Sustainability

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Sustainability

Sustainability Initiatives

Sustainability Policy

Chapter 1 General Provisions

Purpose

Article 1

The purpose of this policy is to create happiness for people around the world by tackling global environmental, social, and economic challenges head on, working together with stakeholders to address these challenges proactively and continuously in the course of our business, based on our Company Motto and Management Philosophy. When this policy is revised in the future, such revisions shall be disclosed in a timely and appropriate manner.

Business Domains

Article 2

We believe it is important to develop our own sustainable business in order to continue to implement social sustainability initiatives. We will continue to conduct business activities in the food-related large market, a market that will never disappear, by channeling management resources into building a food distribution infrastructure business that seeks to enrich the everyday lives of ordinary citizens.

Basic Approach to Sustainability

Article 3

We aim to improve our corporate value while heeding the global environment, societies, economies, and other factors.

We will establish the following four activity areas related to sustainability and manage the progress of the specific issues to be addressed qualitatively or quantitatively under the supervision of the Board of Directors.

（1）Activity area related to economy through food
（2）Activity area related to active participation of human resources
（3）Activity area related to social contributions
（4）Activity area related to environmental preservation

Chapter 2 Activity Areas

Activity Area Related to Economy Through Food

Article 4

To contribute to the improvement of the food culture of customers in the regions, we will work to supply safe and reliable products at low prices and in a stable manner.

（1）Work to ensure appropriate quality products that satisfy customer needs
（2）Work to build a low-cost supply system through concerted corporate efforts
（3）Account for business risks (including risks relating to climate change), and strive to establish business continuity frameworks
（4）Work to strengthen compliance system by enhancing our auditing and supervisory functions, while complying with various laws, regulations, and internal regulations

Activity Area Related to Active Participation of human resources

Article 5

We believe that the growth of each and every one of Director and employee is of utmost importance for the continuation of sustainability initiatives. We will work to develop systems that will enable our people to actively participate in the workplace.

（1）Work to develop training systems for each job level, from Directors to general employees
（2）Work to create a comfortable working environment for employees and develop a personnel system
（3）Work to nurture an environment that encourages Directors and employees to deepen their understanding of diversity, and ensure diversity among Directors and employees
（4）Engage in activities to maintain and promote the health of employees and their families

Activity Area Related to Social Contributions

Article 6

We seek to actively address issues relating to society and human rights.

（1）Promote support dietary education, physical education, and general education
（2）Work to support the acquisition of vocational skills
（3）Address human rights issues

Activity Area Related to Environmental Preservation

Article 7

We will actively address issues relating to the global environment, such as reducing CO₂ emissions, addressing energy issues, using resources effectively, and taking measures to prevent the destruction of natural environments.

（1）Work to reduce food loss
（2）Pursue energy-saving measures
（3）Work on the three Rs: reduce, reuse, recycle
（4）Reduce CO₂ emissions

Material Issues

We have entered an era in which it is imperative that companies engage in business operations that are considerate of the environment and social contribution. Halows has long upheld its management philosophy of “contributing to improvements in life and culture in local communities,” and sought to create a virtuously beneficial society through food.
Working together with our stakeholders to address global environmental, social, and economic challenges proactively and continuously, we will contribute to the creation of happiness for people all over the world and further promote activities that are conscious of sustainability in our day-to-day operations.
With regard to sustainability initiatives, we consider the degree of importance of specific issues to Halows’ business activities and to our stakeholders, and we have identified issues that are considered especially important as material issues that Halows needs to address.

Economy Through Food

To contribute to the improvement of the food culture of customers in the regions, we will work to supply safe and reliable products at low prices and in a stable manner.
To do this, we strive to introduce the concept of safety and reliability into our day-to-day operations and into the equipment and fittings that are used by customers and employees, strengthen our quality management systems, and enhance product development and customer-friendly store facilities.

Active Participation of human resources

The growth of each and every one of our Directors and employees is of utmost importance for the continuation of sustainability initiatives. We are working to develop systems that will enable our people to actively participate in the workplace.

Social Contributions

In response to issues related to society and human rights, we aim to make contributions in various areas in local communities such as education, sports and dietary education.
We also believe that food plays an important role in local communities.

Environmental Preservation

To resolve the issues surrounding the global environment (CO₂ emissions reduction, energy problems, effective use of resources, countermeasures against the destruction of nature, etc.), we are engaged in the collection of resources at stores and the effective re-use of resources.

