Sustainability at Epson

Materiality

The Management Philosophy, Principles of Corporate Behavior, and Sustainability Initiatives

Established in 2005 and applying to the entire Epson Group, Principles of Corporate Behavior spells out principles of conduct to achieve the Management Philosophy. In 2021, Principles of Corporate Behavior was updated to reflect the latest needs of society.

We want to contribute to solutions to societal issues and achieve sustainable growth as a company through sustainability initiatives that are aligned with the Principles of Corporate Behavior, which is based on the idea of building social trust, the concept that underlies Epson's Management Philosophy.

Sustainability-Related Norms That Epson Honors

Epson complies with the laws and regulations in the countries and regions in which it operates and regularly updates Principles of Corporate Behavior to align it with the internationally recognized codes listed below to help ensure that our conduct meets societal expectations.

  • The Ten Principles of the United Nations Global Compact
  • The Sustainable Development Goals (SDGs)
  • OECD Guidelines for Multinational Enterprises
  • Keidanren Charter of Corporate Behavior
  • ILO Core Labor Standards
  • Responsible Business Alliance (RBA) Code of Conduct
  • ISO 26000

Deciding Materiality

When establishing the Epson 25 Renewed corporate vision in 2021, Epson referenced the societal issues and megatrends described in ISO 26000 and other sources, evaluated them from both a company perspective and a social perspective, and identified the high-priority issues (materialities) that Epson should address to solve societal issues.

Material Trends and Frameworks Referenced

- The Sustainable Development Goals (SDGs)
- Task Force on Climate-related Financial Disclosures (TCFD)
- Macro trends in the social and economic fields, including climate change (European Green Deal Policy, Paris Agreement, etc.)
- Global Japan: 2050 Simulations and Strategies
- GRI Standard
- SASB Standard
- ISO 26000
- Socially Responsible Investing (SRI) survey items
- Responsible Business Alliance (RBA) Code of Conduct

Key Sustainability Topics

In the 2021 fiscal year, Epson selected 12 key sustainability topics to enable us to address four newly identified priority issues (materialities). Epson has incorporated these topics in its mid-range action plans and is driving initiatives to address societal issues and contribute to the SDGs.

Key Sustainability Topics, KPI, and FY2021 Results

There are 12 key sustainability topics. The table below summarizes the initiative topics, key performance indicators (KPI), and FY2021 results for two of the ESG-related materialities that emphasize corporate sustainability (achieve sustainability in a circular economy and fulfill our social responsibility). The KPIs for the other materialities (advance the frontiers of industry and improve the quality of life) will be announced after FY2023.

1. Materiality: Achieve sustainability in a circular economy

Key Sustainability Topics Initiative Topics Key Performance Indicators (KPI) FY2021Targets FY2021Results FY2022 Targets SDGs Contributed
Decarbonization initiatives Using energy-saving equipment and facilities, removing greenhouse gases, engaging suppliers, and pursuing carbon-free logistics to become carbon negative by 2050 Scopes 1 and 2 GHG emissions reduction ratio Reduced by 17% compared to FY2017 Reduced by 41% compared to FY2017 Reduced by 21% compared to FY2017 1, 2, 7, 8, 9, 12, 13, 14, 17
Scope 3 GHG emissions (per unit of business profit) reduction ratio Reduced by 22% compared to FY2017 Reduced by 38% compared to FY2017 Reduced by 30% compared to FY2017
Using renewable electricity to achieve RE100 Renewable electricity adoption ratio Japan: 100% Achieved 100% renewables in Japan (since November 2021) Maintain at 100% domestically
Closed resource-loop initiatives Becoming underground resource1 free by 2050:
  • Using resources efficiently by reducing size and weight, using recycled materials, etc.
  • Establishing closed-loop production systems that minimize production losses
Closed-loop materials usage ratio 20% 20%
Began using recycled plastics in high-capacity ink tank printers
≥ 20% 2, 6, 7, 8, 9, 11, 12, 13, 14, 15, 17
Final landfilled ratio2 ≤ 1% 0.90%
Increased metal recycling within the Group
≤ 1%
Customer environmental impact mitigation Maximizing avoided emissions with products and services that have a lower environmental impact3 Emissions avoided through products & services ≥ The previous year 276,000
tonnes-CO2e A 107% YoY
≥ The previous year 3, 6, 7, 8, 9, 11, 12, 13, 14, 15, 17
Environmental technology development Eliminating virgin plastics and closing resource loops by using Dry Fiber Technology to produce recycled materials and natural materials.
  • Packaging materials
  • Housing materials
Progress of development process Develop materials & test prototypes

Selected material candidates for prototyping

  • Packaging: Verify practical use for Epson products
  • Housings: Begin technology verification for practical use
2, 3, 7, 8, 9, 11, 12, 13, 14, 15, 17
Establishing high-added-value recycling technology for used metal Progress of development process Begin reusing waste wafers Began recycling of waste wafer Develop technology for expanding the types of materials recycled

