2. Controlling and reducing CO2 emissions

(1) Improvement of energy efficiency
The Sundrug Group is committed to developing stores that incorporate various eco-friendly technologies to reduce energy consumption. We have switched to LED lighting across all our stores, achieving 100% implementation. Additionally, for new stores, we are installing air conditioning systems and refrigerated display units equipped with high-efficiency inverters that use CO2 as a refrigerant; for existing stores, we are progressively upgrading this equipment during renovations as the efficiency of older units declines over time.

Measures to reduce CO2 emissions
●Introduction of CFC-free refrigeration and freezing equipment
Conventional refrigerants (fluorocarbons) are powerful greenhouse gasses (HFC, etc.) and cause a greater warming effect than CO2 does when emitted into the atmosphere. Instead of these, CFC-free equipment uses refrigerants with a lower global warming potential (GWP) or natural refrigerants (such as CO2 and ammonia) and contributes to reducing emissions of greenhouse gasses.

●Introduction of air conditioning equipment
Air conditioning equipment, which can be operated in a controlled and highly efficient way in accordance with ambient temperature, humidity, and usage, reduces excessive operation of air conditioning equipment. This will significantly reduce the electricity consumption and contribute to reducing CO2 emissions.

(2) Switch to renewable energy
Measures to reduce CO2 emissions
●Utilization of renewable energy
We will install solar power generation equipment (solar panels) by ourselves for self-consumption. We are promoting the installation of solar power generation equipment based on the characteristics of individual stores in each region (hours of sunlight, roof area, roof load capacity, etc.).

(3) Reduction of food waste

(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)Other initiatives to reduce non-food waste
To address challenges such as resource constraints, marine plastic pollution, and global warming, we have implemented a policy of charging for plastic shopping bags across all our retail operations, aiming to curb excessive plastic use. We encourage customers to bring their own reusable bags for daily shopping. Additionally, when stores relocate, undergo reconstruction, or close, we refurbish the product display shelves, fixtures, and refrigeration units used at those locations for reuse in other stores.
For waste that is inevitably generated, we are actively pursuing reuse and recycling initiatives, and we are intensifying our efforts to reduce waste in an environmentally conscious manner to help realize a sustainable society.

Key Initiatives
● Recycling cardboard
● Reducing plastic waste
● Recycling paper
● Sorting and recycling PET bottles
● Utilization of store facilities

■ Focused initiatives in future
・Reduction of the use of plastics
・Reduction of disposed products through optimization in purchasing stock quantities
・Promotion of reuse and recycling (including cooperation with business partners)

(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 toward achieving a 100% share of environmentally friendly products by the fiscal year ending March 31, 2031.
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