Addressing Climate Change

Halows endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in April 2023. We will strive to identify and analyze any risks and opportunities that climate change presents to our business with reference to the TCFD framework, and also to implement appropriate risk management, reflect any changes in our business strategy, and appropriately disclose relevant information. We aim to generate sustainable growth through our business while helping reduce CO₂ and other greenhouse gases, which are thought to be one of the causes of global warming.
The Sustainability Committee takes the leading role on reviewing and enhancing the content of information disclosure based on the TCFD framework on an annual basis.

Indicators and Targets

We aim to achieve carbon neutrality through our business activities. We plan to consistently monitor our CO₂ emissions and implement environment-conscious measures to achieve our reduction targets.

Understanding CO₂ Emissions

We recognize the environmental impact of our business activities by continuously monitoring CO₂ emissions within the company, and we strive to reduce this impact through our various initiatives.

Setting Targets for Reducing CO₂ Emissions

We set targets for reducing CO₂ emissions to help achieve sustainable business activities and, ultimately, carbon neutrality.

Halows will implement the following initiatives to achieve its CO₂ emissions reduction target.

●Introduce renewable energy
●Review refrigerant equipment
●Introduce highly efficient equipment
●Reduce plastic products
●Reduce food wastage rate

Addressing Climate Change (Governance System)

Halows established its Sustainability Committee to realize a sustainable future by balancing the resolution of social issues and the pursuit of corporate growth. The Sustainability Committee works with the Board of Directors to determine promotion measures and monitor companywide initiatives.
As for initiatives for addressing climate change, the Sustainability Committee determines policies, shares environment-related issue, such as CO₂ and other greenhouse gas emissions with each department, monitors companywide progress, and reports to the Board of Directors.

Overview of the Sustainability Committee

Committee chair/Chairperson	President and Representative Director, Chief Executive Officer
Officer in charge	Director in Charge of the General Planning Department
Secretariat	General Planning Department
Committee members	Full-time Directors, General Manager of the General Planning Department, General Manager of the Personnel and Education Division, General Manager of the General Affairs Division, General Manager of the Finance and Accounting Division, and General Manager of the Development Division
Agenda items	1. Basic sustainability policy, medium- to long-term targets, promotion measures, and other important sustainability-related matters 2. Matters relating to material issues 3. Matters relating to our environmental response 4. Matters relating to our social response 5. Matters relating to our governmental response 6. Matters relating to progress of initiatives 7. Any other items relating to the preceding items that the committee deems necessary
Frequency of meetings	Twice a year (August and February)

Addressing Climate Change [Strategy]

We have analyzed future climate change risks and opportunities and identified the financial impact of each risk or opportunity on our company. We will organize and explore measures to avoid or minimize the impact of risks and maximize the benefits of opportunities, including those currently in progress or the planning stage.
We will respond flexibly to changes related to climate-change considerations by periodically reviewing identified risks, opportunities or countermeasures.

1. Scenario Analysis Steps

We conducted a scenario analysis using the following steps to identify risks and opportunities relating to climate change and to evaluate their financial impact.

i. Identifying analysis targets and scenarios
To help identify the impacts of climate change, we identified the targets companies and businesses for analysis, and the relevant analysis scenarios and time frames.

・Target company: Halows
・Target business: Product retail business
・Scenario: 2ºC scenario/4ºC scenario*Main reference materials: IEA World Energy Outlook 2021/IPCC Global Warming of 1.5ºC
・Analysis timeframe: 2030

ii. Enumerating risk items
We analyzed the risks and opportunities that are expected to arise due to climate change.
iii. Assessing business impact
We evaluated the expected risks and opportunities on a large, medium, and small scale, and considered the impact on our company finances.

