Information Disclosure based on the TCFD Framework

(Sustainability Policy and Initiatives)

Our Group's approach to sustainability and its initiatives are as follows.Forward-looking statements are based on the Group's judgment as of the end of the current consolidated fiscal year.

(1) Basic Sustainability Policy and Materiality

① Basic Sustainability Policy

Our corporate philosophy is "One shines. We shine. All shines.” This corporate philosophy is the pillar of our basic policy on sustainability, and we promote sustainability activities. Under "One shines", we aim to realize a wonderful life for our employees, and each and every one of them should have a dream and lead a bright, positive, and wonderful life. beautiful and vibrant lives, and with "All shines" we aim to contribute to the development of human society as well as to the sustainable global environment, with the aim of caring for and preserving the global environment. In addition, corporate governance, systems related to compliance and group management, and their efforts are included in our policy as a mechanism to support sustainable growth.

② Materiality

In line with the Group's Sustainability Policy, we have established priority issues.

Basic Sustainability Policy Materiality
“One shines.”
Realizing a great life for our employees
・Diversity and Inclusion
・Human Resource Development
・Employee health and safety, and a rewarding work
“We shine.”
Contribution to Society through Business Activities
・Ensure product quality and safet
・Implement supply chain management
・Ensuring healthy and prosperous lifestyles
・Respect for human rights
・Transmission of traditional culture
・Regional development
“All shines.”
Care and Conservation of the Global Environment
・Climate Change
・Prevention of environmental pollution
・Energy conservation
・Sustainable resource use
・Maintenance and conservation of water resources
Establish mechanisms to support sustainable growth ・Strengthening Corporate Governance
・Strengthening of compliance

③ Materiality Identification Process

Among the various social issues that the Group must address, we have established materiality issues based on company-wide discussions.

<STEP1> Identification of social issues

We analyzed the impact of social trends, such as the SDGs and the Global Risk Report, on our group. We also examined and extracted expectations and requests from various perspectives through correspondence with our stakeholders, including shareholders, investors, customers, suppliers, and employees.

<STEP2>Discussion by the Sustainability Promotion Division and the director in charge

The Sustainability Promotion Division evaluated and scored each issue from the perspective of its impact on society and the Group, prioritized the issues, discussed the details with the director in charge, and organized the priority issues.

<STEP3>Resolution by the Board of Directors

At the August 2024 meeting of the Board of Directors, the Sustainability Promotion Department presented the priority issues it had identified and the Board approved them. A specific action plan was then drawn up and disclosed as our sustainability activities in December 2024.

④ Governance Structure / Sustainability Committee

In August 2024, the Group established the Sustainability Committee, which is composed of directors, full-time Audit & Supervisory Committee members, and those responsible for subcommittees, in order to place sustainability at the core of management and to promote group-wide, cross-sectional efforts to enhance corporate value over the medium to long term. The Board of Directors is responsible for oversight of sustainability issues, including risks and opportunities, under which the President and CEO, the officers in charge, and the organizational units under their control are responsible for business execution. The Sustainability Committee is chaired by the President and CEO and overseen by the director in charge of administration, and consists of directors, full-time auditors ( ), and members responsible for each subcommittee. The Board of Directors meets twice a year on a semiannual basis and submits reports to the Board of Directors twice a year. In order for the Board of Directors to fully fulfill its supervisory and monitoring functions, in addition to prior deliberations on policies and strategies to be resolved by the Board of Directors, the Board of Directors will manage and evaluate progress toward targets, deliberate on individual measures, and provide instructions on responses and reflect them in strategies. In the fiscal year ending September 30, 2024, the Sustainability Committee was established and the Sustainability Policy and Materiality were identified, which were discussed and reported to the Board of Directors. Going forward, the committee will discuss the enhancement of information disclosure based on the TCFD and other matters, and will strive to strengthen our response to the issue of climate change. For more detailed information on the Group's sustainability initiatives, please refer to、our website.

取締役会 指示 付議・報告 サステナビリティ委員会 委員長:代表取締役社長 サステナビリティ統括責任者:管理担当取締役 指示 報告 サステナビリティ推進会議 活動支援 報告 サステナビリティ分科会(アクション毎) 指示 報告 各本部/グループ会社

(2) Climate change initiatives (disclosure of climate change-related information in line with TCFD recommendations)

Toward the realization of a sustainable society, the Group considers the resolution of climate change-related issues to be of paramount importance. We will take a long-term perspective and consider the opportunities and risks assumed as we move forward in addressing climate change issues.

① Governance

The Group has established the Sustainability Committee, chaired by the President and CEO, and composed of directors, full-time Audit & Supervisory Board Members, and managers of subcommittees, in order to place sustainability at the core of management and to promote group-wide, cross-sectional efforts to enhance corporate value over the medium to long term. The Sustainability Committee manages and evaluates the progress of the Group's overall policies and initiatives regarding climate change and other environmental issues in order to achieve future targets. The Board of Directors, acting as a supervisory and monitoring function, will provide instructions on how to respond to these issues and reflect them in the Group's strategies. For details of the Sustainability Committee, please refer to "(1) Basic Sustainability Policy and Materiality (iv) Governance Structure: Sustainability Committee.

