MUJI REPORT Dialogue Q&A Summary

ESG in

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Answers

general

The content of the report has evolved since the last update.

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The establishment of Mujirushi Ryohin (MUJI) and the issues

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of the company are well organized. Especially, the executive

messages for each product are easy to understand.

New members have joined the board of directors, and discussions have

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What is the change in the atmosphere of the board of

become lively. They include a number of outside audit & supervisory board

directors after the reshuffle in the composition of directors?

members, in addition to the three newly appointed outside directors. They

provide many tough, challenging opinions.

The page structure of MUJI Report makes the relationship

We want to express that materiality is firmly linked to corporate value based

between materiality and individual initiatives (including human

on our "two missions" set forth. The employee engagement survey was

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rights and engagement) difficult to follow, with an impression

conducted in November last year and its results came out in February.

that the information is fragmented. The KPI for 2030 is good,

Although its scores are not necessarily high due to the transformation period

and its progress will be more transparent to outside readers

we are going through, progress made is a forum for discussion established

by providing a preliminary interim target.

for each department based on the results. We would like to devise future

It would be better if the story starting from the corporate

philosophy leading to the ideal vision became clearer. Further,

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it would be appreciated if descriptions were given on the

Let us make it a matter to be taken care of during the next fiscal year.

details of the specific initiatives and the results, as well as the

remaining issues.

G: Governance

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If messages from all outside directors were given in the report,

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they would facilitate the readers' understanding of their ideas.

We will explore it going forward.

Short messages are just fine. Please explore the potential in

this regard.

There are cases in other companies' reports whereby they

After the governance system was changed, we reviewed and enhanced the

feature interviews with outside directors only. If outside

support system to the Board of Directors. To have better views on the local

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directors spoke, on behalf of minority shareholders, about the

workplace, we assisted newly appointed outside directors to make site visits

company's challenges and future outlook, it would deepen

to the Naoetsu store, which is becoming more indigenous to the local

investors' understanding over the company. Inclusion of

community. Furthermore, we hold regular interviews with outside directors

articles relevant to succession plans would be preferable.

and our executives, in addition to holding dialogues with institutional

In the area of remuneration for the board members, please

The share-based compensation with transfer restrictions is linked to ESG-

related efforts and progress of the board members. Targets are set at the

disclose progress made and targets set in detail for issues

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Executive Advisory Committee (attended by the board members) and the

herein. At present, it is difficult to assess the measures for

their validity.

ESG Promotion Committee. An interim report was recently presented to a

board meeting for discussions. We will look for more comprehensible

The Company advocates a "Public Interest and People-Centered

Management," in which our customers, shareholders, and other stakeholders

participate in our business management. Using our stores as a platform, we

will cooperate with our customers and shareholders in activities that will lead

Please elaborate on the targets of the recently announced

to regional revitalization. Some products have been created from the

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opinions of our customers. Shareholder meetings are held as a place to

introduction of shareholder benefits.

directly listen to the opinions of our shareholders. The company split its

shares in 2019 to increase individual shareholders, having led to the

introduction of this shareholder benefit program. We are hoping for as many

stakeholders as possible to participate in our business management, leading

to an increase in our corporate value.

S: Society

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Regarding to the disclosure of Engagement Survey. It must be

Employee engagement surveys were conducted in November, focusing on

difficult to make presentation on progress in transformation in

our original questions. Subsequently, discussions have been made at the

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corporate culture. However, disclosure of engagement survey

Board of Directors' meeting and each division, based on the survey results.

is still requested, such as by providing time-series numerical

We are cautious about disclosing basic scores, but will look for appropriate

data figures like competitors.

methods of disclosure, including the process of response and relevant

In this period of transformation, the external environment is also changing

What are the initiatives being promoted as we move ahead

significantly, and the Company is actively promoting external recruitment

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with integration with mid-career employees? Any change in

because of the need for a speed in change. At the same time, we are hiring

turnover rate?

new graduates to support store openings, and have set up a program to

train employees to be store managers within three years. As issues differ

across departments and teams, it is necessary to take steps for each team,

Under the banner of "Public Interest and People-Centered

rather than steps that are uniform across the entire company. For this

reason, the role of middle management is important, and their training and

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Management," how are the values of mid-career employees

education are repeated. A system and mechanism are required to make

being integrated with those of proper employees?

employees more positive. Turnover is not at the level of concern.