2.Financial Impact of Identified Risks and Opportunities

Risks and Opportunities		Content	Impact on Financial Affairs
Transition risks	Policy and law	Introduction of carbon taxes There is a risk of increases in energy costs and the price of procured goods required for our business activities due to the introduction of carbon pricing.	Higher cost	Medium
		Stronger regulations on plastics There is a risk of an increase in purchasing costs due to the adoption of alternative materials for plastics (biomass plastic, etc.)	Higher cost	Large
		Tighter chlorofluorocarbon (CFC) regulations There is a risk of higher costs related to the introduction of green refrigerants (commercial refrigerators and air conditioners) to replace CFC refrigerants in the case of a tightening of regulations on CFC emissions.	Higher cost	Large
		Measures for achieving targets on reducing GHG emissions There is a risk of incurring capital investment costs linked to the replacement of equipment, etc. in order to achieve GHG emission reduction targets set by the national governments and industry associations.	Higher cost	Small
	Market	Changes in demand There is a risk of a decline in sales resulting from a delayed response to increased demand for low-carbon products and services.	Lower sales	Small
	Reputation	Impact on stock price There is a risk of a decline in the company’s stock price caused by insufficient measures for addressing climate change.	Lower sales	Small
Physical risks	Acute risk Intensifying extreme weather events	Store closures and restoration caused by abnormal weather There is a risk of a decline in sales if heavy rains, floods, typhoons and other extreme weather events result in unavoidable store closures. There is also a risk of incurring restoration costs to damage and repair of store equipment.	Lower sales and higher cost	Large
		Supply chain disruptions There is a risk of lost sales opportunities and a decline in sales when abnormal weather conditions cause distribution to stagnate due to damage at supplier locations, changes in distribution routes, or route disruptions.	Lower sales	Large
		The spread of infectious disease There is a risk of incurring costs in relation to capital investment in self-checkouts or expenses for securing additional personnel to compensate for personnel shortages caused by the spread of infectious diseases.	Higher cost	Small
	Chronic risk Rising average temperatures	Food resources There is a risk of higher food resource procurement costs with rising sea levels and average temperatures predicted to reduce crop yields and maximum potential fish catches.	Higher cost	Medium
		Energy costs There is a risk that electricity prices will increase if rising average temperatures result in higher electricity consumption for air-conditioning and refrigeration in stores and logistics bases.	Higher cost	Small
		Rising sea levels There is a risk of a decline in sales if flooding of stores in low-lying areas suspends business and of incurring costs for store restoration or relocation.	Higher cost	Small
Opportunities	Resource efficiency	Distribution efficiencies There is an opportunity to reduce distribution outsourcing costs by improving transportation efficiency through cargo controls, etc. in order to reduce GHG emissions.	Lower cost	Small
	Resource efficiency	Countering food waste There is an opportunity to reduce the amount of outsourced food waste and food disposal costs.	Lower cost	Small
	Energy	Widespread use of renewable energy There is an opportunity to reduce electricity costs by procuring electricity through power purchase agreements (PPA).	Lower cost	Medium
	Energy	Widespread use of high-efficiency equipment There is an opportunity to reduce electricity costs by introducing highly efficient lighting, heating, cooling, and other equipment.	Lower cost	Medium
	Products and services	Changing consumer preferences and attitudes ・There is an opportunity to increase profits by providing new products and services in accordance with sales strategies that anticipate changing consumer preferences following the implementation of climate-change measures. ・There is an opportunity to boost recycling revenue as recycling needs increase by increasing the collection of recyclable materials in stores.	Higher sales	Small
	Products and services	New services created through technological development There is an opportunity to increase customer numbers by installing charging stations outside stores and other new services to reflect the wider use of electric vehicles.	Higher sales	Small
	Resilience	Improving ability to manage and respond to various climate-related risks and opportunities There is an opportunity to improve external evaluations and increase stock price by systematically responding to climate change through climate risk assessments and risk diversification measures, and thereby building a stable business and robust management and operational platforms.	Higher sales	Small

3. Our Approach to Risks and Opportunities

・Promoting energy saving
We are promoting energy saving measures in logistics operations and stores by focusing on nighttime deliveries to improve delivery efficiency, switching to LED lighting in stores, and introducing freezer cases with doors.
・Introducing renewable energy
We are actively promoting the installation of solar power generation equipment on the roofs of our stores and distribution centers for our own power use and will further expand the number of target stores going forward to help reduce GHG emissions.

Risk Management

We analyze various risks that impact our business continuity and explores potential countermeasures within our companywide risk management framework. The Sustainability Committee is the primary player in managing risks relating to climate change within this framework.
The Sustainability Committee regularly evaluates risks relating to climate change and reports the impact on business to the Board of Directors. We instruct the relevant departments on the type of countermeasures they should implement based on the reports by the Sustainability Committee.

Promotion of Sustainability in Four Activity Areas

Our sustainability initiatives are focused on activities in four areas, namely “economy through food,” “active participation of human resources,” “social contributions,” and “environmental preservation.
We have entered an era in which it is imperative that companies engage in business operations that are considerate of the environment and social contribution.
Halows has long upheld its management philosophy of “contributing to improvements in life and culture in local communities,” and in areas other than its main business of food sales, it has also had a policy of working to contribute to the environment and culture.
Working together with our stakeholders to address global environmental, social, and economic challenges proactively and continuously, we will contribute to the creation of happiness for people all over the world and further promote activities that are conscious of sustainability in our day-to-day operations.

