Material Issues and Performance

KOKUYO’s material issues

We have identified six material issues for KOKUYO Group. Under these six themes, we create social value through our businesses.
The six material issues are shown below along with our basic policy for the material issue and the risks and opportunities we have identified.

Material issue		Basic Policy	Risks and Opportunities
Strategy 1 Improve Wellbeing among Employees and External Stakeholders	1-1.Pitch ideas for new workstyles 1-2.Promote diversity, inclusion, and innovation	We will promote work-life balance, new workstyles, and a diverse workplace (inclusive of gender, disability, and nationality) that produces innovation, so that our corporate group develops products with inclusive design, contributing to wellbeing within our organization and wellbeing in society at large. For this, we have two challenge goals: pitch ideas for new workstyles, and promote diversity, inclusion, and innovation.	Opportunities Improving the wellbeing of our employees will help us to hire and retain a diversity of creative individuals who are the wellspring of our competitiveness. Supporting these individuals to reach their full potential will enable us continually to create new value and to boost our productivity. There is a business incentive to improving the wellbeing of society. We can gain more earning opportunities by providing the products and services needed to realize a society in which every individual can play an active role, including those with disabilities. It will also increase our reputation and resonance, enabling us to form a larger business network.
Strategy 2 Expand Business Fields through the Forest-Like Management Model		Over the years, we’ve offered solutions for new ways of working, learning, and living through a process of first-hand experimentation in which we design experiences for customers through products and services. Amid the plethora of socioenvironmental issues, we want to transform management systems and lead the way to a sustainable future with the support of all employees and businesses.	Risks We can reduce risks associated with field expansion by transforming our management system in line with the Forest-Like Management Model (e.g. strengthening business infrastructure and risk management). Opportunities We can respond to changes in our operating environment and continually increase the value of our organization if we identify unmet needs and commit to an ever-evolving business portfolio and to creating inter-business synergies in a way that continually generates new value.
Strategy 3 Safeguard the Planet as a Place for Work and Life		Over 90% of our CO2 emissions are from our value chain (scope 3), meaning that we can’t contribute to carbon neutrality on our own. Rather, we work with our supply chain partners on initiatives such as switching to more sustainable raw materials and delivery methods to contribute toward carbon neutrality.	Risks Addressing climate change reduces and prepares us for not only short-term financial risks, such as higher energy or transportation costs, but also future physical risks and the risk of rising environmental costs. Opportunities We expect that the supply of low-emissions products and solutions and the enhancement of our brand image will increase our earnings opportunities and boost our external valuation, and that this will support our share price.
		We want to use the planet’s limited resources efficiently in delivering value to customers. Accordingly, we have been working to recycle more of our waste and to develop ecologically sustainable products and services. As an organization that provides products that are as accessible to as many people as possible, we also aim to promote individuated zero-waste lifestyles.	Risks We can reduce risk from resource procurement and reputational damage by recovering and reusing resources. Opportunities Winning the support of consumers looking for more sustainable products will increase our business opportunities while resource recycling will help us build a lasting relationship with many customers. This will increase our earnings from maintenance, updating and other services.
		With the rapid progress of economic globalization, multinational corporations have grown massive. In pursuit of cheap labor, these corporations extend their supply chains into developing countries. This trend is exacerbating human rights violations such as forced labor and child labor and widening economic disparities. Meanwhile, environmental problems are growing ever more severe. Our group will fulfill its social responsibilities together with suppliers and continue contributing to social development.	Risks A consumer boycott could threaten the survival of our business. We must avoid this threat by addressing human rights issues and environmental risks in our supply chain. Communicating such initiatives to our customers will enable us to market products at prices that fairly reflect the costs of addressing these risks.
		Conservation of forests is a major imperative for us since we use timber in many of our business operations, including the production of mainstay products such as notebooks and office furniture. Over the years, we have worked to conserve biodiversity and reduce our use of hazardous materials in order to minimize our impact on the environment. We will monitor and take steps to improve our impact on the environment so that we can balance business activities with natural capital for a healthier planet.	Risks We can ensure stable procurement of raw materials and the continuity of our business by understanding biodiversity-related risks, identifying the nature-related risks in our procurement operations, identifying the environmental risks to areas surrounding our business locations, and then using this knowledge to balance our business interests with natural capital. Opportunities Such actions will create resonance among customers and maintain, if not strengthen, our brand image, feeding through into increased earnings.