② Strategy

The Group, led by its Sustainability Committee, has conducted an analysis of the impact of future climate change on our business by forecasting changes in the external environment using scenario analysis methods in accordance with the framework proposed by the TCFD and the new ISSB. Recognizing the importance of achieving sustainable growth while mitigating and adapting to climate change through our business activities, we have positioned climate change response as a key management issue. By assuming in advance changes in the external environment and business environment associated with the manifestation of climate-related risks and identifying risk events, we conduct qualitative and quantitative assessments of the impact on our company using the International Energy Agency's (IEA) NZE (Net Zero Scenario) as an indicator. We will strive to understand the impact of identified risks and opportunities on the organization's business, strategy, and financial plans, and to further enhance information disclosure.

Scenario Analysis Results

Risk/Opportunity Type Risk/Opportunity Items Business Impact Business Impact Indicators degree of influence time axis
risk Transition risk Policy and Regulations Impact of carbon pricing on your company (Scope 1, 2) Cost of introducing emission reduction measures (introduction of energy conservation, conversion to EVs, etc.) small Year 2030
(the) market (as a concept) Increased costs of responding to the circular economy for products due to changes in consumer behavior sales, general, and administrative expenses during (a certain time when one did or is doing something) Year 2030
reputation Decrease in business opportunities due to consumer disapproval and loss of trust from society due to delay in decarbonization efforts Sales by Product during (a certain time when one did or is doing something) Year 2030
Physical Risk Acute physical risk Increased opportunity losses due to the impact of increased weather disasters such as typhoons and floods on deliveries, resulting in lower sales, etc. Sales by Store small Year 2050
Chronic physical risk Increase in the cost of procuring raw materials derived from agricultural crops due to global warming and other climate changes Cost Ratio by Product during (a certain time when one did or is doing something) Year 2050
opportunity Products and Services Increase in sales of environmentally friendly products Increase in sales due to rising demand for products that reduce environmental impact in response to climate change and other environmental changes Sales by Product small Year 2030
(the) market (as a concept) Expansion of business opportunities due to increased demand for ethical products Increased sales due to increased demand for ethical products Sales by Product small Year 2030

Calculated to a limited extent partially based on our group's actual results for FY2023.

③ Risk management

The Group has established a "Risk Management Committee" for the purpose of improving company-wide risk management. The "Risk Management Committee" and the "Sustainability Committee" each manage related risks. Regarding risks and opportunities affecting climate change in our overall business operations, the department promoting sustainability initiatives analyzes possible risks and opportunities and calculates the amount of financial impact once a year based on climate change scenarios, and the results are reported and discussed at the "Sustainability Promotion Meeting" and then reported to the "Sustainability Committee. The results are reported to the Sustainability Committee. The results are reported to the "Sustainability Promotion Meeting" for discussion and deliberation, and then to the "Sustainability Committee." The identified risks are submitted to the Board of Directors for discussion and reporting, depending on their level of importance, and countermeasures are deliberated.

④ Indicators and Targets

We have set greenhouse gas (Scope 1 and 2) emissions as an indicator to manage climate-related risks and opportunities among sustainability-related risks, and have set Scope 1 and 2 emission reduction targets with reference to SBT (Science Based Targets), aiming at mid- to long-term reduction of greenhouse gas emissions. Scope 1 and 2 emissions reduction targets are set for FY2023 as the base year, with the aim of reducing emissions by 42% by FY2030.

Co2Emissions Results and Targets

(Unit:t- Co2)

Actual results for FY2023
Scope1+2 1,182
Scope1 185
Scope2 997

The scope of the above emissions covers our consolidated group.Scope 2 emissions are calculated using market standards.

(3)Human Capital Initiatives

① Strategies

In line with one of the Group's sustainability policies, "Realization of a Wonderful Life for Employees," we have designated "Diversity and Inclusion," "Human Resource Development," and "Employee Health and Safety, and a Motivating Work Environment" as materiality issues, and have been addressing human capital. From the current fiscal year, we have obtained the Group's Engagement Score, which will be used as a quantitative index to look back on the results of our efforts to resolve each materiality, and we will strive to continuously improve the score in the future. The average engagement score for the current fiscal year was 3.9 (on a 5-point scale).

② Details

Diversity & Inclusion

In terms of "Diversity and Inclusion," since 56.2% of the employees at our three main Group companies, MTG, MTG Professional, and MTG FORMAVITA, are women, we have positioned the "promotion of women's activities" as an important theme that will lead to the growth of the Group as a whole. As of September 2024, the percentage of female managers is 11.7%, and the percentage of female group leaders (assistant manager level), which is the reserve army for such positions, is 34.2%.