Internal quality control department

At our internal testing facility, we check if there are any microbial or physicochemical issues with our products, company facilities and equipment, tools and utensils, fittings, etc.

Free-of-charge purified water, wheelchairs, considerate parking areas, and accessible toilet

With the aim of making our stores comfortable and enjoyable for everyone to shop in, we are enhancing our various facilities and equipment to ensure customer safety, security, and convenience.

Quality control management competition

To offer products with quality and freshness that will satisfy customers, we conduct freshness checks on a regular basis.
We also conduct quality control management competition in-house to evaluate hygiene, labeling, and other matters in a comprehensive way.

Support for food bank activities

We have developed and proposed a new style of food bank, called the “Halows Model,” in which organizations accepting food products and assistance from food banks can collect the products directly from their nearest store.
This has made it possible to provide dairy products and daily-delivery foods, whose short use-by periods make them difficult to be provided to food banks. We are also widely calling on other companies and manufacturers in the same industry to provide their products under this model, and it is attracting many supporters.

The growth of each and every one of our directors and employees is of utmost importance for the continuation of sustainability initiatives. We are working to develop systems that will enable our people to actively participate in the workplace.

Promotion of employment through the practice of diversity

Because our stores are open 24 hours, we are able to employ people in a variety of timeframes. We are also striving to promote diverse employment patterns, such as recruiting foreign trainees, international students, and people with disabilities, and extending the continued employment age to 75 years.
We are also enhancing our various employee assistance programs, such as actively promoting women to management positions and encouraging the effective use of the scheme that allows employees with small children to work shorter hours.

Human resources development with over 1,900 hours of training a year

We send our employees to training sessions and seminars, totaling over 1,900 hours a year, which leads to the growth of each individual employee.

Skills development with a “professional qualifications grade system”

Under our professional qualifications grade system, our employee grade system is based on skills, and wages are determined in line with those grades.
Promotions, upgrade, and wage rises are also backed up by skills development and grade-based education and training programs under a merit-rating system.

In response to issues related to society and human rights, we are committed to making contributions in various areas in local communities such as education, sports and dietary education.
We also believe that food has an important role to play in local communities.

Halows Foundation

Through our foundation, we grant scholarships to senior high school, university, and other students in the region and engage in subsidy grant programs to assist organizations working in dietary education.

Promotion of employment of people with disabilities

The organization contracted to operate the business of our HALOWS ECO Center is required to obtain certification as a Type A Business for Continued Employment Support. The certified business premises are operated based on measures that aim to assist people with disabilities to live independently.

Conclusion of disaster assistance agreements

We have concluded the “Agreements for Assistance at Times of Disaster” and other agreements with local organizations in the areas where our stores are located.
These agreements ensure the provision of food and other daily necessities to people in the area in the event of a disaster, etc. As well as contributing to the stability of daily life after the disaster, we hope that we can help to alleviate the feelings of anxiety at such times.

To resolve the issues surrounding the global environment（CO₂ emissions reduction, energy problems, effective use of resources, countermeasures against the destruction of nature, etc.), we are engaged in the collection of resources at stores and the effective re-use of resources.

Promotion of energy saving in stores and logistics operations

We are achieving energy saving in our stores and logistics operations through the promotion of initiatives such as returnable containers, heat-storing brine systems (distribution centers), LED lighting, adoption of energy-saving furniture and fixtures, condensation-prevention heater controls in refrigerator and freezer cases, temperature and humidity-control air conditioning in sales floors (desiccant air conditioning), and solar power generation.

Example of in-store energy-saving devices: Freezer cases with doors

Hayashima Logistics Center

Promotion of CO₂ reduction, reduction of waste

We are making efforts to preserve the environment and reduce CO₂ emissions by curbing the generation of container and packaging waste and adopting environmentally-friendly trays.
We also share success stories of food waste improvement measures being undertaken at individual stores with all stores, which is leading to the reduction of waste disposal rates.

Effective re-use of resources

We collect resources such as milk cartons, cans (steel and aluminum), PET bottles, and food trays at stations in the front of our stores. We recycle vegetable scraps, waste oil, beef fat, fish bones and other scraps generated in our stores to turn them into fertilizers, stock feed, and oil and fat products.
Paper, aluminum, and other resources generated at our stores and logistics centers are sent to our HALOWS ECO Center for compression and volume reduction treatment to turn them into raw materials, as part of our resources recycling efforts.

Recycling box installed in front of stores