1 Non-renewable resources such as oil and metals
2 Ratio of landfilled amount of production resources against the volume of resources injected
3 Quantified the contribution of products and services toward GHG emissions reductions

2. Materiality: Fulfil our Social Responsibility

Key Sustainability Topics Initiative Topics Key Performance Indicators (KPI) FY2021 Targets FY2021 Results FY2022 Targets SDGs Contributed
Increasing stakeholder engagement Responding to needs and social demands by strengthening dialogue with stakeholders Social support activities, monetary value of support Set social contribution activity targets Determined FY2022-FY2025 targets (0.1% or more of sales revenue) ≥ 0.1% of sales 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17
Number of dialogs with shareholders and investors and reflecting opinions on management ≥ 200 meetings with shareholders & investors 239 times ≥ 200 meetings with shareholders & investors
Evaluation indices of external evaluation agencies Acquire high recognition4 Acquired high recognition Acquire high recognition
Realizing responsible supply chains Reinforcing supply chain BCM Impact on customers due to disruption and stagnation in supply chain (Aiming to have no impact on sales in FY2024) Minimize procurement, manufacturing, and logistics stoppages and disruptions so that sales are not impacted Sales were affected due to difficulties in parts procurement and stagnation of the logistics function caused by COVID-19 Impact on sales Half that compared to FY2021 1, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17
Realizing responsible supply chains CSR risk levels of suppliers CSR risk rank of main suppliers (direct materials): 0% high risk CSR risk rank of main suppliers (direct materials): 0% high risk CSR risk rank of main suppliers (direct materials): 0% high risk, ≤ 6% middle risk
Realizing responsible sourcing of minerals

Conflict-free (CF) ratio of products

- -

Release CF information for CF strategic products

Survey response ratio5

100% survey response ratio 3TG6survey response ratio: 99%

100% survey response ratio

Respecting human rights and promoting diversity Creating a free and open organizational culture Organizational climate assessment score for "strength to work in teams" 3.7 on a scale of 5 3.68 Reset KPI due to change in assessment method7 1, 4, 5, 8, 10, 12
Number of high risk workplaces with "general health risk" in the mental health check No high-risk workplaces 2.7% of all workplaces Consider revising the assessment method7 & resetting the KPI
Implementation of harassment prevention measures (education and training, case sharing, appointment process, etc.), ensuring to report cases to the head office

Education & training, case sharing, appointment process checks

Performed education and training, case sharing, and appointment process checks as planned

Plan & conduct new training course for managers & for general staff

Omission of material cases to the Head Office: 0 Omission in reporting of material cases to the Head Office: 0 Strengthen primary point of contact for harassment consultations & strengthen coordination with the post-report process
Respect for human rights through dissemination of the new "Human Rights Policy" within the Group Embedding and improving the commitment for respecting human rights, human rights due diligence (DD) and relief mechanism Update the Human Rights Policy Updated the Human Rights Policy as of April 1, 2022 Announce the Human Rights Policy and assess and improve the state of human rights DD & remediation mechanisms
Utilizing human resources in a way that respects diversity

Female management position ratio (the Company)

Female manager ratio: 3.6%

Female manager ratio: 4.1% (as of April 1, 2022), 3.7% (as of March 31, 2022)

Female manager ratio: 5%

1 or more female executive officers by FY2025 (in Japan) Enhance internal development Diversity management training became compulsory; promoted female participation in screened training Promote the participation of women in training
Strengthening governance Reinforcement of compliance management platform Number of serious compliance violations8 No serious compliance violations No serious compliance violations No serious compliance violations 16
Enhancement of Group compliance level Implementation ratio of compliance training (e-learning) to all Group employees9 Group-wide implementation ratio: 100% Group-wide implementation ratio: 100% Group-wide implementation ratio: 100%
Maintenance and strengthening of governance structure to realize transparent, fair, prompt and decisive decision-making

Ratio of outside directors on the board of directors

Maintain the ratio of outside directors on the board at ≥1/3

Ratio of outside directors on the board of directors: 50%

Maintain the ratio of outside directors on the board at ≥1/3

Ratio of outside directors on the nomination & compensation committees Maintain the ratio of outside directors on the nomination & compensation committees at ≥70% Ratio of outside directors on the nomination & compensation committees 83% Maintain the ratio of outside directors on the nomination & compensation committees at ≥80%
Strengthening information security Number of serious information security incidents 0 0 0

4 Sustainalytics: Low; FTSE: 4 or higher; Top 50 or higher in "Toyo Keizai CSR ranking"
5 Signifies the ratio of coverage of the survey
6 Abbreviation for conflict minerals, taking the first letters of Tin, Tantalum, Tungsten and Gold
7 Changes designed to achieve greater work engagement
8 Cases of violation that correspond to timely disclosure matters
9 Target: The Company and domestic and overseas subsidiaries