Report on Implementation of New Biodiversity,
Respect for Human Rights and DE&I Initiatives, Improved
Traceability for Palm Oil Procurement, and Impact of ESG Activities
on Financial Results and Business Growth
Kao Corporation (TOKYO:4452), a Japan-based Group whose brand
portfolio includes Attack, Bioré, Goldwell, Jergens, John Frieda,
Kanebo, Laurier, Merries, and Molton Brown, has released a progress
report on its ESG (Environmental, Social, and Governance)
strategy—the Kirei Lifestyle Plan in the Kao Sustainability Report
2024. In 2023, with biodiversity an urgent global-scale issue, Kao
amended its policy on biodiversity and carried out information
disclosure according to the TNFD*1 framework. The company also
continued activities relating to respect for human rights, which is
the foundation of all corporate activity, including formulating its
Diversity, Equity and Inclusion (DE&I) Policy. With regard to
palm oil, one of the main raw materials used by Kao, the company is
aiming to establish traceability throughout the supply chain, down
to oil palm plantations, in order to ensure sustainable procurement
of resources. The progress report also includes quantitative data
on results of Kao’s ESG activities, contributions to its financial
results and envisioned future growth, describing the contributions
of its ESG strategy to its Mid-term Plan 2027 (K27). The following
outlines the results of new 2023 activities for Kao’s key
leadership action themes.
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Kao’s ESG Strategy Kirei Lifestyle Plan
(Graphic: Business Wire)
*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.
Kao Sustainability Report 2024
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 2021, Kao has been
promoting the Kao Group Mid-term Plan with its vision of
“protecting future lives” and “sustainability as the only path.”
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: “At Kao, we
strive to optimize our business operations across the value chain
through ESG-focused Yoki-Monozukuri, and bring value to our
communities through solutions to social issues. Our ESG strategy
the Kirei Lifestyle Plan puts the consumer at its center,
illustrating the direction of our action and setting ambition
targets. Based on this, in 2023, we accelerated our initiatives
looking towards our mid-term plan K27 with the visions of
'sustainability as the only path' and 'protecting future lives'. In
the Kao Sustainability Report 2024, we share our progress in the
three commitments of the Kirei Lifestyle Plan looking towards the
year 2030, as well as new efforts to promote the Kirei Lifestyle.
This includes the publication of the Action Policy on Biodiversity
and disclosure based on the TNFD framework, driving forward in
human rights and DE&I, and efforts towards further
transparency. Aiming to clarify how our ESG strategies contribute
to the mid-term plan K27, we have worked to demonstrate the impact
of our ESG activities financially and otherwise, as well as
expected future growth. As the transition to a more sustainable
society accelerates, at Kao, we will strive to embed sustainability
into business to succeed in both ESG and Economic Value Added
(EVA®)*2.”
*2 Stern Stewart & Co.: Developed EVA in theory and applied
it to corporate EVA management. Registered EVA as a trademark
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 four years in a row.
Kao is one of only 10 companies included in the top-rated ‘A List’
across the three categories, out of more than 21,000 companies
determined by a global survey of businesses and an evaluation of
their activities. In addition, the Ethisphere Institute, a leading
US think-tank, has named Kao one of the World’s Most Ethical
Companies® for 18 consecutive years.
New Initiatives to Promote a Kirei Lifestyle
Kao’s Action Policy on Biodiversity and Information
Disclosure Based on TNFD’s Framework
Kao operates by benefiting from many biological resources such
as palm oil, paper and pulp. Given social expectations that
businesses engage in activities more focused on conserving and
restoring biodiversity and regenerating nature, in 2022 Kao revised
its Basic Policy on Biodiversity. In October 2023, the company
revised its Action Policies on Conservation of Biodiversity,
renamed the Action Policy on Biodiversity. This policy sets out
specific biodiversity-related actions and information disclosure in
accordance with an international framework. In addition, a new
section, Aiming for Symbiosis between People, Nature and Chemistry,
was added to the policy to assess the impact of chemical substances
on biodiversity and to demonstrate the company’s stance on
addressing the challenges of both biodiversity and climate
change.
Since 2021, Kao has been identifying material issues by
examining the relationship between its supply chains and
biodiversity. To respond promptly to developments regarding
information disclosure, the company participated in the TNFD Forum
in April 2022, collecting information and providing feedback on the
information disclosure framework then under development. In April
2023, in collaboration with Accenture Japan Ltd., Kao released a
report which analyzed the company’s business activities based on
the TNFD (β v0.3) LEAP approach*3. In May, Kao identified 13 risks
and opportunities after examining the relationship between its
business and biodiversity related to detergents, one of its leading
product categories, and included them in the Kao Sustainability
Report 2023. In the Kao Sustainability Report 2024, Kao has looked
at the expected financial impact of risks identified the previous
year, based on its analysis in accordance with the final
recommendations for the TNFD framework announced in September 2023.
Kao has registered as an adopter, in response to TNFD’s
solicitation of “TNFD Adopters,” businesses willing to engage in
information disclosure in accordance with the TNFD Recommendations.
