each employee can excel, countries in Asia, hoping to modernize distribution and enabling its diverse human resources to take enhance lifestyles to help make society peaceful and advantage of the diff erences in their values to prosperous. To help all people live better, Aeon is steadily demonstrate their skills and capabilities. expanding the regions it serves, mainly in Asia. 4 Aeon Report 2017 AEON sstorestores* aandnd 221,111,113 llocationsocations Number of Stores and Offices With a unique business model that encompasses seven businesses centering on the retail industry, Aeon expands its operations and develops each store in Japan and overseas to help residents live safe, secure, comfortable and affl uent lives with new lifestyle support propositions closely attuned to local communities. * Consolidated subsidiaries and equity-method affi liates million billion people 1. 2 people (annually) 3Aeon Card8.9 Cardholders Aeon Mall Visitors in Japan and Overseas Aeon initiated its fi nancial services business in 1981 as a means In 1969, Aeon became an early developer of to provide useful payment services for everyday purchases. The shopping centers in Japan, using its accrued number of Aeon Card cardholders is approximately 38.94 million expertise to give customers more plentiful and is increasing in Japan and other Asian countries. lifestyles in many regions. million trees 11.4 Trees Planted and Total Participants Aeon has been planting trees in collaboration with customers since 1991. This activity embodies the Aeon Basic Principles, million and Aeon energetically plants greenery in Japan and other regions worldwide. 1. 1 people Aeon Report 2017 5 VALUE CREATION MODEL Toward 2025 Grounded in the Aeon Basic Principles of “Pursuing peace, respecting humanity, and contributing to local communities, always with the customer’s point of view as its core,” we at Aeon practice sustainable management that achieves both the growth of the Aeon Group and its businesses and the development of local communities, to realize each of our customers’ dreams for the future. Toward this end, we have established Aeon’s unique corporate governance system, and have formulated and implemented a Further growth for Group Medium-term Management Plan the Group and that anticipates our adaptation to the its businesses changes in Aeon’s operating environment. In addition, each of our businesses formulates and implements its own business strategy that conforms to the common Group strategy, so that it can be number one in its respective business fi