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The ���򾺲��Ƽ� sells products in more than 130 countries and regions, and our entire business activities, from procurement of raw materials to manufacturing and sales, are heavily dependent on the various bounties of nature, otherwise known as ecosystem services. These services include agricultural, livestock, and fishery resources, genetic resources, water and soil, and pollinators such as insects. These natural bounties come from healthy biodiversity shaped by the diversity of living organisms and their connections.
However, biodiversity is currently being lost at an unprecedented rate, making biodiversity conservation a pressing issue worldwide. The ���򾺲��Ƽ� recognizes the importance of reducing its impact on biodiversity and protecting the global environment while sustaining its business. Since issues related to biodiversity are also closely related to environmental boundaries and social issues such as climate change, water and soil, waste, and human rights, we will work to resolve these issues so as to create mutual benefit. In conserving biodiversity, we believe it is necessary to establish a system of action to halt and reverse the loss of biodiversity through our business. Accordingly, we will support the Kunming-Montreal Global Biodiversity Framework*¹ adopted at the 15th Conference of the Parties to the Convention on Biological Diversity (COP 15) in 2022 and contribute to its achievement.

In the ���򾺲��Ƽ�, we honestly comply with the ���򾺲��Ƽ� Policies (AGP) that shows the ideal way of thinking and action that the Group companies and their officers and employees should comply with, continue to develop and properly operate our internal control system, strengthen our system that considers sustainability as an active risk-taking system, and continuously enhance our corporate value.

The Board of Directors

The Board of Directors has established the Sustainability Advisory Council, creating a system for making recommendations on the Group’s approach to sustainability and ESG. The board determines materiality items related to sustainability that serve as guidelines for ASV management and supervises the execution of initiatives related to sustainability including biodiversity.

The Executive Committee

The Executive Committee has established the Sustainability Committee as a subordinate body, which selects and extracts risks and opportunities based on materiality and assesses the degree of impact, formulates strategies to combat these, and manages their progress.

Sustainability Advisory Council

Beginning April 2023, the Second Term Sustainability Advisory Council will continue its work to enhance the ���򾺲��Ƽ�’s corporate value from the viewpoint of sustainability. The Second Term Sustainability Advisory Council consists of four external experts, primarily investors and financial market specialists, and is chaired by an external expert. After receiving consultation from the Board of Directors, the council will investigate the implementation of materiality, disclosure and dialogue on its progress, and building relationships with stakeholders through these activities, in the interest of stronger monitoring of the Board of Directors, and issue a report in response to the Board of Directors. The Second Term Sustainability Advisory Council meets at least once a year and report the results of its deliberations to the Board of Directors.

Sustainability Committee

In order to promote medium-term ASV initiatives in accordance with materiality, the Sustainability Committee formulates sustainability measures, proposes them to the Executive Committee, and manages their progress. In addition, the Sustainability Committee formulates risk countermeasures for Companywide management issues and manages their progress. It also formulates the entire ���򾺲��Ƽ�’s sustainability strategy, promotes action themes (nutrition and environment, which includes biodiversity) based on this strategy, makes proposals and provides support for business plans from a sustainability viewpoint, and compiles internal information on ESG.
Biodiversity initiatives comprise a critical issue for the ���򾺲��Ƽ�. We believe that sustainable raw material procurement, climate change adaptation and mitigation, waste reduction, and human rights, which we are already working on, are all activities closely related to biodiversity. Recognizing the interrelationships among these environmental and social initiatives, we will advance them in a way that is effective.

Risk Management Committee

The Risk Management Committee works with the Sustainability Committee to select and identify risks calling for particular initiative by management (pandemics, geopolitical risks, information security risks, etc.) based on materiality as well as assess their impact on the ���򾺲��Ƽ�, making proposals to the Executive Committee. The committee also formulates risk management measures and manages their progress in order to realize a strong corporate structure capable of responding promptly and appropriately to risks and crises.

The AGP states that we work with the community and customers to contribute to harmonious coexistence with the Earth, in order to realize a sustainable “Recycling-Oriented Society.” Based on this “Group Shared Policy on Environment,” in July 2023, the ���򾺲��Ƽ� established and announced the ���򾺲��Ƽ� Biodiversity Guidelines to recognize issues related to biodiversity, as well as its approach, action guidelines, and targets.
We also see biodiversity as deeply related to environmental and social issues such as deforestation and other land modification in the production of raw materials, pesticide use and waste, child labor, and forced labor in our sustainable procurement efforts. In addition to our existing procurement guidelines on palm oil and paper procurement guidelines, we restructured our coffee and soybean procurement guidelines in July 2023. In addition, our Policy Guidelines for Suppliers require suppliers to comply with laws and regulations, and to give consideration to and endorse the ���򾺲��Ƽ�'s policies on human rights and the environment.

The ���򾺲��Ƽ� recognizes that environmental and social issues, including climate change, water and soil, waste, and human rights are closely related to biodiversity conservation. We strive to solve such issues in ways that create synergies based on I. Our Approach to Biodiversity and the ���򾺲��Ƽ� Biodiversity Guidelines, enacted in July 2023.

In fiscal 2023, we analyzed dependencies and impacts using the LEAP approach to assess risks and opportunities for value chains in our seasonings, foods, frozen foods, and healthcare businesses, which account for over 80% of the ���򾺲��Ƽ�’s sales. The LEAP approach is guidance proposed by TNFD that provides a process for the systematic, science-based assessment of nature-related risks and opportunities within corporations and financial institutions.