We have identified material issues aligned with our corporate strategies (as set out in our long-term vision and fourth medium-term plan). In December 2024, we set targets for these material issues. The targets are to be achieved by 2027. Shown below are the targets and results for each material issue.

Strategic Theme	Material Issue	2027 goal	2025 result	2030 Challenge goal
1 Improve Wellbeing among Employees and External Stakeholders	1-1 Pitch ideas for new workstyles	(1) ・Take-up of paid leave: 100%	76.8%	Flexible and diverse work options: 27 challenge goals (three per year for nine years)
	1-1 Pitch ideas for new workstyles	(2) ・Percentage of management posts held by women: 16%%	13.8%
	1-2 Promote diversity, inclusion, and innovation	(3) ・Percentage of new products that incorporate inclusive design: At least 35%	48.8%	Percentage of new product series that incorporate inclusive design: At least 50%
2 Expand Business Fields through the Forest-Like Management Model	Transforming management systems for social value creation	(4) ・Number of visionary idea (Mirai Yokoku) experiments (4th medium-term plan total): 30	13	Percentage of net sales with balanced social value and economic value: 100%
	Transforming management systems for social value creation	・Percentage of employees addressing socioeconomic issues through their job: 100%	91.1%	Percentage of employees addressing social issues: 100%
3 Safeguard the Planet as a Place for Work and Life	3-1 Respond to the climate crisis	(5) Scopes 1 and 2 ・Change from 2022 level: -35% Scope 3 ・SBTi goals to be set by suppliers collectively accounting for 125,000 t-CO2 of our scope 3 emissions (12.5% of our category 1 emissions) ・Complete formulation of action plan for achieving the 2030 goals.	Scopes 1 and 2 40.0% reduction Scope 3 ・SBTi goals set by suppliers collectively accounting for 84,800 t-CO₂ of our scope 3 emissions ・Process launched for implementing action plan for achieving 2030 goals	Scopes 1 and 2 Reduce Scope 1 & 2 greenhouse gas emissions by 42% between 2022 and 2030 Scope 3 ・Reduce greenhouse gas emissions from the Scope 3 category “purchased goods and services” by 25% between 2022 and 2030 ・SBTi goals set by suppliers collectively accounting for 12.5% of our emissions from “purchased goods and services”
	3-1 Respond to the climate crisis			Carbon absorption: At least 6,000 t-CO₂ absorbed a year
	3-2 Contribute toward a circular economy	(6) ・Percentage of net sales attributable to products that incorporate circular-business guidelines: 40%	11.0%	Percentage of net sales attributable to products sold by group (including overseas companies) that support a transition to a circular economy: At least 80%
		・Recycling rate for general business waste (including dead stock): 97%	95.2%
		・Recycling rate for plastic waste: 100%	85.9%	Recycling rate for waste (from offices, worksites, and warehouses): 100%
		・Reduction in mixed construction waste from 2023 level: 75%	73.4%
	3-3 Facilitating sustainable procurement	(7) ・Percentage of products sourced from suppliers ranked B or above: At least 75%	65%	・Percentage of products sourced from suppliers ranked B or above: 100%
	3-4 Contribute toward a society that coexists with nature	・Percentage of net sales attributable to products that satisfy KOKUYO Group Paper and Timber Procurement Standards: 75%	・Stationery business: Disclosures aligned with the TNFD recommendations	Carbon footprint of business activities visualized and carbon neutrality achieved
		・Visually representing environmental impacts: Complete visualization process in all major businesses
		・Number of environmental conservation projects: 3		Forest conservation: Forests thinned at 150 hectares a year
		・Number of environmental conservation projects: 3		Reedbed conservation: Reeds trimmed at 1.5 hectares a year

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(1),(2): This applies to the following entities: KOKUYO Co., Ltd., Kaunet Co., ltd., KOKUYO Marketing Co., ltd., KOKUYO Supply Logistics Co., ltd., KOKUYO Logitem Co., Ltd., Actus Co., Ltd., and KOKUYO & Partners Co., Ltd.
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(3) through (7): These have a smaller coverage. In future reporting, we will standardize the coverage to encompass consolidated subsidiaries inside and outside Japan.

Sustainable Management