Specific Efforts

We have established various systems such as annual paid leave, childcare/nursing care leave, and shortened working hour system so that both men and women can work in accordance with their life stages.

Creation of Opportunities for Female EmployeesWomen are active as group leaders (section manager level) and store managers in a wide range of positions in sales, stores, and other areas. To enable more women to assume managerial roles, we provide training for group leaders and section managers.

Human Resource Development

In the area of "human resource development," we are promoting the "practice of human resource development and career development" and the "development of human resources with management awareness. Of these, in the "Practice of Human Resource Development and Career Development," we are making efforts, etc., to create an environment in which each employee can learn on his/her own, continue to work with peace of mind, and continue to take on challenges, in order to realize our Group's corporate philosophy, "One shines”.

Specific Efforts

In addition to onboarding training involving the workplace and training at the time of hiring new graduates and mid-career hires to promote their early retention and success, we provide learning opportunities such as training by year and management training for managers, supervisors, and group leaders to create an environment where each and every employee can continue to take on new challenges. We are creating an environment where each and every employee can continue to take on challenges.

Hikari Philosophy Mutual Education Meetings.With the aim of realizing the material and spiritual happiness of each and every employee and a sound corporate culture, we provide regular opportunities for employees to learn about the concepts (Hikari Philosophy) that are important to the Group, regardless of their employment status or position.

Providing Career Counseling for Future Supporters "Career Counseling for Future Supporters" is a system that allows employees who are qualified career consultants to consult with our employees about their careers. We provide a place where we can listen to each individual's voice and together think about and look to the future in response to life and work concerns.

In the area of "developing human resources with a management mindset," we provide many opportunities for each employee to come into contact with management information in order to realize "management by all" in which all employees can participate in the management of the company. We also provide opportunities for leaders to receive practical management guidance from the board of directors, and focus on the development of the next generation of management personnel.

Specific Efforts

Practice of the Group Management Method.The Group divides its organization into detailed management units, and by clarifying the profit and loss of each unit, the "Group Management Method" is used to encourage employees to be aware of and take action to improve the profitability of their own organizations. In addition, the Company holds monthly review meetings where business profitability and other issues are questioned by the executive management team in an effort to improve the management skills of the leaders.

Implementation of Management Policy Presentations.Twice a year, we hold company-wide management policy presentations attended by all employees so that each and every employee can personally understand management's message and management policy. In addition, a policy presentation meeting is held once a quarter for each division in response to the company-wide policy, providing an opportunity for employees to be exposed to the policies of management and leaders.

Study Sessions for Leaders.We regularly hold study sessions for all leaders at the section manager level and above to help them become true managers. The president himself serves as a lecturer and provides direct guidance to leaders, providing an opportunity to enhance their management skills on topics such as how to develop strategies and visions for the organization and business, and how to build relationships of trust with members. Once a year, we also hold a "Kessokukai" where each leader presents the management policy of the business and organization and receives practical management guidance from the executive team based on the actual situation of the organization.

Employee health and safety, and a rewarding work environment

In the area of "health and safety of employees and a rewarding work environment," we are continuously implementing the following initiatives to create healthy and energetic workplaces.

Specific Efforts

Support for Cancer Screening Support for Cancer Screening.In addition to regular health checkups, various cancer screenings for stomach, lung, colon, prostate, breast, and cervical cancer are fully subsidized to support employees' health maintenance and early detection and treatment.

Strengthening Mental Health Support (Utilization of Stress Checks).While the quantitative burden is high among the measures for overall health risk, workplace support is functioning well. We will continue to utilize group analysis to maintain the current level and strengthen mental health support throughout the workplace through line care.

③ Indicators and Targets

The Group has set the following indicators related to diversity and inclusion. We have set targets for "women in management positions" and "men taking childcare leave" as of September 2027, and will accelerate support for balancing family and work by promoting the creation of an environment in which both men and women can safely participate in child-rearing.

Indicators and Goals Related to Diversity and Inclusion

(data) item September 30, 2022 Actual September 30, 2023 Actual September 30, 2024 Actual Target for the end of September 2027
Percentage of women among all employees 55.5% 55.9% 56.2% -
Percentage of women in management positions 9.3% 10.9% 11.7% 15.0%
Percentage of women in section chiefs and managers 19.0% 20.8% 24.0% -
Percentage of female directors and executive officers 8.7% 15.4% 13.0% -
Percentage of male employees taking childcare leave 21.4% 15.4% 48.5% 100.0%

*Based on the provisions of the "Law Concerning the Promotion of Active Roles for Women in the Workplace" and the "Law Concerning the Welfare of Workers Who Take Care of Children or Other Family Members Including Childcare Leave and Family Care Leave", the figures are compiled by the Company, MTG Professional Corporation and MTG FORMAVITA Corporation.

1. The number of employees used to calculate the indices in the table is as of the end of the fiscal year under review.2. Management positions refer to general managers, department heads, office managers, and section managers.