We assessed the value chains of businesses that account for 80% of our net sales. Among the assessment targets, we selected 12 raw materials that have large procurement volumes and fall under the High Impact Commodity List (HICL) of the SBTs for Nature, guidance created by the Science Based Targets Network (SBTN). Note that paper, which falls under HICL but is a packaging material, was excluded.

The tools below were used in various combinations at each step of the analysis.
ENCORE, SBT's High Impact Commodity List, SBTN Materiality Screening Tool, Geographic Information System, World Database Protected Area, IUCN Red List, GLOBIO, Aqueduct, Aqueduct Water Atlas, Nature Map Explore, Aqueduct Global Maps, Past and future trends in grey water footprints of anthropogenic nitrogen and phosphorus inputs to major world rivers, International Institute for Applied Systems Analysis, What a Waste

The first three steps, Locate, Evaluate, and Assess (LEA), were used to analyze the four processes of raw materials, production, sales, and consumption.

■ Analysis Process
For the target businesses, we identified areas in the supply chain of our Group's business that are at high risk of biodiversity loss.

L1: Assess value chain inventories L2: Identify dependency and impact levels for each process
We organized the upstream and downstream industries and raw materials in the Group business supply chains and identified processes, products, and raw materials with a high degree of dependence and impact on ecosystems and biomes.
We found that our business impacts raw material production for agricultural products through extensive land and water use in fields and irrigation. Results also indicated that we have significant impacts through water consumption and show a high dependency on water resources in manufacturing processes.

L3: Identify operating locations for processes with significant dependencies and impacts
We identified the countries and regions involved in the supply chain from raw material production to consumption for each of the 12 targeted raw materials.

■ Analysis Process
In addition, we identified factors for dependence and impact on nature in the supply chain of our Group's businesses. Indicators and thresholds for each factor were set to quantitatively diagnose the future state of dependence and impact (2050).

E1: Identify dependency and impact targets
We used LEAP-recommended tools for the dependency and impact targets identified in L2 to extract material factors in each process.

E3: Prioritize dependencies and impacts
We established indicators and thresholds for each dependency and impact item based on LEAP and previous studies.
We determined whether each operation was high-risk based on the condition of the assessment unit area it belongs to and then selected subsequent targets for further analysis.

■ Analysis Process
Risks were identified in the scenarios with respect to the factors of dependence and impact that will cause degradation in a future state. For these results, we estimated the financial impact based on the Group's response status and assessed the magnitude of risk and opportunity.

A1: Define scenarios and specify business risks and opportunities
We specified risks and opportunities based on the E3 key dependency and impact factors. Defining scenarios enables us to understand the background of future natural changes and expresses more concrete potential risks.

• *Opportunities are for existing initiatives only.

fiscal 2024, we will improve the accuracy of our analysis by narrowing down the analysis of raw materials to a specific region, rather than focusing on the country of origin. The biodiversity issues identified through this refined regional analysis are also closely related to environmental and social issues, including human rights, climate change, water and soil, and waste. Therefore, we strive to restore biodiversity through regenerative agriculture while also advancing initiatives to solve these issues in a way that creates effective synergies. We will also work on formulating new business strategies to achieve ASV, where sustainability initiatives lead to greater added value for our products.

Sustainable finance forms the basis for acquiring the necessary funds for our various initiatives. Following the October 2021 issuance of our sustainability bonds and the committed credit line established in January 2022 through the Positive Impact Finance scheme, we concluded a committed credit line agreement through our sustainability linked loans in December 2022, and have been continuing to procure funds through sustainable finance, including with the issuance of sustainability-linked bonds in June 2023. Most recently, we issued two new sustainability-linked loans in March and April of 2024.
Through this financing, we will further accelerate our efforts to realize one of our two outcomes by 2030, namely, to reduce our environmental impact by 50%, as well as to realize a sustainable society.

In order to realize the Purpose-Driven Management by Medium-Term ASV Initiatives2030 Roadmap, it is extremely important to accurately identify risks and respond to them promptly and appropriately. The Sustainability Committee and the Risk Management Committee work closely to ensure that no risk is left unaddressed by the two committees, selecting and identifying risks and opportunities based on material matters for the ���򾺲��Ƽ� (materiality) and making proposals to the Executive Committee. The Sustainability Committee then formulates measures and regularly manages their progress for matters related to sustainability, including social, environmental such as biodiversity, and nutritional issues, while the Risk Management Committee handles the same processes for risks that management should take the initiative to address pandemics, geopolitical risks, information security risks, etc.).
At each business site in Japan and overseas, we implement a risk process cycle identifying risks and formulating countermeasures, taking into account individual business strategies and local political, economic, and social conditions. The Risk Management Committee continuously improves this risk process cycle, compiles the risks identified by each site, and responds to those calling for initiative by management. In addition, each business and corporation has formulated a business continuity plan (BCP) in preparation for emergencies, and the Risk Management Committee has established a system for constant verification of each BCP's effectiveness and regularly monitors and manages risk response. Full-time Audit Committee members attend the Sustainability Committee and the Risk Management Committee to monitor risk management process.

For issues related to biodiversity for which we have enhanced analysis precision and the closely related issues thereof (for the environment and society, human rights, climate change, water and soil, and waste), we have set metrics and targets to facilitate initiatives to solve these issues.