2. Controlling and reducing CO2 emissions

(1) Improvement of energy efficiency
The SUNDRUG Group is working to create stores that incorporate various environmentally friendly technologies to reduce energy consumption. We are in the process of replacing the lights used at stores with LED lights. As of March 31, 2021, we have introduced LED lighting at around 85% of Group stores. Our plan is to complete the switch at all target stores in the next several years. In addition, air-conditioning equipment and refrigerators equipped with inverters that use CO2 as a refrigerant and are highly energy efficient are being introduced at new stores. We are also in the process of updating existing stores where the equipment has become less efficient with age when renovating them. We are pursuing the possibilities of environmentally friendly stores, such as by installing windows for natural lighting in the storage and break rooms and using double-glazed glass offering high heat insulation.

Furthermore, we are introducing a Building and Energy Management System (BEMS) that allows us to centrally monitor the energy usage of air conditioning, lighting, and other equipment as well as the status of equipment operations. By visualizing energy usage with this BEMS, we are able to establish improvement plans to realize building-wide energy savings and reduce CO2 emissions.

(2) Switch to renewable energy
The SUNDRUG Group has begun reviewing the structure of our energy procurement and use, including installing solar panels on store roofs to utilize renewable energy and introducing hybrid vehicles in the fleet of company cars. We are preparing for full-scale introduction of solar panels while taking into account the integration into our Business Continuity Plan (BCP) as it will allow us to continue to operate stores and supply daily necessities in the event of a power outage caused by a natural disaster or other events as well as the possibility of the introduction of carbon pricing such as a carbon tax or emissions trading that are currently under discussion.

(3) Reduction of waste
The SUNDRUG Group is working to optimize product lineups, shelving allotment (what products to put out on which part of the shelves and in what quantities), orders, and inventory levels at each store as it is important to eliminate dead stock in order to control and reduce food waste. In addition, when products near their sell-by dates based on internal criteria, we attempt to ensure they sell by marking them down with the optimal discount at the right timing in order to reduce waste. To improve the accuracy of these efforts, we work continuously to improve the operational logic of our IT systems, including automatic ordering systems.

(4) Adoption of business casual dress code
At the SUNDRUG headquarters, we implement Cool Biz measures in the summer and Warm Biz measures in the winter to reduce CO2 emissions and improve the working environment of our employees continuously throughout the year. In October 2021, we adopted a business casual dress code (casual outfits with no neckties) for the whole year. In combining Cool Biz and Warm Biz, we are working to reduce CO2 emissions by calling for proper room temperature control and reasonable means with light clothing according to each employee’s time, place, and occasion (TPO).

3. Increasing efficiency of resource use and promoting effective utilization

(1) Reduction of plastic waste
All business operators running retail outlets are required to charge for plastic shopping bags. This is intended to address issues such as limiting waste and resource usage, the problem of marine waste, and global warming by reducing excessive use of plastic. At SUNDRUG, we have introduced an original point system in which customers that bring their own shopping bags and decline plastic shopping bags are granted eco-points (one point) in order to promote the reduction of plastic.

(2) Management of water resources
The SUNDRUG Group uses the water supply efficiently and works to reduce usage by installing water-saving toilets and automatic faucets at new stores. When renovating existing stores, we switch to this equipment.
In addition, because we use a significant amount of water to process the seafood products, which increasingly more Group companies are carrying, we are introducing equipment that adjusts the water to maintain a fixed volume and feeds water while taking in air. As foamy water contains air and eliminates splashing during processing, it improves operational efficiency as well. As such, we are working to save water by establishing a cooperative system with our business partners and tenants.

(3) Utilization of store facilities
The SUNDRUG Group refurbishes the showcases, furniture, and refrigerators from stores that are relocated, rebuilt, or closed and reuses them at other stores to reduce waste and effectively utilize resources. By properly managing and reusing the resources from stores and offices, we are contributing to the realization of a circular economy.

4. Selling environmentally friendly products

SUNDRUG develops and sells various private brand products, including over-the-counter (OTC) drugs, cosmetics, and processed foods. When developing these private brand products, we always incorporate the elements of sustainability and environmental friendliness. We take various approaches, including using recycled resources in containers and packaging materials, conserving containers and packaging materials, using recyclable containers and packaging materials, using natural materials with little environmental impact, and extending the consume-by and use-by dates.
With new products, we take the environment into account from the planning stage. As for products that are already being sold, we gradually switch them out while taking into account material and product inventories, contracts, and other factors. We are actively working to ensure that 100% of our products are environmentally friendly as quickly as possible.
To reflect the element of environmental friendliness, we are working to reduce manufacturing costs while maintaining functional value by applying the concept of value engineering* in the product design stage. Normally, if FSC-certified pulp is used to make the decorative box of a product and vegetable ink or biomass ink for printing, that will drive the manufacturing cost up higher than it was before. For that reason, we are working to reduce the cost by switching to recycled paper containing a higher ratio of used paper after confirming that there are no issues with functionality when using it for the outer box of another product. Going forward, we will continue to use wisdom and innovative ideas to balance the value provided to customers with the economic value to be gained by our Company.

*Value engineering: A method of improving value by ascertaining the value of a product or service in relation to the function that it should perform and the corresponding cost

SDGs	Target	Initiative
	Effective use of resources	・Use of recycled base paper ・Simplification of packaging ・Biomass/vegetable ink
	Control and reduction of CO2 emissions	・Switch to reduced basis weight* base paper ・Compactifying of packaging ・Biomass/vegetable ink
	Conservation of forest resources	・Use of recycled base paper ・Use of forest-certified paper

*Per square meter weight of a single sheet of paper