Release of Results of Activities for the Three Kao Commitments, Analysis of the Relationship between Kao’s Business and Biodiversity, and Progress on Targets Based on the Findings of an Employee Engagement Survey

Kao Corporation (TOKYO:4452), a Japan-based Group whose brand portfolio includes Attack, Bioré, Goldwell, Jergens, John Frieda, Kanebo, Laurier, Merries, and Molton Brown, released progress reports on its ESG (Environmental, Social, and Governance) strategy—the Kirei Lifestyle Plan. Details of its progress is released in the Kao Sustainability Report 2023. In addition to the results of its activities in 2022, Kao also released information on the results of its activities for the three Kao commitments in the Kirei Lifestyle Plan, an analysis of the relationship between Kao’s business and biodiversity and progress on targets based on the findings of an employee engagement survey. The following is a report of the results of 2022 activities for Kao’s key leadership action themes.

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Kao's ESG Commitments and Actions (Graphic: Business Wire)

For over 130 years, Kao has worked to help consumers lead fulfilling lifestyles. In April 2019, Kao established the Kirei Lifestyle Plan, which is an ESG strategy that includes 19 leadership action themes to achieve a sustainable and desirable way of living. The Japanese word ‘kirei’ describes something that is both clean and beautiful. For Kao, Kirei not only encapsulates appearance, but also attitude—to create beauty for oneself, other people, and for the world around us. Since its start in 2021, the Kao Group Mid-term Plan 2025 (K25) has proclaimed “protecting future lives” and promoting “sustainability as the only path” as its vision. The Kao Group will continue to integrate its ESG strategy into its management practices. It will also develop its business, provide better products and services for consumers and society, and work toward its purpose “to realize a Kirei world in which all life lives in harmony.”

The Director, Managing Executive Officer in charge of Kao’s ESG Division, Dave Muenz, delivered this message regarding the announcement of progress of the Kirei Lifestyle Plan: “The global landscape continues to evolve rapidly, becoming more complex and presenting new challenges. Therefore, it is increasingly important that we drive forward our ESG strategy the Kirei Lifestyle Plan to realize a truly sustainable society while enhancing our business and minimizing risks. In 2022, we accelerated efforts towards our mid-term business strategy—K25—with the visions of ‘saving future lives’ and ‘sustainability as the only path.’ In the Kao Sustainability Report 2023, we share our progress on the three commitments of the Kirei Lifestyle Plan looking towards the year 2030. Some of our progress includes the launch of Bioré GUARD Mos Block Serum to save future lives in Thailand through our unique technology and key partnerships. We analyzed the relationship between our business and biodiversity using the Taskforce on Nature-related Financial Disclosures (TNFD)’s^*1 LEAP^*2 approach to identify material issues in order to ultimately diminish adverse impacts on nature and regenerate biodiversity loss. Our efforts in the palm oil supply chain saw the launch of the grievance mechanism for smallholders in Indonesia, aiming to provide a voice for rightsholders in higher risk environments. We will continue to evolve our efforts towards creating a Kirei Life for all, together with our partners and communities.”

*1 The Taskforce on Nature-related Financial Disclosures officially launched in 2021 in order to build a corporate risk management and disclosure framework related to the resources of nature.

*2 The analytical approach proposed by TNFD, which stands for Locate (identify priority areas), Evaluate (understand dependencies and impacts), Assess (identify and evaluate risks and opportunities) and Prepare (strategy, goal setting, evaluation and reporting).

These efforts have been recognized by the CDP, a leading international nonprofit organization, which included Kao in its prestigious ‘A List’ in all surveys across the three categories of climate change, forests and water security for three years in a row. Kao is one of only 12 companies out of more than 10,000 evaluated that were selected for inclusion in the top-rated A List across the three categories. In addition, the Ethisphere Institute, a leading US think-tank, has named Kao one of the World’s Most Ethical Companies® for 17 consecutive years.

New Initiatives to Promote a Kirei Lifestyle

Release of Results of 2022 Activities for the Three Kao Commitments

The ESG strategy the Kirei Lifestyle Plan consists of the vision, the Kao commitments and 19 leadership action themes (Kao Actions) to realize a Kirei Lifestyle. The three Kao commitments with a target year of 2030 are “Making my everyday more beautiful,” “Making thoughtful choices for society” and “Making the world healthier & cleaner.” The results for each target have been released for the first time in the Kao Sustainability Report 2023. Kao aims to empower people to enjoy more beautiful lives by achieving the three Kao commitments.

2022 Results

Analysis of the Relationship between Kao’s Business and Biodiversity Based on TNFD’s LEAP Approach

Kao operates by benefiting from many biological resources such as palm oil, paper and pulp. In 2011, Kao formed the Basic Policy on Biodiversity and has been working to realize sustainable raw material procurement and develop new technologies that contribute to biodiversity conservation. Kao revised the basic policy last year with the goal of shifting from biodiversity loss to biodiversity regeneration by reducing its dependency and adverse impacts on nature and biodiversity, and increasing actions that have positive impacts.

In order to promptly respond to developments regarding information disclosure, Kao has participated in TNFD Forum since April 2022 and is collecting information and providing feedback on the information disclosure framework currently under development. In the Kao Sustainability Report 2023, Kao releases the results of its analysis of the relationship between its business and biodiversity related to detergents, one of its leading product categories, based on TNFD’s LEAP approach. Kao identified material issues in each of the areas of upstream supply chain, direct operations and downstream supply chain as well as the risks and opportunities, and examined what actions to take accordingly.

In addition to specifying the relationship between Kao’s business and biodiversity in collaboration with Accenture Japan Ltd., Kao examined scenarios taking into account future natural and economic conditions and changes in the consumer products market. The details of the analysis were released in a report titled “Business Risk and Opportunity on Biodiversity – TNFD case study with location analysis –” in April 2023.

Release of 2022 Progress on Targets Based on the Findings of an Employee Engagement Survey

In the ESG strategy the Kirei Lifestyle Plan, which aims for the realization of a Kirei Lifestyle, “Walking the right path” is the foundation that supports actions for the three Kao commitments of “Making my everyday more beautiful,” “Making thoughtful choices for society” and “Making the world healthier & cleaner.” Kao has established seven key leadership action themes to promote walking the right path. Kao aims to empower people around the world to live more beautiful lives by having all employees conduct fair and honest business activities at all times. Of the seven key leadership action themes, Kao has set the response rate for “Inclusive & diverse workplaces,” “Employee wellbeing and safety” and “Human capital development” in the employee engagement survey as mid- to long-term target indicators.

In 2022, Kao conducted its first employee engagement survey in four years for Kao Group companies in Japan. People are Kao’s greatest asset, and “maximizing the power and potential of employees” is one of Kao’s strategic approaches in its Mid-term Plan 2025 (K25). To this end, Kao has redesigned the survey content and added new items in the Kao focus areas of tackling challenges, collaboration, dialogue and job satisfaction. While utilizing the new survey, Kao will strive to improve its human capital development measures and workplace environments as well as increase employee engagement.

For the Key Leadership Action Themes: 2021 Activity Results, click here.

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