Kao will continue taking specific actions to propose
nature-positive biodiversity strategies and set target
objectives.
*3 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).
Kao Sustainability Report 2024: Biodiversity
Promoting Respect for Human Rights and DE&I
Kao’s corporate philosophy, the Kao Way, upholds “integrity as
the only choice” and “we trust, respect, and need each other” as
two of its core values. Across all of its corporate activities, Kao
aims to completely eliminate infringement of human rights and
commits to taking prompt action if any infringement occurs. In
addition to “respecting human rights,” the company’s ESG strategy
the Kirei Lifestyle Plan, emphasizes other key aspects of human
rights such as “responsibly sourced raw materials,” “inclusive and
diverse workplaces” and “employee wellbeing and safety.”
Kao conducts a yearly assessment of human rights risks, which
are detailed in the Kao Sustainability Report. This assessment is
carried out by employees from several departments, including
members of the Human Rights and DE&I Steering Committee, who
discuss plausible risks from various perspectives. With input from
experts in the field, in a list of human rights risks across the
Kao Group compiled in 2023, Kao identified “producers and farmers
from whom Kao procures raw materials” and “foreign workers
(including those at subsidiaries or affiliates and in the supply
chain)” as particularly high-priority issues within the “working
environment of people we work with” category, an important human
rights theme for Kao.
Concerning “producers and farmers from whom Kao procures raw
materials,” in 2020 Kao initiated the SMILE (Smallholder Inclusion
for better Livelihood & Empowerment) program for palm oil
plantation smallholders in Indonesia to support yield improvements
and help them obtain RSPO*4 certification. A grievance mechanism
was also launched in 2022. Where “foreign workers (including those
at subsidiaries or affiliates and in the supply chain)” are
concerned, Kao has proposed to contractors the introduction of a
grievance mechanism for foreign workers and has had third parties
interview workers to ascertain working conditions.
*4 Roundtable on Sustainable Palm Oil: A roundtable to promote
the production and use of sustainable palm oil
The 2023 assessment also added a list of human rights risks
connected to climate change. This list includes the negative impact
that climate change and measures implemented to mitigate its
effects could have on human rights, for example, the destruction or
loss of livelihood bases due to natural disasters, or on health or
daily life.
Kao is also accelerating DE&I, creating a new DE&I
Policy in June 2023. The company is working to employ the numerous
opportunities gained via Kao’s broad range of businesses and
working together with its stakeholders—employees, business partners
and all people—to promote implementation of DE&I to contribute
to its business and create a more inclusive society.
Kao Sustainability Report 2024: Respecting human rights
Kao Sustainability Report 2024: Responsibly sourced raw
materials Kao Sustainability Report 2024: Inclusive &
diverse workplaces Kao Sustainability Report 2024: Employee
wellbeing & safety
New Information Disclosure Initiative in the Kao
Sustainability Report 2024
In the Kao Sustainability Report 2024, Kao has undertaken a new
information disclosure initiative. To tie in activities based on
its ESG strategy Kirei Lifestyle Plan and its Mid-term Plan 2027
(K27), in addition to the impact of ESG on its activities and
contribution to financial results, Kao has disclosed new
information to forecast anticipated future business growth. The new
Executive Summary groups Kao’s main activities in 2023 under the
headings “new values for life and society” and “reducing the burden
on life and society.” Progress in these areas is shown
quantitatively, further broken down into the categories of life,
society, environment and business foundation for additional
clarity.
Kao Sustainability Report 2024: Executive summary
For the Key Leadership Action Themes: 2023 Activity Results,
click here.
About the Kirei Lifestyle Plan
Over the past 130 years, Kao has worked to improve people’s
lives and help them realize more sustainable lifestyles—a Kirei
Lifestyle. The Japanese word ‘kirei’ describes something that is
clean, well-ordered and beautiful, all at the same time. The Kao
Group established its ESG strategy Kirei Lifestyle Plan in April
2019, which is designed to deliver the vision of a gentler and more
sustainable way of living. By 2030, Kao aims to empower at least 1
billion people, to enjoy more beautiful lives and have 100% of its
products leave a full lifecycle environmental footprint that
science says our natural world can safely absorb. Please visit the
Kao sustainability website for more information.
About Kao
Kao creates high-value-added products and services that provide
care and enrichment for the life of all people and the planet.
Through its portfolio of over 20 leading brands such as Attack,
Bioré, Goldwell, Jergens, John Frieda, Kanebo, Laurier, Merries,
and Molton Brown, Kao is part of the everyday lives of people in
Asia, Oceania, North America, and Europe. Combined with its
chemical business, which contributes to a wide range of industries,
Kao generates about 1,530 billion yen in annual sales. Kao employs
about 34,300 people worldwide and has 137 years of history in
innovation. Please visit the Kao Group website for updated
information.
Related Information
Kao launches new ESG Strategy “Kirei Lifestyle Plan” to support
consumer lifestyle changes Kao’s New Challenges for the Future:
Accelerating Purposeful Business Commitment with ESG Kao
sustainability website Kao Releases the Kao Integrated Report
2024
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