The personnel system was substantially overhauled last year. In addition to

How are the personnel systems being reviewed during the

revamping the salary system in order to actively promote external

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recruitment, we have adopted a new grade system and designed

transformation of the second startup?

remuneration to be linked to improvements in roles and skills. We are now in

a transition period and the transition will be completed within two years.

Compared to when I joined the company, the share of female in all

Regarding to the enhancement of disclosure on active

employees has been declining year by year, which is an issue. We are at the

stage where the Diversity Committee focuses on the empowerment of

participation by women. The empowerment of women is

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women and discussions are underway on how women can play an active role

deemed important for your company. Please elaborate on the

relevant challenges and action plans.

through their careers. In order to enable women to work for a long time, we

will develop work styles and support systems from different perspectives, so

that they can take on challenges regardless of their life events.

Please elaborate on results of regional localization and local

Various efforts are being made for regional localization, but the current

status and its disclosure are still insufficient. However, connections with

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area revitalization, in conjunction with KPIs and numerical

lodging, cafes, farmers, etc. have been created. We will increase our

values.

achievement, so that our goal is more visible.

The regional division started in September 2021 as a role model of

autonomous decentralization and individual store management. There is no

How is the development of human resources to support the

manual for the management of individual stores, and good examples are

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region making progress after the launch of the regional

accumulated at each regional division, with the Kinki region as a leader. In

division? How about overseas?

order to train community managers, we plan to start systematic education.

In mainland China, Taiwan, Hong Kong, and other countries, efforts with a

focus on food and agriculture themes have begun a gradual move forward.

The contribution to the local community is possible, only if based on the

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How do you foster perspectives of business and earnings as

power cultivated through store management. We are gradually increasing

you proceeding regional localization?

the number of stores that contribute to local community, taking into account

the abilities of our employees.

Regarding to human rights due diligence. We look forward to

This time, we disclosed our human rights policy as a first step. Supply chains

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better relevant disclosure in relation not only to our suppliers

have a high risk in human rights. We will continue our efforts in this regard,

but also to our employees.

including audits.

Re: supply chain management. Retailers generally tend to look

We believe it is necessary to improve the literacy of production control

at their business partners in a genuine way. While the site

members and to enhance the expertise of the ESG team. Instead of dividing

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inspections into factories or manufacturing sites are becoming

ESG and production, the need of a dedicated organization is also being

more common, please be reminded that strict checks are

discussed. We ensure the thorough check of the risk of business partners

crucial when starting businesses.

before starting the transactions.

E: Environment

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Regarding to activities with "Circular" in mind. Please disclose

information linked to specific products. Behind this request, for

example, is the lack of information about completely

It is important to be more mindful about how to present our environmentally

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commercialized products although the description of the

conscious perspectives in the sales floor through product sales activities.

recycled wool is given. This request is applicable to the efforts

Currently, our thoughts have not reached our customers sufficiently. The

for reuse and recycling. The readers of the Report will find

company is making steady progress in its environmental initiatives, such as a

Mujirushi Ryohin's strengths more if the Company responds

focus on environmental consideration to packaging and product materials,

I found the stories about natural materials such as kapok. I

collecting plastics, and offering flat-rate monthly services for furniture. We

hope for the message that the Company is doing something

will use our ingenuity in the ways to make our efforts known externally,

basically good to be delivered more to outside the Company,

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including how to present it in the report.

including the customers. Disclosure of corporate information is

also effective, such as the information that the income of

employees involved in production is rising.